<PAGE>
As filed with the Securities and Exchange Commission on May 4, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
LEVI STRAUSS & CO.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 2325 94-0905160
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification Code
Organization) Number)
1155 Battery Street, San Francisco, California 94111 (415) 501-6000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Albert F. Moreno, Esq. Copies to:
Senior Vice President,
General Patricia A. Vlahakis, Jay A. Mitchell, Esq.
Counsel And Assistant Esq. Chief Counsel-Corporate
Secretary Wachtell, Lipton, Rosen Levi Strauss & Co.
Levi Strauss & Co. & Katz 1155 Battery Street
1155 Battery Street 51 West 52nd Street San Francisco,
San Francisco, New York, New York 10019 California 94111
California 94111 (212) 403-1000 (415) 501-1372
(415) 501-6284
(Name, Address,
Including Zip Code, and
Telephone Number,
Including Area Code, of
Agent for Service)
------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Proposed
Maximum
Title of Each Class of Proposed Aggregate Amount of
Securities to be Amount to Offering Price Offering Registration
Registered be Registered Per Note Price(1) Fee(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6.80% Notes due 2003.... $350,000,000 100% $350,000,000 $ 92,400
- --------------------------------------------------------------------------------
7.00% Notes due 2006.... $450,000,000 100% $450,000,000 $118,800
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933.
(2) Calculated pursuant to Rule 457 under the Securities Act.
------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities or accept any offer to buy these securities until +
+the registration statement filed with the Securities and Exchange Commission +
+is effective. This prospectus is not an offer to sell these securities and is +
+not soliciting an offer to buy these securities in any state where the offer +
+or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED MAY 4, 2000
PROSPECTUS
Levi Strauss & Co.
Offer to Exchange
all outstanding 6.80% Notes due 2003 ($350,000,000 principal amount)
for
6.80% Notes due 2003 ($350,000,000 principal amount)
which have been registered under the Securities Act of 1933
and
all outstanding 7.00% Notes due 2006 ($450,000,000 principal amount)
for
7.00% Notes due 2006 ($450,000,000 principal amount)
which have been registered under the Securities Act of 1933
---------
The exchange offer will expire at 5:00 p.m., New York City time, on ,
2000, unless extended.
We do not intend to list the exchange notes on any national securities
exchange, and no established trading market for the exchange notes is
anticipated.
---------
See "Risk Factors" beginning on page 11 for a discussion of factors that you
should consider before tendering your old notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
---------
The date of this prospectus is , 2000.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 under the Securities Act of 1933 relating to the exchange
offer that incorporates important business and financial information about us
that is not included in or delivered with this prospectus. This prospectus does
not contain all of the information included in the registration statement. This
information is available from us without charge to holders of the notes as
specified below. If we have made references in this prospectus to any
contracts, agreements or other documents and also filed any of those contracts,
agreements or documents as exhibits to the registration statement, you should
read the relevant exhibit for a more complete understanding of the document or
matter involved.
Following the exchange offer, we will be required to file periodic reports
and other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934. Information that we file with the Securities
and Exchange Commission after the date of this prospectus will automatically
supersede the information in this prospectus and any earlier filed incorporated
information. We are also incorporating any future filings made with the
Securities and Exchange Commission under sections 13(a), 13(e), 14, or 15(d) of
the Securities Exchange Act of 1934 until the termination of the exchange
offer.
You may read and copy the registration statement, including the attached
exhibits, and any report, statements or other information that we file at the
Securities and Exchange Commission's public reference room at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the operation of the public reference room. Our Securities and Exchange
Commission filings will also be available to the public from commercial
document retrieval services and at the Securities and Exchange Commission's
Internet site at http://www.sec.gov.
You may request a copy of any of our filings with the Securities and
Exchange Commission, or any of the agreements or other documents that
constitute exhibits to those filings, at no cost, by writing or telephoning us
at the following address or phone number:
Levi Strauss & Co.
1155 Battery Street
San Francisco, California 94111
Attention: Treasurer
Telephone: (415) 501-3869 or (415) 501-6000
To obtain timely delivery of any of our filings, agreements or other
documents, you must make your request to us no later than five business days
before the expiration date of the exchange offer. The exchange offer will
expire at 5:00 p.m., New York City time on , 2000, which is 30 days
following the commencement of the exchange offer. The exchange offer can be
extended by us in our sole discretion. See the caption "The Exchange Offer" for
more detailed information.
You should rely only on the information provided in this prospectus. No
person has been authorized to provide you with different information. The
information in this prospectus is accurate as of the date on the front cover.
You should not assume that the information contained in this prospectus is
accurate as of any other date.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information...................................... i
Summary.................................................................. 1
Risk Factors............................................................. 11
Forward-Looking Statements............................................... 19
The Exchange Offer....................................................... 20
Use of Proceeds.......................................................... 29
Capitalization........................................................... 29
Selected Historical Consolidated Financial Data.......................... 30
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 32
Business................................................................. 46
Management............................................................... 59
Principal Stockholders................................................... 67
Material Relationships and Related Party Transactions.................... 71
Description of Other Indebtedness........................................ 72
Description of the Exchange Notes........................................ 76
Book-Entry, Delivery and Form............................................ 82
Federal Income Tax Considerations........................................ 85
Plan of Distribution..................................................... 89
Experts.................................................................. 89
Legal Matters............................................................ 89
Index to Financial Statements............................................ F-1
</TABLE>
------------
Until , 2000, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus.
<PAGE>
SUMMARY
The following summary highlights selected information contained elsewhere in
this prospectus. This summary may not contain all of the information that you
should consider before exchanging your old notes for exchange notes, and you
are encouraged to read this prospectus in its entirety. Our fiscal year ends in
November. Unless otherwise stated in this prospectus, any reference to periods
shall refer to fiscal periods. This prospectus includes the specific terms of
the exchange notes we are offering, as well as a discussion of risk factors and
the financial statements that we have included.
Our Company
We are one of the world's leading branded apparel companies with operations
in more than 40 countries. We design and market jeans and jeans-related pants,
casual and dress pants, shirts, jackets and related accessories for men, women
and children under our Levi's(R), Dockers(R) and Slates(R) brands. Our products
are primarily distributed in the United States through chain retailers and
department stores and abroad through department stores and specialty retailers.
We also maintain a network of approximately 750 franchised or independently
owned stores dedicated to our products outside the United States and operate a
small number of company-owned stores.
We believe there is no other apparel company with a comparable global
presence in either the jeans or casual pants segment of the apparel market.
Since our founder, Levi Strauss, invented the blue jean in 1873, Levi's(R)
jeans have become one of the most successful and widely recognized brands in
the history of the apparel industry. According to a 1999 study performed on our
behalf by an international market research firm, the Levi's(R) brand is the
most recognized casual clothing brand in all 17 of the markets in which the
study was conducted, including the United States, Canada, Germany, Italy,
France, the United Kingdom, Japan and Australia. Our Dockers(R) brand of casual
pants, introduced in 1986, is also widely recognized in the United States and a
growing number of markets abroad. According to industry research, approximately
71% of U.S. male consumers ages 18 to 45 own Dockers(R) brand casual pants.
Jeans and casual and dress pants represented approximately 85% of our total
units sold in 1999. Basic jeans are our key generator of sales and gross
profits.
<TABLE>
<CAPTION>
Levi's(R) Brand Dockers(R) Brand Slates(R) Brand
--------------- ---------------- ---------------
<S> <C> <C> <C>
Products: Men's, women's and Men's, women's and Men's and in Fall
kids' -jeans, jeans boys' -casual pants, 2000 women's - dress
related products, shorts, skirts, knit pants, skirts, tops,
knits and woven tops, and woven tops, jackets, outerwear
outerwear and outerwear and and accessories
accessories accessories
Geographic Men's and women's - Men's and women's - Men's and women's -
Markets: global global U.S. only
Kids' - primarily Boys' - U.S. only
U.S.
Percentage
of 1999
Net
Sales: 76% 22% 2%
</TABLE>
Our business is currently organized into three geographic divisions: the
Americas, consisting of the United States, Canada and Latin America; Europe,
including the Middle East and Africa; and Asia Pacific. In 1999, we had net
sales of $5.1 billion, of which the Americas, Europe and Asia Pacific accounted
for 66.5%, 26.5% and 7.0%, respectively. In 1999, we had EBITDA of $295.1
million and adjusted EBITDA of $448.9 million. For the three months ended
February 27, 2000, we had net sales of $1.1 billion and EBITDA and adjusted
EBITDA of $148.5 million.
Our operating performance has deteriorated in recent years. Our net sales
fell from $7.1 billion in 1996 to $5.1 billion in 1999, and our brand equity
and market position have declined in all three of our operating regions. This
deterioration is attributable to both industry-wide and company-specific
factors. Industry-wide
1
<PAGE>
factors include consumer market trends towards more fashion denim and non-denim
products and intense competition from designer and private label products.
Company-specific factors include brand equity erosion, insufficient product
innovation, poor presentation of our products at retail, operational problems
in our supply chain and weakness in our key distribution channels. In response
to these developments, we have, among other things, taken the following
restructuring actions:
. reduced overhead expenses and eliminated excess manufacturing capacity
through extensive restructuring initiatives executed during the past
three years, including reducing the number of our employees by
approximately 18,500 since 1997 and closing 29 of our owned and operated
production and finishing facilities in North America and Europe;
. shifted from manufacturing two-thirds of our U.S. jeans internally in
1997 to manufacturing one-third internally in 1999;
. reduced corporate infrastructure at our San Francisco and regional
headquarters and consolidated and streamlined merchandising, marketing
and sales functions in all three of our operating regions; and
. hired a new senior management team, including a chief executive officer,
a chief financial officer, senior vice presidents responsible for
worldwide supply chain and worldwide human resources and heads for each
of our three operating regions.
We intend our restructuring efforts to help us achieve our strategic goals
of reversing the recent deterioration in our performance and repositioning our
business to support future growth. We do not anticipate taking any material
restructuring actions relating to additional capacity reductions or
reorganization efforts in 2000 or 2001.
Our Business Strategy
Going forward, our primary strategic goals are to leverage the worldwide
recognition of our brand names and our history of product innovation and high
product quality to reverse the recent deterioration in our performance and to
reposition our business to support future growth. To achieve these goals, we
have three key business strategies:
Reinvigorate our brands through better product innovation and increased
consumer and channel relevance.
We believe that an integrated presentation of new and innovative products
and marketing programs targeted to specific consumer and retail segments is
crucial to generating consumer demand for our products. We intend to:
. focus on continually updating our core products and creating new
products;
. design and market sub-brands and products that are relevant to our
various consumer segments;
. leverage our global brand recognition and marketing capabilities;
. target our sub-brands and product offerings to specific distribution
channels; and
. develop product-focused marketing programs using both traditional and
non-traditional advertising vehicles.
2
<PAGE>
Upgrade the presentation of our product at retail and improve our
relationships with our customers.
We distribute our products in a wide variety of retail formats around the
world including through chain and department stores in the United States,
Europe and Asia, franchise stores dedicated to our brands and specialty
retailers. We intend to:
. engage in more collaborative planning and performance monitoring
processes with our retail customers;
. improve the presentation of our product at retail through new retailing
formats and sales area upgrade programs; and
. increase the number of franchised or other retail formats dedicated to
our Dockers(R) brand products outside the United States.
Improve our supply chain execution and continue to focus on cost reduction.
We made extensive restructuring changes during the last three years to shift
our sourcing base and reduce manufacturing costs and overhead expenses. We must
continue improving our supply chain in order to capture the benefits of these
changes and become a more effective competitor. We intend to:
. focus on improving the coordination of our design, merchandising,
forecasting, sourcing and logistics processes;
. improve the linkage of product supply to consumer demand; and
. leverage our restructuring initiatives to further reduce cost of goods
sold, operating expenses and inventory costs.
Failure to Exchange Your Old Notes
The old notes which you do not tender or we do not accept will, following
the exchange offer, continue to be restricted securities. Therefore, you may
only transfer or resell them in a transaction registered under or exempt from
the Securities Act of 1933 and applicable state securities laws. We will issue
the exchange notes in exchange for the old notes under the exchange offer only
following the satisfaction of the procedures and conditions described in the
caption "The Exchange Offer."
Because we anticipate that most holders of the old notes will elect to
exchange their old notes, we expect that the liquidity of the markets, if any,
for any old notes remaining after the completion of the exchange offer will be
substantially limited. Any old notes tendered and exchanged in the exchange
offer will reduce the aggregate principal amount outstanding of the old notes.
3
<PAGE>
The Exchange Offer
On November 6, 1996, we completed the private offering of the unregistered
6.80% notes due 2003 and 7.00% notes due 2006, which we refer to in this
prospectus as the old notes. In this exchange offer, we are offering to
exchange, for your old notes, exchange notes which are identical in all
material respects to the old notes except that the exchange notes have been
registered under the Securities Act.
The Exchange Offer...... We are offering to exchange:
. up to $350.0 million aggregate principal amount of
6.80% old notes due 2003 for up to $350.0 million
aggregate principal amount of 6.80% exchange notes
due 2003; and
. up to $450.0 million aggregate principal amount of
7.00% old notes due 2006 for up to $450.0 million
aggregate principal amount of 7.00% exchange notes
due 2006.
You may exchange old notes only in integral multiples
of $1,000 principal amount.
Purpose and Effect...... The purpose of the exchange offer is to give you the
opportunity to exchange your old notes for exchange
notes that have been registered under the Securities
Act. As a consequence of the registration of the
exchange notes, we will become subject to the
informational requirements of the Exchange Act and
will file reports and other information with the SEC
to which each holder of old notes, if any are
outstanding after the exchange offer, and exchange
notes will have access.
Resale.................. We believe that the exchange notes issued pursuant to
the exchange offer in exchange for old notes may be
offered for resale, resold and otherwise transferred
by you (unless you are an "affiliate" of us within
the meaning of Rule 405 under the Securities Act)
without compliance with the registration and
prospectus delivery provisions of the Securities Act,
so long as you are acquiring the exchange notes in
the ordinary course of your business and that you
have not engaged in, do not intend to engage in, and
have no arrangement or understanding with any person
to participate in, a distribution of the exchange
notes.
Each participating broker-dealer that receives
exchange notes for its own account under the exchange
offer in exchange for old notes that were acquired as
a result of market-making or other trading activity
must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. See
the caption "Plan of Distribution."
Any holder of old notes who:
. is our affiliate;
. does not acquire exchange notes in the ordinary
course of its business; or
4
<PAGE>
. exchanges old notes in the exchange offer with the
intention to participate, or for the purpose of
participating, in a distribution of exchange
notes;
must, in the absence of an exemption, comply with the
registration and prospectus delivery requirements of
the Securities Act in connection with the resale of
the exchange notes.
Expiration of the
Exchange Offer; The exchange offer will expire at 5:00 p.m., New York
Withdrawal of Tender... City time, on , 2000, or a later date and time to
which we may extend it. We do not currently intend to
extend the expiration of the exchange offer. You may
withdraw your tender of old notes pursuant to the
exchange offer at any time before expiration of the
exchange offer. Any old notes not accepted for
exchange for any reason will be returned without
expense to you promptly after the expiration or
termination of the exchange offer.
Conditions to the
Exchange Offer......... The exchange offer is subject to customary
conditions, which we may waive. Please read the
caption "The Exchange Offer--Conditions" for more
information regarding the conditions to the exchange
offer.
Procedures for
Tendering Old Notes.... If you wish to participate in the exchange offer, you
must:
. complete, sign and date the accompanying letter of
transmittal, or a facsimile of the letter of
transmittal, according to the instructions
contained in this prospectus and the letter of
transmittal; and
. mail or otherwise deliver the letter of
transmittal, or a facsimile of the letter of
transmittal, together with your old notes and any
other required documents, to the exchange agent at
the address set forth on the cover page of the
letter of transmittal.
If you hold old notes through The Depository Trust
Company, or DTC, and wish to participate in the
exchange offer, you must comply with DTC's Automated
Tender Offer Program procedures, by which you will
agree to be bound by the letter of transmittal. By
signing, or agreeing to be bound by, the letter of
transmittal, you will represent to us that, among
other things:
. you acquired your old notes in the ordinary course
of your business;
. you have no arrangement or understanding with any
person or entity to participate in a distribution
of the exchange notes;
. if you are a broker-dealer that will receive
exchange notes for your own account in exchange
for old notes that were acquired as a result of
market-making activities, that you will deliver a
prospectus, as required by law, in connection with
any resale of those exchange notes; and
5
<PAGE>
. you are not an "affiliate," as defined in Rule 405
of the Securities Act, of us or, if you are an
affiliate, that you will comply with any
applicable registration and prospectus delivery
requirements of the Securities Act.
Special Procedures for
Beneficial Owners...... If you are a beneficial owner of old notes that are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, and
you want to tender old notes in the exchange offer,
you should contact the registered holder promptly and
instruct the registered holder to tender on your
behalf. If you wish to tender on your own behalf, you
must, before completing and executing the letter of
transmittal and delivering your old notes, either
make appropriate arrangements to register ownership
of the old notes in your name or obtain a properly
completed bond power from the registered holder. The
transfer of registered ownership may take
considerable time and may not be able to be completed
before expiration of the exchange offer.
Guaranteed Delivery
Procedures.............. If you wish to tender your old notes and your old
notes are not immediately available or you cannot
deliver your old notes, the letter of transmittal or
any other documents required by the letter of
transmittal or cannot comply with the applicable
procedures under DTC's Automated Tender Offer Program
before expiration of the exchange offer, you must
tender your old notes according to the guaranteed
delivery procedures set forth under the caption "The
Exchange Offer--Guaranteed Delivery Procedures."
Effect on Holders of
Old Notes............... If you are a holder of old notes and you do not
tender your old notes in the exchange offer, you will
continue to hold your old notes and will be entitled
to all the rights and subject to all the limitations
applicable to the old notes in the indenture.
The trading market for old notes could be adversely
affected if some but not all of the old notes are
tendered and accepted in the exchange offer.
Consequences of Failure
to Exchange............ All untendered old notes will remain subject to the
restrictions on transfer provided for in the old
notes and in the indenture. In general, absent
registration under or exemption from the Securities
Act, if you are, were or acquired old notes from an
affiliate of us, your transfer of old notes will be
restricted by the resale limitations of Rule 144 and
applicable state securities laws. Non-affiliates will
be able to transfer their old notes freely without
limitation under Rule 144 and in compliance with
applicable state securities laws. Other than in
connection with the exchange offer, we do not
currently anticipate that we will register the old
notes under the Securities Act.
6
<PAGE>
Federal Income Tax
Considerations......... The exchange of old notes for exchange notes in the
exchange offer will not be a taxable event for U.S.
federal income tax purposes. See the caption "Federal
Income Tax Considerations" for a more detailed
description of the tax consequences of the exchange.
Use of Proceeds......... We will not receive any cash proceeds from the
issuance of exchange notes pursuant to the exchange
offer.
Exchange Agent.......... Citibank, N.A. is the exchange agent for the exchange
offer. The address and telephone number of the
exchange agent are set forth under the caption "The
Exchange Offer--Exchange Agent."
The Exchange Notes
Issuer.................. Levi Strauss & Co.
Securities Offered...... . $350.0 million aggregate principal amount of 6.80%
exchange notes due 2003.
. $450.0 million aggregate principal amount of 7.00%
exchange notes due 2006.
Maturity................ . November 1, 2003 for the 6.80% exchange notes.
. November 1, 2006 for the 7.00% exchange notes.
Interest Payment
Dates................... May 1 and November 1 of each year.
Redemption.............. The exchange notes cannot be redeemed prior to
maturity.
Ranking................. The exchange notes will be unsecured and will rank
equally with all of our other existing and future
unsecured and unsubordinated debt. As of April 30,
2000, we had $1.2 billion of debt that was secured by
most of our assets, including our trademarks, and the
assets of our material U.S. subsidiaries. That
secured debt will have priority over the exchange
notes with respect to those assets. See the caption
"Description of Other Indebtedness--Bank Credit
Facilities."
Restrictive Covenants... We will issue the exchange notes under the same
indenture with Citibank, N.A., as the trustee, under
which we issued the old notes. The indenture, among
other things, restricts our ability and the ability
of our subsidiaries and future subsidiaries, to:
. incur liens;
. engage in sale and leaseback transactions; and
. engage in mergers and sales of assets.
See the caption "Description of the Exchange Notes--
Restrictive Covenants."
7
<PAGE>
Absence of Established
Market for the
Exchange Notes......... The exchange notes are a new issue of securities, and
there is no established trading market for the
exchange notes. We do not intend to apply for the
exchange notes to be listed on any securities
exchange or to arrange for quotation on any automated
dealer quotation system. The initial purchasers of
the old notes may discontinue any market making in
the exchange notes at any time in their sole
discretion. We cannot assure you that a liquid market
will develop for the exchange notes.
------------
We are located at Levi Strauss & Co., 1155 Battery Street, San Francisco,
California 94111. Our telephone number is (415) 501-6000. We maintain a website
at www.levistrauss.com. Information contained on this website, or on any other
website referred to therein, does not constitute part of this prospectus and is
not incorporated by reference in this prospectus.
8
<PAGE>
Summary Historical Consolidated Financial Data
The following table sets forth summary historical consolidated financial
data for Levi Strauss & Co. The following selected statements of income data
and cash flow data for fiscal years 1995, 1996, 1997, 1998 and 1999 and the
consolidated statement of balance sheet data of such periods are derived from
our financial statements that have been audited by Arthur Andersen LLP,
independent public accountants. The data for the three months ended February
28, 1999 and February 27, 2000 have been derived from our unaudited
consolidated financial statements which, in our opinion, contain all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the financial condition and results of operations for these
periods. The results of operations for the three months ended February 27, 2000
may not be indicative of the results to be expected for the year ending
November 26, 2000.
The financial data set forth below should be read in conjunction with, and
is qualified by reference to, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," our consolidated financial
statements and the related notes to those financial statements, included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended Three Months Ended
-------------------------------------------------------------- ------------------------
Nov. 26, Nov. 24, Nov. 30, Nov. 29, Nov. 28, Feb. 28, Feb. 27,
1995 1996 1997 1998 1999 1999 2000
---------- ----------- ----------- ----------- ----------- ----------- -----------
(Unaudited)
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Net sales............... $6,707,631 $ 7,136,304 $ 6,861,482 $ 5,958,635 $ 5,139,458 $ 1,278,322 $ 1,082,437
Cost of goods sold...... 3,930,132 4,159,371 3,962,719 3,433,081 3,180,845 814,673 632,442
---------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit............ 2,777,499 2,976,933 2,898,763 2,525,554 1,958,613 463,649 449,995
Marketing, general and
administrative
expenses............... 1,809,633 2,029,138 2,045,938 1,834,058 1,629,845 419,085 322,111
Excess
capacity/restructuring
charges(1)............. -- -- 386,792 250,658 497,683 394,105 --
Global Success Sharing
Plan(2)................ -- 138,963 114,833 90,564 (343,873) -- --
Special compensation
charge(3).............. -- 76,983 -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income
(loss)................. 967,866 731,849 351,200 350,274 174,958 (349,541) 127,884
Interest expense........ 15,659 145,234 212,358 178,035 182,978 43,157 56,782
Other (income) expense,
net.................... (82,630) (33,291) (45,439) 9,539 (16,519) (16,127) (29,141)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
taxes.................. 1,034,837 619,906 184,281 162,700 8,499 (376,571) 100,243
Income tax expense
(benefit).............. 300,101 154,977 46,070 60,198 3,144 (139,331) 35,084
---------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)....... $ 734,736 $ 464,929 $ 138,211 $ 102,502 $ 5,355 $ (237,240) $ 65,159
========== =========== =========== =========== =========== =========== ===========
Other Financial Data:
EBITDA(4)............... $1,083,248 $ 861,386 $ 490,094 $ 479,047 $ 295,060 $ (315,894) $ 148,504
Adjusted EBITDA(5)...... 1,083,248 1,077,332 991,719 820,269 448,870 78,211 148,504
Capital expenditures.... 333,949 210,466 121,595 116,531 61,062 18,779 4,252
Ratio of adjusted EBITDA
to interest expense.... 69.2x 7.4x 4.7x 4.6x 2.5x 1.8x 2.6x
Ratio of earnings to
fixed charges(6)....... 23.2x 3.8x 1.6x 1.6x 1.0x -- 1.7x
Statement of Cash Flow
Data:
Cash flows from
operating activities... $ 749,319 $ 494,138 $ 573,890 $ 223,769 $ (173,772) $ 43,627 $ 60,302
Cash flows from
investing activities... (363,841) (242,781) (76,895) (82,707) 62,357 (9,801) 104,953
Cash flows from
financing activities... (105,305) (1,136,300) (530,302) (194,489) 224,219 (17,828) (251,176)
Balance Sheet Data:
Cash and cash
equivalents............ $1,088,032 $ 195,852 $ 144,484 $ 84,565 $ 192,816 $ 97,654 $ 105,959
Working capital......... 1,722,074 1,059,940 706,522 645,900 799,627 521,998 666,010
Total assets............ 4,709,157 4,192,696 4,032,327 3,884,658 3,665,517 3,819,131 3,303,383
Total debt.............. 38,057 3,225,512 2,631,696 2,415,330 2,664,609 2,393,028 2,403,477
Stockholders' equity
(deficit)(3)........... 2,115,293 (1,481,577) (1,370,262) (1,313,747) (1,288,562) (1,519,481) (1,219,572)
</TABLE>
9
<PAGE>
(1) We reduced overhead expenses and eliminated excess manufacturing capacity
through extensive restructuring initiatives executed during the past three
years, including reducing the number of our employees by 18,500 and
closing 29 of our owned and operated production and finishing facilities
in North America and Europe.
(2) Our Global Success Sharing Plan, adopted in 1996, provides for cash
payments to our employees in 2002 if we achieve pre-established financial
targets. We recognized and accrued expenses in 1998, 1997 and 1996 for our
Global Success Sharing Plan. During 1999, we concluded that, based on our
financial performance, the targets under the plan would not be achieved
and that the probability of a payment in 2002 is highly unlikely. As a
result, in 1999 we reversed into income $343.9 million of accrued
expenses, less miscellaneous expenses, previously recorded in connection
with the Global Success Sharing Plan.
(3) The special compensation charge and stockholders' equity (deficit)
resulted from a 1996 transaction in which our stockholders created new
long-term governance arrangements for us, including the voting trust and
stockholders agreement. In the 1996 transaction, a group of stockholders
of our former parent, Levi Strauss Associates Inc., established a new
company, LSAI Holding Corp, to which they contributed approximately 70% of
the outstanding shares of Levi Strauss Associates Inc. Levi Strauss
Associates Inc. was then merged with a subsidiary of LSAI Holding Corp. In
the merger, shares of Levi Strauss Associates Inc. not contributed to LSAI
Holding Corp., including shares held under several employee benefit and
compensation plans, were converted into the right to receive cash, thereby
making Levi Strauss Associates Inc. a wholly-owned subsidiary of LSAI
Holding Corp. Funding for the cash payments in the merger was provided in
part by cash on hand and in part from proceeds of approximately $3.3
billion of borrowings under bank credit facilities. The special
compensation charge resulted from the impact of the transaction on various
employee plans. In October 1996, Levi Strauss Associates Inc. and LSAI
Holding Corp. were merged into Levi Strauss & Co. These transactions were
accounted for as a reorganization of entities under common control.
(4) EBITDA equals operating income (loss) plus depreciation and amortization
expense. EBITDA is not intended to represent cash flow or any other
measure of performance in accordance with generally accepted accounting
principles. EBITDA is included herein because we believe that you may find
it to be a useful analytical tool. Other companies may calculate EBITDA
differently, and we cannot assure you that our figures are comparable with
similarly-titled figures for other companies.
(5) The calculation for adjusted EBITDA is shown below:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
------------------------------------------------- -------------------
Nov. 26, Nov. 24, Nov. 30, Nov. 29, Nov. 28, Feb. 28, Feb. 27,
1995 1996 1997 1998 1999 1999 2000
---------- ---------- -------- -------- --------- --------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA.................. $1,083,248 $ 861,386 $490,094 $479,047 $ 295,060 $(315,894) $148,504
Excess capacity
reduction/restructuring
charge................. -- -- 386,792 250,658 497,683 394,105 --
Global Success Sharing
Plan................... -- 138,963 114,833 90,564 (343,873) -- --
Special compensation
charges................ -- 76,983 -- -- -- -- --
---------- ---------- -------- -------- --------- --------- --------
Adjusted EBITDA......... $1,083,248 $1,077,332 $991,719 $820,269 $ 448,870 $ 78,211 $148,504
========== ========== ======== ======== ========= ========= ========
</TABLE>
(6) For the purpose of computing the ratio of earnings to fixed charges,
earnings are defined as income from continuing operations before income
taxes, plus fixed charges and less capitalized interest. Fixed charges are
defined as the sum of interest, including capitalized interest, on all
indebtedness, amortization of debt issuance cost and that portion of
rental expense which we believe to be representative of an interest
factor. For the three months ended February 28, 1999, earnings were
insufficient by $412.1 million to cover total fixed charges.
10
<PAGE>
RISK FACTORS
You should carefully consider the following factors and the other
information in this prospectus before deciding to exchange your old notes for
exchange notes.
Risks relating to our substantial debt
We have substantial debt and interest payment requirements that may restrict
our future operations and impair our ability to meet our obligations under
the exchange notes.
As of February 27, 2000, our total debt was $2.4 billion, and we had $365.5
million of additional borrowing capacity under our bank credit facilities. Our
substantial debt may have important consequences to you. For instance, it
could:
. make it more difficult for us to satisfy our financial obligations,
including those relating to the exchange notes;
. require us to dedicate a substantial portion of any cash flow from
operations to the payment of interest and principal due under our debt,
including the exchange notes, which will reduce funds available for
other business purposes;
. increase our vulnerability to general adverse economic and industry
conditions;
. limit our flexibility in planning for or reacting to changes in our
business and the industry in which we operate;
. place us at a competitive disadvantage compared to some of our
competitors that have less financial leverage; and
. limit our ability to obtain additional financing required to fund
working capital and capital expenditures and for other general corporate
purposes.
All borrowings under our bank credit facilities are, and will continue to
be, at variable rates of interest. As a result, increases in market interest
rates may require a greater portion of our cash flow to be used to pay
interest. In addition, if by February 1, 2001, we have not completed one or
more private or public capital-raising transactions yielding net proceeds to
us of at least $300.0 million, which have been used to reduce commitments
under our bank credit facilities, we will be required to pay our lenders an
additional borrowing spread of 1.00% on outstanding borrowings under our bank
credit facilities, plus a one-time additional fee of 2.00% of total
commitments as of January 31, 2001. Our borrowing spread will increase by
0.25% quarterly until those capital-raising transactions are completed. For a
detailed schedule of our required payments under our bank credit facilities,
see the caption "Description of Other Indebtedness--Bank Credit Facilities--
Amortization; Interest."
Our ability to satisfy our obligations and to reduce our total debt depends
on our future operating performance and on economic, financial, competitive
and other factors, many of which are beyond our control. We cannot assure you
that our business will generate sufficient cash flow or that future financings
will be available to provide sufficient proceeds to meet these obligations or
to successfully execute our business strategy.
The restrictive covenants in our bank credit facilities may limit our
activities.
Our bank credit facilities contain customary restrictive covenants,
including covenants limiting our ability to:
. incur additional debt;
. grant liens;
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. make investments;
. consolidate, merge or acquire other businesses and sell assets;
. pay dividends and other distributions;
. make capital expenditures; and
. enter into transactions with affiliates.
We also are required to meet specified financial ratios. These covenants may
make it difficult for us to successfully execute our business strategy or to
compete in the worldwide apparel industry with companies not similarly
restricted.
Our bank credit facilities mature in January 2002, at which time we will be
required to refinance our borrowings under those facilities. We cannot assure
you that we will be able to obtain replacement financing at that time or that
any available replacement financing will be on terms acceptable to us. If we
are unable to obtain acceptable replacement financing on or before January
2002, we will not be able to satisfy our obligations under our bank credit
facilities and may be required to take other actions to avoid defaulting on
those facilities, including selling assets or surrendering assets to our
lenders, which would not otherwise be in our long-term economic interest.
Failure to comply with the terms of our bank credit facilities or our
inability to pay our lenders at maturity would entitle those lenders
immediately to foreclose on most of our assets, including our trademarks and
the capital stock of all of our U.S. and most of our foreign subsidiaries, and
the assets of our material U.S. subsidiaries, which serve as collateral. In
this event, those secured lenders would be entitled to be repaid in full from
the proceeds of the liquidation of those assets before those assets would be
available for distribution to other creditors, including you, and, lastly, to
the holders of our capital stock.
Since the exchange notes are effectively subordinated to all of our secured
debt and the liabilities of our subsidiaries, we may not have sufficient
assets to pay amounts owed on the exchange notes if a default occurs.
The exchange notes are general senior unsecured obligations that rank equal
in right of payment with all of our existing and future unsecured and
unsubordinated debt. The exchange notes are effectively subordinated to all of
our secured debt to the extent of the value of the assets securing that debt.
The exchange notes are also structurally subordinated to all obligations of our
subsidiaries. As of February 27, 2000, we had $1.3 billion of debt under our
bank credit facilities that was secured by liens on most of our assets and the
assets of our material U.S. subsidiaries, including our trademarks, and by the
capital stock of some of our subsidiaries to which the exchange notes would
have been effectively subordinated in right of payment.
The ability of our creditors, including you, to participate in any
distribution of assets of any of our subsidiaries upon liquidation or
bankruptcy will be subject to the prior claims of that subsidiary's creditors,
including trade creditors, and any prior or equal claim of any equity holder of
that subsidiary. In addition, the ability of our creditors, including you, to
participate in distributions of assets of our subsidiaries will be limited to
the extent that the outstanding shares of capital stock of any of our
subsidiaries are either pledged to secure other creditors, such as under our
bank credit facilities, or are not owned by us. As a result, you may receive
less, proportionately, than our secured creditors and the creditors of our
subsidiaries.
If our foreign subsidiaries are unable to distribute cash to us when needed,
we may be unable to satisfy our obligations under the exchange notes.
We conduct our foreign operations through foreign subsidiaries, which in
fiscal year 1999 accounted for approximately 38% of our net sales. As a result,
we depend in part upon dividends or other intercompany transfers of funds from
our foreign subsidiaries for the funds necessary to meet our debt service
obligations,
12
<PAGE>
including payments on the exchange notes. We only receive the cash that remains
after our foreign subsidiaries satisfy their obligations. If those subsidiaries
are unable to pass on the amount of cash that we need, we will be unable to
make payments to you. Any agreements our foreign subsidiaries enter into with
other parties, as well as applicable laws and regulations limiting the right
and ability of non-U.S. subsidiaries and affiliates to pay dividends and remit
earnings to affiliated companies absent special conditions, may restrict the
ability of our foreign subsidiaries to pay dividends or make other
distributions to us.
Risks relating to the industry in which we compete
We face intense competition in the worldwide apparel industry.
We face a variety of competitive challenges from other domestic and foreign
jeanswear marketers, fashion-oriented apparel marketers, specialty retailers
and retailers of private label jeanswear and casual apparel products, some of
which have greater financial and marketing resources than we do. We compete
with these companies primarily on the basis of:
. anticipating and responding to changing consumer demands in a timely
manner;
. maintaining favorable brand recognition;
. developing innovative, high-quality products in sizes, colors and styles
that appeal to consumers;
. pricing products;
. providing strong and effective marketing support;
. creating an acceptable value proposition for retail customers;
. ensuring product availability and optimizing supply chain efficiencies
with retailers; and
. obtaining sufficient retail floor space.
We also face increasing competition from companies selling apparel products
through the Internet, where we lack a direct, company-operated selling
presence. Increased competition in the worldwide apparel industry, including
from Internet-based competitors, could reduce our sales and prices and
adversely affect our results of operations. Because of our high debt level, we
may also be less able to respond effectively to these developments than our
competitors who have less financial leverage.
The success of our business is subject to constantly changing fashion trends.
Our success depends in large part on our ability to anticipate, identify and
respond to rapidly changing consumer demands and fashion trends in a timely
manner. Any failure on our part to anticipate, identify and respond effectively
to changing consumer demands and fashion trends could adversely affect retail
and consumer acceptance of our products and leave us with a substantial amount
of unsold inventory. If that occurs, we may be forced to rely on markdowns or
promotional sales to dispose of excess, slow-moving inventory, which may harm
our business. The exposure of our business to fashion trends and changes in
consumer preferences is heightened by our recent decision to outsource a
substantially larger proportion of our pants production to offshore
manufacturers, as offshore outsourcing may increase lead times between
production decisions and customer delivery.
The worldwide apparel industry is heavily influenced by general economic
cycles.
Apparel is a cyclical industry that is heavily dependent upon the overall
level of consumer spending. Purchases of apparel and related goods tend to be
highly correlated with cycles in the disposable income of our retail consumers.
As a result, any substantial deterioration in general economic conditions or
increases in interest rates in any of the regions in which we compete could
adversely affect the sales of our products.
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<PAGE>
Increases in the price of raw materials or their reduced availability could
increase our cost of sales and decrease our profitability.
The principal fabrics used in our business are cotton, synthetics, wools and
blends. The prices we pay for these fabrics are dependent on the market price
for raw materials used to produce them, primarily cotton. The price and
availability of cotton may fluctuate significantly, depending on a variety of
factors, including crop yields. Any raw material price increases could increase
our cost of sales and decrease our profitability unless we are able to pass
higher prices on to our customers. Moreover, any decrease in the availability
of cotton could impair our ability to meet our production requirements in a
timely manner.
Our business is subject to risks associated with importing products.
We import raw materials and finished garments into all of our operating
regions. Substantially all of our import operations are subject to:
. quotas imposed by bilateral textile agreements between the countries
where our facilities are located and foreign countries;
. customs duties imposed on imported products by the governments where our
facilities are located; and
. penalties imposed for, or adverse publicity relating to, violations by
foreign contractors of labor and wage standards.
In addition, the countries in which our products are manufactured or imported
may from time to time impose additional new quotas, duties, tariffs or other
restrictions on our imports or adversely modify existing restrictions. Adverse
changes in these import costs and restrictions could harm our business.
Risks relating to our business
We may be unable to reverse or recover from recent declines in sales and
earnings which have impaired our competitive and financial positions.
Our business has been in decline for the past three years. Specifically:
. net sales declined from $6.9 billion in 1997 to $5.1 billion in 1999, a
decrease of 25%; and
. net income, excluding one-time charges, declined from $411.5 million in
1997 to $102.3 million in 1999, a decrease of 75%.
Consistent with these declining financial results, our market research
indicates that during this period we experienced significant brand equity and
market position erosion in all of the regions in which we operate, including a
substantial deterioration in the perception of the Levi's(R) brand by younger
consumers. In addition, our ability to reverse or recover from declines in
sales depends in part on improving our supply chain, including our ability to
ship complete and timely orders to our retail customers and to reduce product
lead times through better execution and coordination across business functions
from product design to customer delivery. Our declining business, and the
actions we took in response to that decline, prevented us from repaying the
substantial debt we incurred in the 1996 transaction as quickly as we then
intended. As a result, our financial condition remains highly leveraged,
reducing our operating flexibility and impairing our ability to respond to
developments in the worldwide apparel industry as effectively as competitors
that do not have equivalent financial leverage.
In response to these trends, we have made substantial strategic, operational
and management changes in the past three years. We do not know whether those
changes will have the desired effect.
14
<PAGE>
We may be unable to maintain or increase our sales through our current
distribution channels.
In the United States, chain stores and department stores are currently the
primary distribution channels for our products. We may be unable to increase
sales of our apparel products through these distribution channels, since other
channels, including vertically integrated specialty stores and mass merchants,
now account for most of the growth in jeanswear and casual wear sales in the
United States. Our lack of a substantial presence in the vertically integrated
specialty store market, where companies such as Gap Inc. and Abercrombie &
Fitch Co. compete, weakens our ability to market to younger consumers.
Moreover, we do not sell products to mass merchants in the United States, such
as Wal-Mart Stores, Inc., Target Corporation and Kmart Corporation, a
distribution channel that continues to increase its share of overall retail
spending, as well as its share of jeanswear and casual wear sales.
In Europe we depend heavily on independent jeanswear retailers, which
account for approximately half of our sales in that region. Independent
retailers in Europe have experienced increasing difficulty competing against
large department stores and increasingly prevalent vertically integrated
specialty stores, evidenced, according to our internal research, by decreases
in the last five years in the percentage of total jeanswear sales made by
independent stores. Further declines in the independent retailer channel may
adversely affect the sales of our products in Europe.
We also lack company-owned stores and Internet distribution channels
possessed by some of our competitors, including Gap Inc. and other vertically
integrated specialty stores. Although we own a small number of stores located
in selected major urban areas, we operate those stores primarily as "flagships"
for marketing and branding purposes and do not expect them to produce
substantial unit volume or sales. As a result, we have less control than
industry competitors over the distribution and presentation at retail of our
apparel products, which we believe has adversely affected our performance and
could make it more difficult for us to implement our strategy.
A group of key U.S. customers accounts for a significant portion of our sales.
Net sales to our 10 largest customers, all of which are located in the
United States, totaled approximately 46% and 43% of net worldwide sales during
fiscal years 1999 and 1998. One customer, J.C. Penney Company, Inc., accounted
for 11% of our fiscal year 1999 net sales and 12% of our fiscal year 1998 net
sales. Moreover, we believe that consolidation in the retail industry has
centralized purchasing decisions and given customers greater leverage over
suppliers like us, and we expect that trend to continue, including in Europe,
Canada and Mexico.
While we have long-standing customer relationships, we do not have long-term
contracts with any of them. As a result, purchases generally occur on an order-
by-order basis, and the relationship, as well as particular orders, can be
terminated by either party at any time. In addition, during the past several
years, various retailers, including some of our customers, have experienced
significant changes and difficulties, including consolidation of ownership,
increased centralization of buying decisions, restructurings, bankruptcies and
liquidations. These and other financial problems of some of our retailers
increase the risk of extending credit to these retailers. A significant adverse
change in a customer relationship or in a customer's financial position could
cause us to limit or discontinue business with that customer, require us to
assume more credit risk relating to that customer's receivables or limit our
ability to collect amounts related to previous purchases by that customer, all
of which could harm our business and financial condition.
Our operations may be harmed if our recent decision to outsource most of our
U.S. jeans production to independent manufacturers proves unsuccessful.
From 1997 through 1999, we closed 29 of our manufacturing and finishing
facilities in North America and Europe. As a result, we now outsource
approximately two-thirds of our U.S. jeans production from independent
contractors, compared with approximately one-third in 1997. We depend upon our
contract manufacturers to secure a sufficient supply of raw materials and
maintain sufficient manufacturing and shipping capacity. This
15
<PAGE>
dependence could subject us to difficulty in obtaining timely delivery of
products of acceptable quality. In addition, a contractor's failure to ship
products to us in a timely manner or to meet the required quality standards
could cause us to miss the delivery date requirements of our customers. The
failure to make timely deliveries may cause our customers to cancel orders,
refuse to accept deliveries, impose non-compliance charges, demand reduced
prices or reduce future orders, any of which could harm our sales, reputation
and overall profitability.
We require contractors to meet our standards in terms of working conditions,
environmental protection and other matters before we are willing to place
business with them. As such, we may not be able to obtain the lowest-cost
production. In addition, any failure by our independent manufacturers to adhere
to labor or other laws, or any divergence of any independent manufacturer's
labor practices from those generally considered ethical in the United States,
and the potential negative publicity relating to any of these events, could
harm our business and reputation.
We do not have long-term contracts with any of our independent
manufacturers, and any of these manufacturers may unilaterally terminate their
relationship with us at any time. In addition, the recent trend in the apparel
industry towards outsourcing has intensified competition for quality
contractors, some of which have long-standing relationships with our
competitors. To the extent we are not able to secure or maintain relationships
with manufacturers that are able to fulfill our requirements, our operations
would be harmed.
We rely on key suppliers for a large portion of our fabric purchases.
Three vendors, Cone Mills Corporation, Burlington Industries, Inc. and Galey
& Lord, Inc., including its Swift Denim subsidiary, supplied approximately 55%
of our total volume of fabric purchases worldwide in 1999. Cone Mills, our
largest supplier, supplies various fabrics to us and is the sole supplier of
the denim used for our 501(R) jeans. Purchases from Cone Mills accounted for
22% of our total fabric purchases in 1999. Our supply agreement with Cone Mills
provides for a rolling five-year term unless either Cone Mills or we elect not
to extend the agreement, upon which the agreement will terminate at the end of
the then-current term. Cone Mills and we may also terminate the agreement in
the event of bankruptcy or insolvency of the other party or a material breach
by the other that is not cured within a specified time period. We may also
terminate the agreement at any time upon 30 days notice to Cone Mills. We do
not have long-term supply agreements with any other principal suppliers, and we
compete with other apparel companies for supply capacity. We cannot assure you
that we will be able to obtain adequate supply if there occurs a significant
disruption in any of our supplier relationships, including any disruption
caused by a change of control, bankruptcy or other financial or operating
difficulty of any of our suppliers, or in the markets for the fabrics we
purchase, including disruptions arising from mill closures or consolidation
resulting from excess industry capacity or otherwise. Any of those disruptions
could impair our ability to deliver products to customers in a timely manner
and harm our business.
We have recently made significant changes in our senior management team, and
our current senior management team has limited apparel industry experience.
We have replaced four members of our senior management team with external
hires during the past eight months and created one new position. With one
exception, none of the recent additions to our management team has prior
experience in the apparel industry. This includes our president and chief
executive officer, Philip Marineau, and the newly hired head of our worldwide
supply chain, Karen Duvall. In addition, we have recently made several key
internal appointments, including president of the U.S. Levi's(R) brand,
president of the U.S. Dockers(R) and Slates(R) brands and president of our
European business. We cannot assure you that our new management team will be
able to successfully execute our strategy, and our business and financial
condition may suffer if they fail to do so.
The success of our business depends on our ability to attract and retain key
personnel.
We compete for the services of qualified personnel. Our inability to retain
and attract qualified personnel or the loss of any of our current key
executives or key members of our design, merchandising or marketing
16
<PAGE>
staff could harm our business. Our ability to retain and attract qualified
employees has been adversely affected by the San Francisco location of our
corporate and Americas headquarters, including the high cost of living and
competitive labor market in the San Francisco and Silicon Valley area. Other
factors that have affected our ability to retain and attract employees include
the disruption associated with our restructuring initiatives, our deteriorating
financial position and our lack of stock option or other equity-based
compensation programs and resulting reliance on cash incentive programs tied to
our financial performance.
Our success depends on the continued protection of our trademarks and other
proprietary intellectual property rights.
Our trademarks and other intellectual property rights are important to our
success and competitive position, and the loss or inability to enforce
trademarks and other proprietary intellectual property rights could harm our
business. We devote substantial resources to the establishment and protection
of our trademarks and other proprietary intellectual property rights on a
worldwide basis. We cannot assure you that our efforts to establish and protect
our trademarks and other proprietary intellectual property rights will be
adequate to prevent imitation of our products by others or to prevent others
from seeking to block sales of our products. Moreover, we cannot assure you
that others will not assert rights in, or ownership of, our trademarks and
other proprietary intellectual property or that we will be able successfully to
resolve those claims. In addition, the laws of some foreign countries may not
allow us to protect our proprietary rights to the same extent as we do in the
United States and other countries. Because our brand recognition is such an
important part of our strategy, we are especially dependent upon the protection
of our trademarks.
Our international operations expose us to political and economic risks.
In fiscal year 1999, approximately 38% of our net sales were generated
outside the United States, and a substantial amount of our products came from
sources outside of the country of distribution. As a result, we are subject to
the risks of doing business abroad, including:
. political and economic instability;
. exchange controls;
. language and other cultural barriers;
. foreign tax treaties and policies; and
. restrictions on the transfer of funds to or from foreign countries.
Our financial performance on a U.S. dollar denominated basis is also subject
to fluctuations in currency exchange rates. Approximately $30 million of the
decrease in total net sales for the three months ended February 27, 2000, as
compared to the same period in 1999, was due to the effects of translating non-
U.S. currency reported sales results into U.S. dollars. From time to time we
enter into agreements seeking to reduce our foreign currency exposure, but we
cannot assure you that our efforts will be successful.
Our approach to corporate governance may lead us to take actions that conflict
with your interests as holders of exchange notes.
All of our common stock is owned by a voting trust described under the
caption "Principal Stockholders." Four voting trustees have the exclusive
ability to elect and remove directors, amend our by-laws and take other actions
which would normally be within the power of stockholders of a Delaware
corporation. Although the voting trust agreement gives the holders of two-
thirds of the outstanding voting trust certificates the power to remove
trustees and terminate the voting trust, three of the trustees, as a group
based on their ownership of voting trust certificates, have the ability to
block all efforts by the two-thirds of the holders of the voting trust
certificates to remove a trustee or terminate the voting trust. In addition,
the concentration of voting trust certificate ownership in a small group of
holders, including these three trustees, gives this group the voting
17
<PAGE>
power to block stockholder action on matters for which the holders of the
voting trust certificates are entitled to vote and direct the trustees under
the voting trust agreement.
Our principal stockholders created the voting trust in part to ensure that
we would continue to operate in a socially responsible manner while seeking the
greatest long-term benefit for our stockholders, employees and other
stakeholders and constituencies. We measure our success not only by growth in
economic value, but also by our reputation, the quality of our constituency
relationships and our commitment to social responsibility. As a result, we
cannot assure you that the voting trustees will cause us to be operated and
managed in a manner that benefits you as a holder of exchange notes or that the
interests of the voting trustees or our principal equity holders will not
diverge from yours.
Risks relating to the offering
There is no established trading market for the exchange notes, and any market
for the exchange notes may be illiquid.
The exchange notes are a new issue of securities with no established trading
market. We cannot assure you that a liquid market will develop for the exchange
notes, that you will be able to sell your exchange notes at a particular time
or that the prices that you receive when you sell will be favorable. Moreover,
we do not intend to apply for the exchange notes to be listed on any securities
exchange or to arrange for quotation on any automated dealer quotation system,
and the initial purchasers of the old notes are not obligated to make a market
in the exchange notes. This offer to exchange the exchange notes for the old
notes does not depend upon any minimum amount of old notes being tendered for
exchange.
If you do not exchange your old notes, they may be difficult to resell.
It may be difficult for you to sell old notes that are not exchanged in the
exchange offer, since any old notes not exchanged may remain subject to the
restrictions on transfer provided for in Rule 144 under the Securities Act.
These restrictions on transfer of your old notes exist because we issued the
old notes pursuant to an exemption from the registration requirements of the
Securities Act and applicable state securities laws. In general, absent
registration under or exemption from the Securities Act, if you are, were or
acquired old notes from an affiliate of ours, your transfer of old notes will
continue to be restricted by the resale limitations of Rule 144 and applicable
state securities laws. If you are a non-affiliate, any transfer of your old
notes must still comply with applicable state securities laws. We do not intend
to register the old notes under the Securities Act.
Unless you are an affiliate of us within the meaning of Rule 405 under the
Securities Act, you may offer for resale, resell or otherwise transfer exchange
notes without compliance with the registration and prospectus delivery
provisions of the Securities Act, so long as you acquired the exchange notes in
the ordinary course of business and have no arrangement or understanding with
respect to the distribution of the exchange notes to be acquired in the
exchange offer. If you tender your old notes for the purpose of participating
in a distribution of the exchange notes, you must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction.
To the extent any old notes are tendered and accepted in the exchange offer,
the trading market, if any, for the old notes that remain outstanding after the
exchange offer would be adversely affected due to a reduction in market
liquidity.
18
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, including, in
particular, statements about our plans, strategies and prospects under the
captions "Summary," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business." We have based these
forward-looking statements on our current assumptions, expectations and
projections about future events. When used in this prospectus, the words
"believe," "anticipate," "intend," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain such words. These forward-looking
statements speak only as of the date of this prospectus, and we do not
undertake any obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Although we believe that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to be correct or that savings or other benefits anticipated in the
forward-looking statements will be achieved. Important factors, some of which
may be beyond our control, that could cause actual results to differ materially
from management's expectations are disclosed in this prospectus, including
under the caption "Risk Factors." Prospective purchasers are cautioned not to
place undue reliance on these forward-looking statements. All subsequent
written and oral forward-looking statements attributable to us are expressly
qualified in their entirety by the cautionary statements and the risk factors
contained throughout this prospectus.
19
<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The exchange offer will give holders of old notes the opportunity to
exchange the old notes, which were issued on November 6, 1996, for exchange
notes that have been registered under the Securities Act. The exchange notes
will be identical in all material respects to the old notes. As a consequence
of the registration of the exchange notes, we will become subject to the
informational requirements of the Exchange Act. To satisfy those requirements,
we will file reports and other information with the SEC that will be made
available to the holders of the old notes, if any are outstanding after the
exchange offer, and the exchange notes and the general public. We are not
obligated by any agreement to effect the exchange offer.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of the jurisdiction.
Resale of Exchange Notes
We believe that exchange notes issued under the exchange offer in exchange
for old notes may be offered for resale, resold and otherwise transferred by
any exchange note holder without further registration under the Securities Act
and without delivery of a prospectus that satisfies the requirements of Section
10 of the Securities Act if:
. the holder is not our "affiliate" within the meaning of Rule 405 under
the Securities Act;
. the exchange notes are acquired in the ordinary course of the holder's
business; and
. the holder does not intend to participate in a distribution of the
exchange notes.
Any holder who exchanges old notes in the exchange offer with the intention
of participating in any manner in a distribution of the exchange notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction.
This prospectus may be used for an offer to resell, resale or other
retransfer of exchange notes. With regard to broker-dealers, only broker-
dealers that acquired the old notes as a result of market-making activities or
other trading activities may participate in the exchange offer. Each broker-
dealer that receives exchange notes for its own account in exchange for old
notes, where the old notes were acquired by the broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
Please read the caption "Plan of Distribution" for more details regarding the
transfer of exchange notes.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any old notes
properly tendered and not withdrawn before expiration of the exchange offer.
The date of acceptance for exchange of the old notes and completion of the
exchange offer, is the exchange date, which will be the first business day
following the expiration date unless we extend the date as described in this
document. We will issue $1,000 principal amount of exchange notes in exchange
for each $1,000 principal amount of old notes surrendered under the exchange
offer. Old notes may be tendered only in integral multiples of $1,000. The
exchange notes will be delivered on the earliest practicable date following the
exchange date.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the old notes, except the exchange notes:
. will be registered under the Securities Act; and
20
<PAGE>
. will not bear legends restricting their transfer.
The exchange notes will evidence the same debt as the old notes. The
exchange notes will be issued under and entitled to the benefits of the same
indenture that authorized the issuance of the old notes. Consequently, both the
old notes and the exchange notes will be treated as a single series of debt
securities under that indenture. For a description of the indenture, see the
caption "Description of the Exchange Notes."
The exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange.
As of the date of this prospectus, $800.0 million aggregate principal amount
of the old notes are outstanding. This prospectus and the letter of transmittal
are being sent to all registered holders of old notes. There will be no fixed
record date for determining registered holders of old notes entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations of the SEC. Old notes that are not exchanged in the exchange offer
will remain outstanding and continue to accrue interest and will be entitled to
the rights and benefits their holders have under the indenture relating to the
old notes and the exchange notes.
We will be deemed to have accepted for exchange properly tendered old notes
when we have given oral or written notice of the acceptance to the exchange
agent. The exchange agent will act as agent for the holders of old notes who
surrender them in the exchange offer for the purposes of receiving the exchange
notes from us and delivering the exchange notes to their holders. The exchange
agent will make the exchange promptly on the date of acceptance for exchange of
the old notes. This exchange date will be the first business day following the
expiration date unless it is extended as described in this document. We
expressly reserve the right to amend or terminate the exchange offer, and not
to accept for exchange any old notes not previously accepted for exchange, upon
the occurrence of any of the conditions specified below under the caption "--
Conditions."
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes. We
will pay all charges and expenses, other than applicable taxes described below,
in connection with the exchange offer. It is important that you read the
caption "--Fees and Expenses" for more details regarding fees and expenses
incurred in the exchange offer.
Expiration of the Exchange Offer; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City time, on ,
2000 which is 30 days following the commencement of the exchange offer. The
exchange offer can be extended by us in our sole discretion, in which case the
term "expiration date" shall mean the latest date and time to which the
exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent
orally, confirmed in writing, or in writing of any extension. We will notify
the registered holders of old notes by public announcement of the extension no
later than 9:00 a.m., New York City time, on the business day after the
previously scheduled expiration of the exchange offer.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the exchange offer, we will have no obligation to publish, advertise, or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.
21
<PAGE>
Conditions
Despite any other term of the exchange offer, we will not be required to
accept for exchange any old notes and we may terminate or amend the exchange
offer as provided in this prospectus before accepting any old notes for
exchange if in our reasonable judgment:
. the exchange notes to be received will not be tradeable by the holder,
without restriction under the Securities Act, the Exchange Act and
without material restrictions under the blue sky or securities laws of
substantially all of the states of the United States;
. the exchange offer, or the making of any exchange by a holder of old
notes, would violate applicable law or any applicable interpretation of
the staff of the SEC; or
. any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that would reasonably be expected to impair our ability to proceed
with the exchange offer.
We will not be obligated to accept for exchange the old notes of any holder
that has not made to us:
. the representations described under the captions "--Purpose and Effect
of the Exchange Offer," "--Procedures for Tendering" and "Plan of
Distribution"; and
. any other representations that may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available
to us an appropriate form for registration of the exchange notes under
the Securities Act.
We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. Consequently, we
may delay acceptance of any old notes by giving oral or written notice of an
extension to their holders. During an extension, all old notes previously
tendered will remain subject to the exchange offer, and we may accept them for
exchange. We will return any old notes that we do not accept for exchange for
any reason without expense to their tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer and
to reject for exchange any old notes not previously accepted for exchange, upon
the occurrence of any of the conditions of the exchange offer specified above.
By public announcement we will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the old notes as
promptly as practicable. If we amend the exchange offer in a manner that we
consider material, we will disclose the amendment by means of a prospectus
supplement.
These conditions are solely for our benefit and we may assert them
regardless of the circumstances that may give rise to them or waive them in
whole or in part at any time or at various times in our sole discretion. If we
fail at any time to exercise any of the foregoing rights, this failure will not
constitute a waiver of that right. Each of these rights will be deemed an
ongoing right that we may assert at any time or at various times.
We will not accept for exchange any old notes tendered, and will not issue
exchange notes in exchange for any old notes, if at that time a stop order is
threatened or in effect with respect to the registration statement of which
this prospectus constitutes a part or the qualification of the indenture under
the Trust Indenture Act of 1939.
Procedures for Tendering
Only a holder of record of old notes may tender old notes in the exchange
offer. To tender in the exchange offer, a holder must:
. complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and deliver the
letter of transmittal or facsimile to the exchange agent prior to the
expiration date; or
22
<PAGE>
. comply with DTC's Automated Tender Offer Program procedures described
below.
In addition, either:
. the exchange agent must receive old notes along with the letter of
transmittal;
. the exchange agent must receive, before expiration of the exchange
offer, a properly transmitted agent's message or a timely confirmation
of book-entry transfer of old notes into the exchange agent's account at
DTC according to the procedure for book-entry transfer described below;
or
. the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under the caption "--Exchange Agent" before expiration
of the exchange offer. To receive confirmation of valid tender of old notes, a
holder should contact the exchange agent at the telephone number listed under
the caption "--Exchange Agent."
The tender by a holder that is not withdrawn before expiration of the
exchange offer will constitute an agreement between that holder and us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal. If a holder tenders less than all
of the old notes held by this holder, this tendering holder should fill in the
applicable box of the letter transmittal. The amount of old notes delivered to
the exchange agent will be deemed to have been tendered unless otherwise
indicated.
The method of delivery of old notes, the letter of transmittal and all other
required documents to the exchange agent is at the holder's election and risk.
Rather than mail these items, we recommend that holders use an overnight or
hand delivery service. In all cases, holders should allow sufficient time to
assure delivery to the exchange agent before expiration of the exchange offer.
Holders should not send the letter of transmittal or old notes to us. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or other nominees to effect the above transactions for them.
Any beneficial owner whose old notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct it to tender
on the owner's behalf. If the beneficial owner wishes to tender on its own
behalf, it must, prior to completing and executing the letter of transmittal
and delivering its old notes, either:
. make appropriate arrangements to register ownership of the old notes in
the owner's name; or
. obtain a properly completed bond power from the registered holder of old
notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
If the applicable letter of transmittal is signed by the record holder(s) of
the old notes tendered, the signature must correspond with the name(s) written
on the face of the old note without alteration, enlargement or any change
whatsoever. If the applicable letter of transmittal is signed by a participant
in DTC, the signature must correspond with the name as it appears on the
security position listing as the holder of the old notes.
A signature on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible guarantor institution. Rule 17Ad-15 under the
Exchange Act describes eligible guarantor institutions as banks, brokers,
dealers, municipal securities dealers, municipal securities brokers, government
securities dealers, government securities brokers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations. The signature need not be guaranteed by an eligible
guarantor institution if the old notes are tendered:
. by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
23
<PAGE>
. for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the registered
holder of any old notes, the old notes must be endorsed or accompanied by a
properly completed bond power. The bond power must be signed by the registered
holder as the registered holder's name appears on the old notes and an eligible
institution must guarantee the signature on the bond power.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, these
persons should so indicate when signing. Unless we waive this requirement, they
should also submit evidence satisfactory to us of their authority to deliver
the letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's Automated Tender Offer
Program to tender. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing DTC to transfer the old notes to the exchange agent
in accordance with its procedures for transfer. DTC will then send an agent's
message to the exchange agent. The term "agent's message" means a message
transmitted by DTC, received by the exchange agent and forming part of the
book-entry confirmation, to the effect that:
. DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering old notes that are the
subject of the book-entry confirmation;
. the participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, that the participant has received and agrees to be
bound by the applicable notice of guaranteed delivery; and
. the agreement may be enforced against the participant.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, acceptance and withdrawal of
tendered old notes. Our determination will be final and binding. We reserve the
absolute right to reject any old notes not properly tendered or any old notes
the acceptance of which would, in the opinion of our counsel, be unlawful. We
also reserve the right to waive any defects, irregularities or conditions of
tender as to particular old notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
old notes must be cured within the time that we determine. Although we intend
to notify holders of defects or irregularities with respect to tenders of old
notes, neither we, the exchange agent nor any other person will incur any
liability for failure to give notification. Tenders of old notes will not be
deemed made until those defects or irregularities have been cured or waived.
Any old notes received by the exchange agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the exchange agent without cost to the tendering holder, unless
otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
In all cases, we will issue exchange notes for old notes that we have
accepted for exchange under the exchange offer only after the exchange agent
timely receives:
. old notes or a timely book-entry confirmation that old notes have been
transferred into the exchange agent's account at DTC; and
. a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
Holders should receive copies of the applicable letter of transmittal with
the prospectus. A holder may obtain additional copies of the applicable letter
of transmittal for the old notes from the exchange agent at its
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<PAGE>
offices listed under the caption "--Exchange Agent." By signing the letter of
transmittal, each tendering holder of old notes will represent to us that,
among other things:
. any exchange notes that the holder receives will be acquired in the
ordinary course of its business;
. the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange notes;
. if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the exchange notes;
. if the holder is a broker-dealer that will receive exchange notes for
its own account in exchange for old notes that were acquired as a result
of market-making activities or other trading activities, that it will
deliver a prospectus, as required by law, in connection with any resale
of those exchange notes (see the caption "Plan of Distribution"); and
. the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of us or, if the holder is an affiliate, it will comply
with any applicable registration and prospectus delivery requirements of
the Securities Act.
Book-entry Transfer
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer promptly after the
date of this prospectus. Any financial institution participating in DTC's
system may make book-entry delivery of old notes by causing DTC to transfer old
notes into the exchange agent's account at DTC in accordance with DTC's
procedures for transfer. Holders of old notes who are unable to deliver
confirmation of the book-entry transfer of their old notes into the exchange
agent's account at DTC or all other documents required by the letter of
transmittal to the exchange agent on or prior to the expiration date must
tender their old notes according to the guaranteed delivery procedures
described below.
Guaranteed Delivery Procedures
Holders wishing to tender their old notes but whose old notes are not
immediately available or who cannot deliver their old notes, the letter of
transmittal or any other required documents to the exchange agent or cannot
comply with the applicable procedures under DTC's Automated Tender Offer
Program before expiration of the exchange offer may tender if:
. the tender is made through an eligible guarantor institution;
. before expiration of the exchange offer, the exchange agent receives
from the eligible guarantor institution either a properly completed and
duly executed notice of guaranteed delivery, by facsimile transmission,
mail or hand delivery, or a properly transmitted agent's message and
notice of guaranteed delivery:
-- setting forth the name and address of the holder and the registered
number(s) and the principal amount of old notes tendered;
-- stating that the tender is being made by guaranteed delivery; and
-- guaranteeing that, within three New York Stock Exchange trading days
after expiration of the exchange offer, the letter of transmittal,
or facsimile thereof, together with the old notes or a book-entry
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible guarantor institution
with the exchange agent; and
. the exchange agent receives the properly completed and executed letter
of transmittal, or facsimile thereof, as well as all tendered old notes
in proper form for transfer or a book-entry confirmation, and all other
documents required by the letter of transmittal, within three New York
Stock Exchange trading days after expiration of the exchange offer.
25
<PAGE>
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, holders of old notes may
withdraw their tenders at any time before expiration of the exchange offer.
For a withdrawal to be effective:
. the exchange agent must receive a written notice of withdrawal, which
may be by telegram, telex, facsimile transmission or letter, at one of
the addresses set forth below under the caption "--Exchange Agent"; or
. holders must comply with the appropriate procedures of DTC's Automated
Tender Offer Program system.
Any notice of withdrawal must:
. specify the name of the person who tendered the old notes to be
withdrawn;
. identify the old notes to be withdrawn, including the principal amount
of the old notes to be withdrawn; and
. where certificates for old notes have been transmitted, specify the name
in which the old notes were registered, if different from that of the
withdrawing holder.
If certificates for old notes have been delivered or otherwise identified to
the exchange agent, then, prior to the release of those certificates, the
withdrawing holder must also submit:
. the serial numbers of the particular certificates to be withdrawn; and
. a signed notice of withdrawal with signatures guaranteed by an eligible
institution, unless the withdrawing holder is an eligible institution.
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of the facility.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of notices of withdrawal, and our determination
shall be final and binding on all parties. We will deem any old notes so
withdrawn not to have been validly tendered for exchange for purposes of the
exchange offer. We will return any old notes that have been tendered for
exchange but that are not exchanged for any reason to their holder without cost
to the holder. In the case of old notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described
above, those old notes will be credited to an account maintained with DTC for
old notes, as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. You may retender properly withdrawn old
notes by following one of the procedures described under the caption "--
Procedures for Tendering" above at any time on or before expiration of the
exchange offer.
A holder may obtain a form of the notice of withdrawal from the exchange
agent at its offices listed under the caption "--Exchange Agent."
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<PAGE>
Exchange Agent
Citibank, N.A. has been appointed as exchange agent for the exchange offer.
You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery or the notice of withdrawal to
the exchange agent addressed as follows:
By Registered or Certified Mail:
Citibank, N.A.
111 Wall Street
5th Floor
New York, New York 10043
Attention: Sebastien Andrieszyn
By Hand or Overnight Delivery:
Citibank, N.A.
111 Wall Street
5th Floor
New York, New York 10005
Attention: Sebastien Andrieszyn
By Facsimile Transmission (for Eligible Institutions Only):
(212) 825-3483
To Confirm by Telephone or for Information Call:
(800) 422-2066
Delivery of the letter of transmittal to an address other than as shown
above or transmission via facsimile other than as set forth above does not
constitute a valid delivery of the letter of transmittal.
Fees and Expenses
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with the exchange
offer. The expenses are estimated in the aggregate to be approximately $ ,
including the following:
. SEC registration fees;
. fees and expenses of the exchange agent and trustee;
. accounting and legal fees; and
. printing and mailing costs.
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<PAGE>
Transfer Taxes
We will pay all transfer taxes, if any, applicable to the exchange of old
notes under the exchange offer. The tendering holder, however, will be required
to pay any transfer taxes, whether imposed on the registered holder or any
other person, if:
. certificates representing old notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be issued in
the name of, any person other than the registered holder of old notes
tendered;
. exchange notes are to be delivered to, or issued in the name of, any
person other than the registered holder of the old notes;
. tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal; or
. a transfer tax is imposed for any reason other than the exchange of old
notes under the exchange offer.
If satisfactory evidence of payment of transfer taxes is not submitted with
the letter of transmittal, the amount of any transfer taxes will be billed to
the tendering holder.
Accounting Treatment
We will record the exchange notes in our accounting records at the same
carrying value as the old notes, which is the aggregate principal amount, as
reflected in our accounting records on the date of exchange. Accordingly, we
will not recognize any gain or loss for accounting purposes in connection with
the exchange offer. We will record the expenses of the exchange offer as
incurred.
Other
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. We urge you to consult your financial and tax
advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered old notes in open market or
privately negotiated transactions, through subsequent exchange offers or
otherwise. However, we have no present plans to acquire any old notes that are
not tendered in the exchange offer or to file a registration statement to
permit resales of any untendered old notes.
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<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes under the exchange offer. In consideration for issuing the exchange notes
as contemplated by this prospectus, we will receive the old notes in like
principal amount, the terms of which are identical in all material respects to
the exchange notes. The old notes surrendered in exchange for the exchange
notes will be retired and canceled and cannot be reissued. Accordingly, the
issuance of the exchange notes will not result in any increase in our
indebtedness or capital stock.
CAPITALIZATION
The following table sets forth our capitalization as of February 27, 2000.
This table should be read in conjunction with our historical financial
statements and the related notes included in this prospectus.
<TABLE>
<CAPTION>
February 27, 2000
----------------------
(Dollars in Thousands)
<S> <C>
Cash and cash equivalents................................ $ 105,959
===========
Total debt (including current portion):
Credit facilities...................................... $ 1,292,552
Short-term foreign bank lines.......................... 29,943
6.80% Notes due 2003................................... 348,189
7.00% Notes due 2006................................... 446,853
4.25% Yen-denominated eurobond due 2016................ 180,180
Customer service center equipment financing............ 89,500
Industrial development revenue refunding bond.......... 10,000
Notes payable, at various rates, due through 2006...... 6,260
-----------
Total debt............................................... 2,403,477
Total stockholders' deficit.............................. (1,219,572)
-----------
Total capitalization................................... $ 1,183,905
===========
</TABLE>
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data for Levi Strauss & Co. The following selected statements of income data
and cash flow data for fiscal years 1995, 1996, 1997, 1998 and 1999 and the
consolidated statement of balance sheet data of such periods are derived from
our financial statements that have been audited by Arthur Andersen LLP,
independent public accountants. The data for the three months ended February
28, 1999 and February 27, 2000 have been derived from our unaudited
consolidated financial statements which, in our opinion, contain all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the financial condition and results of operations for these
periods. The results of operations for the three months ended February 27, 2000
may not be indicative of the results to be expected for the year ending
November 26, 2000.
The financial data set forth below should be read in conjunction with, and
is qualified by reference to, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," our consolidated financial
statements and the related notes to those financial statements, included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended Three Months Ended
-------------------------------------------------------------- ------------------------
Nov. 26, Nov. 24, Nov. 30, Nov. 29, Nov. 28, Feb. 28, Feb. 27,
1995 1996 1997 1998 1999 1999 2000
---------- ----------- ----------- ----------- ----------- ----------- -----------
(Unaudited)
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Net sales............... $6,707,631 $ 7,136,304 $ 6,861,482 $ 5,958,635 $ 5,139,458 $ 1,278,322 $ 1,082,437
Cost of goods sold...... 3,930,132 4,159,371 3,962,719 3,433,081 3,180,845 814,673 632,442
---------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit............ 2,777,499 2,976,933 2,898,763 2,525,554 1,958,613 463,649 449,995
Marketing, general and
administrative
expenses............... 1,809,633 2,029,138 2,045,938 1,834,058 1,629,845 419,085 322,111
Excess
capacity/restructuring
charges(1)............. -- -- 386,792 250,658 497,683 394,105 --
Global Success Sharing
Plan(2)................ -- 138,963 114,833 90,564 (343,873) -- --
Special compensation
charge(3).............. -- 76,983 -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income
(loss)................. 967,866 731,849 351,200 350,274 174,958 (349,541) 127,884
Interest expense........ 15,659 145,234 212,358 178,035 182,978 43,157 56,782
Other (income) expense,
net.................... (82,630) (33,291) (45,439) 9,539 (16,519) (16,127) (29,141)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
taxes.................. 1,034,837 619,906 184,281 162,700 8,499 (376,571) 100,243
Income tax expense
(benefit).............. 300,101 154,977 46,070 60,198 3,144 (139,331) 35,084
---------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)....... $ 734,736 $ 464,929 $ 138,211 $ 102,502 $ 5,355 $ (237,240) $ 65,159
========== =========== =========== =========== =========== =========== ===========
Other Financial Data:
EBITDA(4)............... $1,083,248 $ 861,386 $ 490,094 $ 479,047 $ 295,060 $ (315,894) $ 148,504
Adjusted EBITDA(5)...... 1,083,248 1,077,332 991,719 820,269 448,870 78,211 148,504
Capital expenditures.... 333,949 210,466 121,595 116,531 61,062 18,779 4,252
Ratio of adjusted EBITDA
to interest expense.... 69.2x 7.4x 4.7x 4.6x 2.5x 1.8x 2.6x
Ratio of earnings to
fixed charges(6)....... 23.2x 3.8x 1.6x 1.6x 1.0x -- 1.7x
Statement of Cash Flow
Data:
Cash flows from
operating activities... $ 749,319 $ 494,138 $ 573,890 $ 223,769 $ (173,772) $ 43,627 $ 60,302
Cash flows from
investing activities... (363,841) (242,781) (76,895) (82,707) 62,357 (9,801) 104,953
Cash flows from
financing activities... (105,305) (1,136,300) (530,302) (194,489) 224,219 (17,828) (251,176)
Balance Sheet Data:
Cash and cash
equivalents............ $1,088,032 $ 195,852 $ 144,484 $ 84,565 $ 192,816 $ 97,654 $ 105,959
Working capital......... 1,722,074 1,059,940 706,522 645,900 799,627 521,998 666,010
Total assets............ 4,709,157 4,192,696 4,032,327 3,884,658 3,665,517 3,819,131 3,303,383
Total debt.............. 38,057 3,225,512 2,631,696 2,415,330 2,664,609 2,393,028 2,403,477
Stockholders' equity
(deficit)(3)........... 2,115,293 (1,481,577) (1,370,262) (1,313,747) (1,288,562) (1,519,481) (1,219,572)
</TABLE>
30
<PAGE>
(1) We reduced overhead expenses and eliminated excess manufacturing capacity
through extensive restructuring initiatives executed during the past three
years, including reducing the number of our employees by 18,500 and closing
29 of our owned and operated production and finishing facilities in North
America and Europe.
(2) Our Global Success Sharing Plan, adopted in 1996, provides for cash
payments to our employees in 2002 if we achieve pre-established financial
targets. We recognized and accrued expenses in 1998, 1997 and 1996 for our
Global Success Sharing Plan. During 1999, we concluded that, based on our
financial performance, the targets under the plan would not be achieved and
that the probability of a payment in 2002 is highly unlikely. As a result,
in 1999 we reversed into income $343.9 million of accrued expenses, less
miscellaneous expenses, previously recorded in connection with the Global
Success Sharing Plan.
(3) The special compensation charge and stockholders' equity (deficit) resulted
from a 1996 transaction in which our stockholders created new long-term
governance arrangements for us, including the voting trust and stockholders
agreement. In the 1996 transaction, a group of stockholders of our former
parent, Levi Strauss Associates Inc., established a new company, LSAI
Holding Corp, to which they contributed approximately 70% of the
outstanding shares of Levi Strauss Associates Inc. Levi Strauss Associates
Inc. was then merged with a subsidiary of LSAI Holding Corp. In the merger,
shares of Levi Strauss Associates Inc. not contributed to LSAI Holding
Corp., including shares held under several employee benefit and
compensation plans, were converted into the right to receive cash, thereby
making Levi Strauss Associates Inc. a wholly-owned subsidiary of LSAI
Holding Corp. Funding for the cash payments in the merger was provided in
part by cash on hand and in part from proceeds of approximately $3.3
billion of borrowings under bank credit facilities. The special
compensation charge resulted from the impact of the transaction on various
employee plans. In October 1996, Levi Strauss Associates Inc. and LSAI
Holding Corp. were merged into Levi Strauss & Co. These transactions were
accounted for as a reorganization of entities under common control.
(4) EBITDA equals operating income (loss) plus depreciation and amortization
expense. EBITDA is not intended to represent cash flow or any other measure
of performance in accordance with generally accepted accounting principles.
EBITDA is included herein because we believe that you may find it to be a
useful analytical tool. Other companies may calculate EBITDA differently,
and we cannot assure you that our figures are comparable with similarly-
titled figures for other companies.
(5) The calculation for adjusted EBITDA is shown below:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
------------------------------------------------- -------------------
Nov. 26, Nov. 24, Nov. 30, Nov. 29, Nov. 28, Feb. 28, Feb. 27,
1995 1996 1997 1998 1999 1999 2000
---------- ---------- -------- -------- --------- --------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA.................. $1,083,248 $ 861,386 $490,094 $479,047 $ 295,060 $(315,894) $148,504
Excess capacity
reduction/restructuring
charge................. -- -- 386,792 250,658 497,683 394,105 --
Global Success Sharing
Plan................... -- 138,963 114,833 90,564 (343,873) -- --
Special Compensation
Charges................ -- 76,983 -- -- -- -- --
---------- ---------- -------- -------- --------- --------- --------
Adjusted EBITDA......... $1,083,248 $1,077,332 $991,719 $820,269 $ 448,870 $ 78,211 $148,504
========== ========== ======== ======== ========= ========= ========
</TABLE>
(6) For the purpose of computing the ratio of earnings to fixed charges,
earnings are defined as income from continuing operations before income
taxes, plus fixed charges and less capitalized interest. Fixed charges are
defined as the sum of interest, including capitalized interest, on all
indebtedness, amortization of debt issuance cost and that portion of rental
expense which we believe to be representative of an interest factor. For
the three months ended February 28, 1999, earnings were insufficient by
$412.1 million to cover total fixed charges.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Business Overview
We are one of the world's leading branded apparel companies with operations
in more than 40 countries. We design and market jeans and jeans-related pants,
casual and dress pants, shirts, jackets and related accessories for men, women
and children under the Levi's(R), Dockers(R) and Slates(R) brands. Our products
are primarily distributed in the United States through chain retailers and
department stores and abroad through department stores and specialty retailers.
We also maintain a network of approximately 750 franchised or independently
owned stores dedicated to our products outside the United States and operate a
small number of company-owned stores.
We believe there is no other apparel company with a comparable global
presence in either the jeans or casual pants segment of the apparel market.
According to a 1999 study performed on our behalf by an international market
research firm, the Levi's(R) brand is the most recognized casual clothing brand
in all 17 of the markets in which the study was conducted, including the United
States, Canada, Germany, Italy, France, the United Kingdom, Japan and
Australia.
Despite our brand recognition, our operating and financial performance has
declined over the last three years. Our total net sales fell from $7.1 billion
in 1996 to $5.1 billion in 1999, and we expect our sales to continue to decline
in 2000 as compared to 1999. For the three months ended February 27, 2000, our
total net sales were $1.1 billion, compared with $1.3 billion in the same
period in 1999. Our brand equity and market position have also declined in all
three of the regions where we operate. This deterioration is attributable to
both industry-wide and company-specific factors. Industry-wide factors include
consumer market trends towards more fashion denim and non-denim products and
intense competition from designer and private label products. Company-specific
factors include brand equity erosion, insufficient product innovation, poor
presentation of our product at retail, operational problems in our supply chain
and weakness in our key distribution channels.
In late 1997, we began restructuring our business to address our
deteriorating operating and financial performance. We have reduced overhead
expenses and eliminated excess manufacturing capacity through extensive
restructuring initiatives executed during the last three years. We have shifted
to increased outsourcing of production to contract manufacturers. We put in
place a new senior management team, including a new chief executive officer, a
new chief financial officer, new senior vice presidents responsible for
worldwide supply chain and worldwide human resources and new operating heads
for each of our three operating regions. Going forward, our primary strategic
goals are to reverse the recent deterioration in our performance and to
reposition our business to support future growth. We plan to achieve these
goals through our restructuring efforts and by leveraging the worldwide
recognition of our brand names, our global presence and our history of product
innovation and high product quality.
Restructuring Overview
Over the last three years, we closed 29 of our owned and operated production
and finishing facilities in North America and Europe in order to reduce costs,
eliminate excess capacity and align our sourcing strategy with changes in the
industry and in consumer demand, leaving us with 22 operated facilities
worldwide as of February 27, 2000. As a result, we currently produce only
approximately one-third of our U.S. jeans ourselves, down from approximately
two-thirds in 1997. During this period, we executed initiatives to reduce
operating expenses and consolidate operations in conjunction with the closure
of these facilities. We also reduced the number of our employees from
approximately 36,000 at the end of 1997 to approximately 17,500 as of February
27, 2000.
We have recorded charges totaling approximately $1.1 billion arising from
plant closures and restructuring initiatives, including costs related to
severance plans and other employee assistance programs, write-offs of property
and plants to be disposed of, and other restructuring charges such as costs to
cover contractor obligations and various administrative functions. This $1.1
billion is comprised of charges of $497.7 million,
32
<PAGE>
$250.7 million and $386.8 million recorded in 1999, 1998 and 1997,
respectively. As of February 27, 2000, we have expended $814.2 million in cash
and incurred $90.0 million in non-cash asset write-offs related to these
recorded charges. We anticipate completing the remaining spending by the end of
2000, except for the spending relating to the North American plant closures,
which we expect to complete in 2001. The $230.9 million reserve remaining at
February 27, 2000 is composed of $135.2 million for severance and other
employee assistance programs, $56.5 million for asset write-offs and $39.2
million for other restructuring costs. These changes are described in further
detail in the caption "--Restructuring and Excess Capacity Reduction." We do
not anticipate taking any material restructuring charges for additional
capacity reductions or reorganization efforts in 2000 or 2001.
Global Success Sharing Plan
Our Global Success Sharing Plan, adopted in 1996, provides for cash payments
to our employees in 2002 if we achieve pre-established financial targets. We
recognized and accrued expenses of $90.6 million, $114.8 million and $139.0
million in 1998, 1997 and 1996, respectively, for our Global Success Sharing
Plan. During 1999, we concluded that, based on our financial performance, the
targets under the plan would not be achieved and that the probability of a
payment in 2002 is highly unlikely. As a result, in 1999 we reversed into
income $344.0 million of accrued expenses, less miscellaneous expenses,
previously recorded in connection with the Global Success Sharing Plan.
Results of Operations
The following table sets forth, for the periods indicated, selected items in
our consolidated statements of operations, expressed as a percentage of net
sales (amounts may not foot due to rounding).
<TABLE>
<CAPTION>
Year Ended Three Months Ended
--------------------------- -----------------------
Nov. 30, Nov. 29, Nov. 28, Feb. 28, Feb. 27,
1997 1998 1999 1999 2000
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Margin Data:
Net sales............... 100.0 % 100.0% 100.0 % 100.0 % 100.0 %
Cost of goods sold...... 57.8 57.6 61.9 63.7 58.4
----- ----- ----- --------- ---------
Gross profit............ 42.2 42.4 38.1 36.3 41.6
Marketing, general and
administrative
expenses............... 29.8 30.8 31.7 32.8 29.8
Excess
capacity/restructuring
charges................ 5.6 4.2 9.7 30.8 --
Global Success Sharing
Plan................... 1.7 1.5 (6.7) -- --
----- ----- ----- --------- ---------
Operating income
(loss)................. 5.1 5.9 3.4 (27.3) 11.8
Interest expense........ 3.1 3.0 3.6 3.4 5.2
Other (income) expense,
net.................... (0.7) 0.2 (0.3) (1.3) (2.7)
----- ----- ----- --------- ---------
Income (loss) before
taxes.................. 2.7 2.7 0.2 (29.5) 9.3
Income tax expense
(benefit).............. 0.7 1.0 0.1 (10.9) 3.2
----- ----- ----- --------- ---------
Net income (loss)....... 2.0 % 1.7% 0.1 % (18.6)% 6.0 %
===== ===== ===== ========= =========
Net Sales Segment Data:
Geographic
Americas.............. 66.5 % 66.1% 66.5 % 64.1 % 63.8 %
Europe................ 26.7 27.7 26.5 29.5 28.0
Asia Pacific.......... 6.8 6.2 7.0 6.4 8.2
</TABLE>
Three Months Ended February 27, 2000 as Compared to Three Months Ended
February 28, 1999
Net sales. Total net sales for the three months ended February 27, 2000
decreased 15.3% to $1.1 billion, as compared to $1.3 billion in the same period
in 1999. The decrease was primarily due to volume declines in Levi's(R) brand
products in the United States and Europe as a result of the continued erosion
of younger
33
<PAGE>
consumers' perception of our Levi's(R) brand and intense competition from
designer and private label products. Also contributing to the decrease were
lower average unit selling prices worldwide caused by a higher proportion of
closeout sales in line with our intensive efforts to clear inventories of slow-
moving or obsolete fashion products. In the Americas, net sales decreased 15.8%
to $690.5 million, as compared to $819.8 million in the same period in 1999. In
Europe, net sales decreased 19.6% to $303.0 million, as compared to
$377.0 million in the same period in 1999. Approximately half of the decline in
Europe was due to a stronger U.S. dollar to European currencies exchange rate.
In the Asia Pacific region, net sales increased 9.1% to $88.9 million, as
compared to $81.5 million in the same period in 1999, partially attributable to
the weaker U.S. dollar to yen exchange rate. Approximately $30.0 million of the
decrease in total net sales for the three months ended February 27, 2000, as
compared to the same period in 1999, was due to the effects of translating non-
U.S. currency reported sales results into U.S. dollars.
Gross profit. Gross profit as a percentage of net sales, or gross margin,
for the three months ended February 27, 2000 increased to 41.6%, as compared to
36.3% in the same period in 1999. Higher proportions of higher margin basic
denim products sold in all regions contributed to the increase. In addition,
during the three months ended February 27, 2000, we realized the benefit of
cost reductions associated with plant closures due to the reduction of plant
downtime.
Marketing, general and administrative expenses. Marketing, general and
administrative expenses for the three months ended February 27, 2000 decreased
23.1% to $322.1 million, as compared to $419.1 million in the same period in
1999. Consequently, marketing, general and administrative expenses as a
percentage of net sales decreased to 29.8%, as compared to 32.8% in the same
period in 1999. These decreases were primarily due to lower total salary and
wages resulting from headcount reductions and lower sales volume-related,
information technology and advertising expenses. Sales volume-related
marketing, general and administrative expenses such as selling, distribution
and freight decreased in line with the reduction in sales volume. The lower
salary and wages and information technology expenses were due primarily to our
focus on cost containment and overhead reduction. We also incurred minimal
information technology expenses associated with our year 2000 compliance
effort. Advertising expense for the three months ended February 27, 2000
decreased 27.7% to $81.8 million, as compared to $113.2 million in the same
period in 1999. Our advertising expenses decreased because we lowered our media
advertising costs by focusing on key youth segments in relevant media, slightly
offset by the costs associated with an increased emphasis on retail
presentation and the launch of our new Levi's(R) Engineered Jeans(TM) line.
Excess capacity/restructuring expenses. For the three months ended February
27, 2000, we recorded no charges, as compared to charges of $394.1 million in
the same period in 1999 from the closure of 11 manufacturing facilities in
North America.
Interest expense. Interest expense for the three months ended February 27,
2000 increased 31.6% to $56.8 million, as compared to $43.2 million in the same
period in 1999. This increase was due to a higher average cost of borrowing
resulting from higher interest rates associated with the new credit facility
agreements and an equipment financing agreement, higher average debt
outstanding and higher market interest rates.
Other (income) expense, net. Other (income) expense, net includes items such
as interest income, hyper-inflationary transaction gains and losses in foreign
countries, foreign exchange gains and losses on our hedging program, licensee
income and gains and losses on sale of property, plant and equipment. Other
(income) expense, net for the three months ended February 27, 2000 increased
80.7% to $29.1 million, as compared to $16.1 million in the same period in
1999. This increase was primarily attributable to a $26.1 million gain on the
sale of two office buildings in San Francisco located next to our corporate
headquarters, offset by lower net gains on foreign currency contracts. Net
currency gains are primarily due to the fluctuations of various currencies in
relation to foreign currency hedging positions.
Income tax expense (benefit). Income tax expense for the three months ended
February 27, 2000 was $35.1 million, as compared to an income tax benefit of
$139.3 million in the same period in 1999. The income
34
<PAGE>
tax benefit for the three months ended February 28, 1999 was generated
primarily from the excess capacity restructuring charge of $394.1 million that
created a pre-tax loss. Our effective tax rate for the three months ended
February 27, 2000 was 35.0%, as compared to 37.0% for the same period in 1999.
The lower tax rate for the three months ended February 27, 2000 was due to a
reassessment of potential tax settlements.
Net income (loss). Net income for the three months ended February 27, 2000
increased to $65.2 million, as compared to a net loss of $237.2 million in the
same period in 1999. Net income for the three months ended February 27, 2000
included a $26.1 million pre-tax gain related to the sale of two office
buildings. Net loss for the three months ended February 28, 1999 included a
pre-tax excess capacity reduction charge of $394.1 million. Excluding the
impacts of these one-time charges, net income for the three months ended
February 27, 2000 would have increased by $37.2 million to $48.2 million, as
compared to $11.0 million for the same period in 1999. Lower marketing, general
and administrative expenses and increases in gross profit as a percentage of
sales contributed to the increase in net income for the three months ended
February 27, 2000, partially offset by lower net sales and higher interest
expense.
Year Ended November 28, 1999 as Compared to Year Ended November 29, 1998
Net sales. Total net sales in fiscal year 1999 decreased 13.7% to $5.1
billion, as compared to $6.0 billion in fiscal year 1998. Net sales declined
worldwide in Levi's(R) brand basic denim products as the consumer market
trended towards more fashion denim, designer and private label products, as
well as non-denim products. Factors contributing to our fiscal year 1999 net
sales decline were difficulties in matching production with demand and a higher
percentage of closeout sales needed to reduce the buildup of inventories. In
the Americas, net sales decreased 13.2% to $3.4 billion, as compared to $3.9
billion in fiscal year 1998. In Europe, net sales decreased 17.6% to $1.4
billion, as compared to $1.7 billion in fiscal year 1998. In the Asia Pacific
region, net sales decreased 3.0% to $358.4 million, as compared to $369.4
million in fiscal year 1998. Changes in foreign exchange rates had a minimal
impact on total net sales. In fiscal years 1999 and 1998, we had one customer
that represented approximately 11% and 12%, respectively, of total net sales.
No other customer accounted for more than 10% of total net sales.
Gross profit. Gross profit as a percentage of net sales, or gross margin,
decreased to 38.1% in fiscal year 1999, as compared to 42.4% in fiscal year
1998. The decrease was primarily attributable to unfavorable product mix and
increased production downtime. Idle capacity associated with production
downtime occurred in 1999 as factory production was curtailed prior to fully
closing some North American and European plants. In fiscal year 1999 we
determined that the sell-off of obsolete goods would continue in fiscal year
2000 and thus inventories were marked down accordingly resulting in higher
costs of goods sold.
Marketing, general and administrative expenses. Marketing, general and
administrative expenses for fiscal year 1999 decreased 11.1% to $1.6 billion,
as compared to $1.8 billion in fiscal year 1998. Marketing, general and
administrative expenses as a percentage of net sales in fiscal year 1999
increased to 31.7%, as compared to 30.8% in fiscal year 1998. The dollar
decrease resulted primarily from reduced selling and distribution costs
associated with lower unit volume shipments, decreases in performance-related
incentives and reductions in administrative and overhead expenses associated
with cost reduction efforts. Advertising expenses in fiscal year 1999 increased
5.0% to $490.2 million, as compared to $466.7 million in fiscal year 1998
primarily due to various initiatives we implemented to revitalize our brand.
Advertising initiatives in fiscal year 1999 included worldwide music
sponsorship programs, a new Pan-European marketing campaign and a renewed focus
on U.S. Dockers(R) brand promotions.
Excess capacity reduction/restructuring expenses. For fiscal year 1999, we
incurred charges of $497.7 million, as compared to $250.7 million in fiscal
year 1998. These charges were associated with the plant closures in North
America and Europe and with our corporate overhead restructuring initiatives.
Global Success Sharing Plan. In fiscal year 1999, we reversed into income
$343.9 million of previously recorded expenses associated with the Global
Success Sharing Plan, as compared to an expense of
35
<PAGE>
$90.6 million recognized in fiscal year 1998. This reversal of the Global
Success Sharing Plan liability was based on our lower estimate of financial
performance through the year 2001.
Interest expense. Interest expense in fiscal year 1999 increased 2.8% to
$183.0 million, as compared to $178.0 million in fiscal year 1998. This
increase was due to higher average debt outstanding throughout most of fiscal
year 1999. The increase in outstanding debt was primarily due to the cash
outflows associated with plant closures and restructuring initiatives.
Other (income) expense, net. Other (income) expense, net in fiscal year 1999
increased to $16.5 million, as compared to a $9.5 million net expense in fiscal
year 1998. This change was primarily attributable to net gains on foreign
currency contracts in fiscal year 1999, as compared to net losses in fiscal
year 1998. Net currency gains and losses are primarily due to currency
fluctuations in relation to our foreign currency hedging positions.
Income tax expense (benefit). Income tax expense for fiscal year 1999
decreased 94.8% to $3.1 million, as compared to $60.2 million in fiscal year
1998. The decrease in income tax expense is consistent with the decrease in
income before taxes as the effective tax rate was 37.0% for both fiscal years.
Net income (loss). Net income for fiscal year 1999 decreased 94.8% to $5.4
million, as compared to $102.5 million in fiscal year 1998. Net income for
fiscal years 1999 and 1998 was adversely impacted by the pre-tax North American
and European plant closures and restructuring initiatives totaling $497.7
million in fiscal year 1999 and $250.7 million in fiscal year 1998. Offsetting
this decrease in fiscal year 1999 was the pre-tax reversal of the Global
Success Sharing Plan liability totaling $343.9 million, as compared to a pre-
tax charge of $90.6 million in fiscal year 1998. Excluding the charges for the
plant closures and restructuring initiatives and the reversal and charge for
Global Success Sharing Plan in fiscal years 1999 and 1998, net income for
fiscal year 1999 would have decreased by $215.2 million to $102.3 million, as
compared to $317.5 million in fiscal year 1998. The principal causes of this
decrease were lower net sales and lower gross margin, which were partially
offset by lower marketing, general and administrative expenses.
Year Ended November 29, 1998 as Compared to Year Ended November 30, 1997
Net sales. Total net sales in fiscal year 1998 decreased 13.2% to $6.0
billion, as compared to $6.9 billion in fiscal year 1997. The decrease from
fiscal year 1997 was a result of lower sales volumes, primarily due to
worldwide decline in consumer demand for our Levi's(R) basic denim products.
This was a result of a consumer market trend towards more fashion denim and
non-denim products, intense competition from designer and private label
products and a poor economy in the Asia Pacific region. Net sales also declined
as a result of insufficient product innovation, poor presentation of product at
retail and challenges in accurately matching production with forecasted demand.
In addition, net sales in fiscal year 1998 decreased from fiscal year 1997 by
approximately 2.0% due to the effects of translating non-U.S. currency sales to
the U.S. dollar. In the Americas, net sales in fiscal year 1998 decreased 13.7%
to $3.9 billion, as compared to $4.6 billion in fiscal year 1997. In Europe,
net sales in fiscal year 1998 decreased 9.7% to $1.7 billion, as compared to
$1.8 billion in fiscal year 1997. In the Asia Pacific region, net sales in
fiscal year 1998 decreased by 21.1% to $369.4 million, as compared to $468.0
million in fiscal year 1997. In fiscal years 1998 and 1997, we had one customer
that represented approximately 12% and 11%, respectively, of total net sales.
No other customer accounted for more than 10% of total net sales.
Gross profit. Gross profit as a percentage of net sales, or gross margin, in
fiscal year 1998 remained relatively flat at 42.4%, as compared to 42.2% in
fiscal year 1997. Gross margin increased slightly due to improved product mix,
offset by a stronger U.S. dollar and higher product sourcing costs.
Marketing, general and administrative expenses. Marketing, general and
administrative expenses in fiscal year 1998 decreased 10.4% to $1.8 billion, as
compared to $2.0 billion in fiscal year 1997. Marketing, general and
administrative expenses as a percentage of net sales increased to 30.8%, as
compared to 29.8% in fiscal year 1997. Sales volume-related expenses such as
distribution, freight and sourcing costs declined in line with
36
<PAGE>
net sales reductions. Administrative expenses declined as a result of lower
performance-related incentive pay costs and declines in other overhead costs
associated with cost reduction efforts. Advertising expenses as a percentage of
net sales in fiscal year 1998 increased to 7.8%, as compared to 6.9% million in
fiscal year 1997 and reflected various initiatives to revitalize sales volume.
Excess capacity reduction/restructuring expenses. In fiscal year 1998, we
incurred charges of $250.7 million, as compared to $386.8 million in fiscal
year 1997. These charges were associated with the plant closures in North
America and Europe and with our corporate overhead restructuring initiatives.
Global Success Sharing Plan. Global Success Sharing Plan expenses in fiscal
year 1998 decreased 21.1% to $90.6 million, as compared to $114.8 million in
fiscal year 1997. This decrease resulted from the adoption of a lower Global
Success Sharing Plan accrual rate, based on revised estimates of financial
performance through the year 2001.
Interest expense (benefit). Interest expense in fiscal year 1998 decreased
16.2% to $178.0 million, as compared to $212.4 million in fiscal year 1997.
This decrease was due to lower average debt outstanding that resulted from the
repayment of borrowings using cash generated from operations.
Other (income) expense, net. In fiscal year 1998 there was a net expense of
$9.5 million compared to other income, net of $45.4 million in fiscal year
1997. This net expense was primarily attributable to losses on foreign currency
hedging contracts in fiscal year 1998, as compared to gains in fiscal year
1997. Net currency gains and losses are primarily due to currency fluctuations
in relation to our foreign currency hedging positions.
Income tax expense (loss). Income tax expense in fiscal year 1998 increased
30.7% to $60.2 million, as compared to $46.1 million in fiscal year 1997. This
increase was primarily due to a non-recurring tax benefit in fiscal year 1997
of $40.0 million associated with the restructuring of non-U.S. affiliates under
a U.S. tax regulation allowing deductions for previously non-deductible losses.
As a result, the effective tax rate for fiscal year 1998 was 37.0%, as compared
to 25.0% for fiscal year 1997.
Net income. Net income in fiscal year 1998 decreased 25.8% to $102.5
million, as compared to $138.2 million in fiscal year 1997. Net income for
fiscal years 1998 and 1997 were adversely impacted by charges associated with
the restructuring initiatives and the Global Success Sharing Plan. In addition,
fiscal year 1997 included a $40.0 million one-time tax benefit. These pre-tax
one-time items totaled $341.2 million in fiscal year 1998 and $461.6 million in
fiscal year 1997. Excluding the effects of the restructuring initiatives and
the Global Success Sharing Plan in fiscal years 1998 and 1997, net income for
fiscal year 1998 would have decreased by $94.0 million to $317.5 million, as
compared to $411.5 million in fiscal year 1997. The principal cause of this
decrease was lower net sales, partially offset by lower marketing, general and
administrative expenses.
Restructuring and Excess Capacity Reduction
The following is a summary of the actions taken and related charges
associated with our excess capacity reductions and other restructuring
activities:
. During September 1999, we announced plans to close one manufacturing
facility and further reduce overhead costs by consolidating operations
in Europe, with an estimated displacement of 960 employees. We recorded
an initial charge to set up a reserve of $54.7 million. As of February
27, 2000, the balance of this reserve was $19.9 million, and
approximately 810 employees had been displaced. The manufacturing
facility was closed in December 1999.
. In February 1999, we announced the closure of 11 manufacturing
facilities in North America. We recorded an initial charge to set up a
reserve of $394.1 million. As of February 27, 2000, the balance in this
reserve was $145.9 million, and approximately 5,880 employees had been
displaced. The 11 manufacturing facilities were closed during 1999.
37
<PAGE>
. In fiscal year 1999, we recorded an initial charge to set up a reserve
of $48.9 million for corporate overhead reorganization initiatives with
an estimated displacement of 930 employees upon completion of the
reorganization. As of February 27, 2000, the balance of this reserve was
$21.5 million, and approximately 360 employees had been displaced.
. In fiscal year 1998, we recorded an initial charge to set up a reserve
of $61.1 million for corporate overhead reorganization initiatives and
$82.1 million for the closure of two North American finishing
facilities. Approximately 770 and 990 employees were displaced in
connection with the reorganization and facility closures, respectively.
As of February 27, 2000, the balances of these reserves were $10.6
million and $9.4 million, respectively. The two North America finishing
facilities were closed during 1999.
. In fiscal year 1998, we recorded an initial restructuring charge to set
up a reserve of $107.5 million for reorganization initiatives and the
closure of two manufacturing and two finishing facilities in Europe with
an estimated displacement of 1,650 employees. As of February 27, 2000,
the balance of this reserve was $8.1 million and approximately 1,630
employees had been displaced. The two manufacturing and two finishing
facilities were closed in 1999.
. In November 1997, we announced the closure of one finishing and 10
manufacturing facilities in North America. Those facilities were closed
by the end of 1998, resulting in the displacement of approximately 6,400
employees. We recorded an initial charge to set up a reserve of $386.8
million. As of February 27, 2000, the balance of this reserve was $15.5
million.
The following table summarizes the plant closures and restructuring charges
and the resulting cash and non-cash reductions:
<TABLE>
<CAPTION>
Balance as of
Initial Cash Non-cash February 27,
Provision Reductions Reductions 2000
---------- ---------- ---------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
1997 North American Plant
Closures...................... $ 386,792 $332,421 $38,847 $ 15,524
1998 North American Plant
Closures...................... 82,073 53,347 19,293 9,433
1999 North American Plant
Closures...................... 394,105 225,714 22,472 145,919
1998 Corporate Restructuring
Initiatives................... 61,062 49,500 983 10,579
1999 Corporate Restructuring
Initiatives................... 48,889 27,418 -- 21,471
1998 European Restructuring and
Plant Closures................ 107,523 91,077 8,336 8,110
1999 European Restructuring and
Plant Closures................ 54,689 34,734 55 19,900
---------- -------- ------- --------
Total as of February 27,
2000........................ $1,135,133 $814,211 $89,986 $230,936
========== ======== ======= ========
</TABLE>
The balance of the above reserves as of February 27, 2000 was $230.9
million, of which $56.5 million was included as a reduction to property, plant
and equipment on the balance sheet and was a non-cash item, while the remaining
balance of $174.4 million was included in restructuring reserves on the balance
sheet and will be paid in cash. Approximately $145.0 million of this balance is
expected to be paid by the end of fiscal year 2000, with the remaining balance
expected to be paid in 2001.
Liquidity and Capital Resources
Our principal capital requirements have been to fund working capital, to pay
down debt and for capital expenditures. We have historically relied on
internally generated funds and bank borrowings to finance our operations. As of
February 27, 2000, total cash and cash equivalents were $106.0 million, an $8.3
million increase over the $97.7 million cash balance reported as of February
28, 1999 and a decrease of $86.8 million from the $192.8 million reported as of
November 28, 1999.
Our capital spending in fiscal year 1999 was $61.1 million, as compared to
$116.5 million in fiscal year 1998 and $121.6 million in fiscal year 1997. Our
capital expenditure plan for fiscal year 2000 contemplates
38
<PAGE>
$50.0 million in expenditures, primarily for maintenance and purchase of
equipment at our remaining manufacturing facilities and distribution centers,
and for computer systems. As a result of our plant closures in 1998 and 1999,
we expect to have reduced capital spending for manufacturing activities than in
the past.
Cash provided by/used in operations. Cash provided by operating activities
for the three months ended February 27, 2000 increased 38.2% to $60.3 million,
as compared to $43.6 million in the same period in 1999. Inventory decreased
due to our inventory initiatives, which included tighter inventory control,
lead-time reduction and an aggressive program to dispose of obsolete inventory.
Net deferred tax assets decreased during the three months ended February 27,
2000 primarily due to the spending related to the excess capacity reduction and
restructuring initiatives. Restructuring reserves decreased due to spending
associated with restructuring initiatives and plant closures. Accrued salaries,
wages and employee benefits, and long-term employee benefits decreased during
the three months ended February 27, 2000 as a result of the reduced number of
employees and timing differences.
Cash used by operating activities in fiscal year 1999 was $173.8 million, as
compared to cash provided by operating activities of $223.8 million in fiscal
year 1998. This change was primarily due to increased spending associated with
plant closures and restructuring initiatives and lower sales in fiscal year
1999. The decrease in long-term employee related benefits during fiscal year
1999 primarily reflected the reversal of the prior year's accruals for Global
Success Sharing Plan and reductions in deferred compensation. Inventory
decreased during fiscal year 1999 primarily due to reduced production levels.
The increase in income tax receivable for fiscal year 1999 reflected an
expected income tax refund based upon a carryback of a net operating loss to be
reported on our income tax return.
Cash provided by operating activities in fiscal year 1998 decreased 61.0% to
$223.8 million, as compared to $573.9 million in fiscal year 1997 primarily due
to lower sales and spending associated with the plant closures announced in
fiscal year 1997. The increase in long-term employee related benefits during
fiscal year 1998 reflected increased cumulative accruals for Global Success
Sharing Plan and deferred compensation.
Cash provided by/used for investing activities. Cash provided by investing
activities during the three months ended February 27, 2000 was $105.0 million,
as compared to net cash used for investing activities of $9.8 million during
the same period in 1999. This increase in cash provided by investing activities
resulted primarily from proceeds received on increased sales of property, plant
and equipment, higher realized gains on net investment hedges and lower
purchases of property, plant and equipment. The higher proceeds received on the
sale of property during the three months ended February 27, 2000 was primarily
attributable to a sale in February 2000 of two office buildings in San
Francisco located adjacent to our corporate headquarters.
Cash provided by investing activities in fiscal year 1999 was $62.4 million,
as compared to net cash used by investing activities of $82.7 million in fiscal
year 1998. This change was primarily due to an increase in proceeds from the
sale of property, plant and equipment mainly associated with the plant
closures, and lower purchases of property, plant and equipment in fiscal year
1999. In addition, in fiscal year 1999 we had net realized gains on hedging of
our net investments, as compared to net losses in fiscal year 1998.
Cash used for investing activities in fiscal year 1998 increased 7.6% to
$82.7 million, as compared to $76.9 million in fiscal year 1997. This increase
was primarily due to net realized losses on hedging of our net investments in
fiscal year 1998, as compared to net gains in fiscal year 1997, partially
offset by an increase in proceeds from the sale of property, plant and
equipment in fiscal year 1998 mainly associated with the plant closures.
Cash provided by/used for financing activities. Cash used for financing
activities for the three months ended February 27, 2000 increased to $251.2
million, as compared to $17.8 million in the same period in 1999 as a result of
amendments to our credit facility agreements and continued debt repayments on
existing debt. These increases were partially offset by proceeds from the new
credit facility and equipment financing agreements.
39
<PAGE>
Cash provided by financing activities in fiscal year 1999 was $224.2
million, as compared to net cash used for financing activities of $194.5
million in fiscal year 1998. This change was primarily due to an increase in
debt financing in fiscal year 1999.
Cash used for financing activities in fiscal year 1998 decreased 63.3% to
$194.5 million, as compared to $530.3 million in fiscal year 1997 primarily due
to the repayment of debt with cash generated from operations.
In early March 2000, we received income tax refunds in cash in the amount of
$66.3 million associated with a carryback of a net operating loss reported on
our income tax return.
Credit Agreements. On January 31, 2000, we amended each of our three
existing credit agreements, and we entered into one new $450.0 million bridge
credit agreement. The new credit facilities include the following terms:
. The maturity date for all four credit facilities is January 31, 2002.
Borrowings under the credit facilities bear interest at the London
Interbank Offered Rate, or the agent bank's base rate, plus an
incremental borrowing spread ranging from 3.00% to 3.25% over the London
Interbank Offered Rate, or 1.75% to 2.00% over the base rate, a
substantial increase from the prior spread. Additional fees will be
incurred and increases in the borrowing spread will occur on February 1,
2001 if we have not completed a private or public capital-raising
transaction of at least $300.0 million by that date and used those
proceeds to reduce commitments under the bank credit facilities.
. The credit agreements provide for a total of $200.0 million in minimum
commitment reductions in 2000 and 2001 and mandatory prepayments from
specified transactions we may effect during the term of the facilities,
including equipment and real estate financings, asset dispositions and
foreign subsidiary receivables securitizations. We are also obligated to
prepay borrowings ratably under the credit facilities with up to 60% of
our excess cash flow (after voluntary prepayments) as defined in the
credit agreements.
At February 27, 2000, we had borrowings of approximately $1.3 billion
outstanding under these bank credit facilities. These facilities also support
letters of credit and interest rate and foreign exchange risk management
activities. At the time we amended our existing credit agreements and entered
into the new bridge agreement, we terminated a domestic receivables
securitization facility.
In addition, in December 1999, we entered into a five-year $89.5 million
credit facility secured by most of the equipment located at our distribution
centers in Nevada, Mississippi and Kentucky. At February 27, 2000, there was
$89.5 million principal amount outstanding under this facility. In February
2000, several of the Company's European subsidiaries entered into receivables
securitization financing agreements with several lenders under which those
subsidiaries may borrow up to $125.0 million, subject to specified operational
conditions. No borrowings have been made under the facilities. See the caption
"Description of Other Indebtedness" for more information about these credit
arrangements.
The following table sets forth the required total long and short-term debt
principal payments and commitment reductions as of February 27, 2000 for the
next five years and thereafter:
<TABLE>
<CAPTION>
Year Payments/Reductions
---- ----------------------
(Dollars in Thousands)
<S> <C>
2000.................. $ 234,627
2001.................. 11,297
2002.................. 1,099,689
2003.................. 365,988
2004.................. 8,520
Thereafter............ 683,356
----------
Total............... $2,403,477
==========
</TABLE>
40
<PAGE>
Seasonality and Backlog
Our sales do not vary substantially by quarter in any of our three regions,
as the apparel industry has become less seasonal due to more frequent selling
seasons and offerings of both basic and fashion oriented merchandise throughout
the year. In addition, all of our orders are subject to cancellation.
Therefore, our order backlog may not be indicative of future shipments.
Foreign Currency Fluctuations
The functional currency for most of our foreign operations is the applicable
local currency. For those operations, assets and liabilities are translated
into U.S. dollars using period-end exchange rates and income and expense
accounts are translated at average monthly exchange rates. The U.S. dollar is
the functional currency for foreign operations in countries with highly
inflationary economies and certain other subsidiaries. The translation
adjustments for these entities are included in other (income) expense, net.
Year 2000
We experienced no material disruption in customer or supplier relationships,
revenue patterns or customer buying patterns as a result of the year 2000
problem. There have been no losses of revenue and we do not believe that any
future contingencies related to year 2000 would have a material impact on our
business.
Effects of Inflation
We believe that the relatively moderate rates of inflation which have been
experienced in the regions where most of our sales occur have not had a
significant effect on our net sales or profitability.
Euro Conversion
We have a multi-functional Euro project team responsible for ensuring our
ability to operate effectively during the Euro transition phase and through
final Euro conversion. Our total program costs are not expected to be material.
We have developed marketing and pricing strategies for implementation
throughout the more open European market.
We are currently able to make and receive payments in Euros and will convert
financial and information technology systems to be able to use Euros as the
base currency in relevant markets prior to January 1, 2002. Based on the
analysis and actions taken to date, we do not expect the Euro conversion to
materially affect our consolidated financial position, results of operations or
cash flow.
Market Risk Disclosure
Derivative Financial Instruments
We are exposed to market risk primarily related to foreign exchange,
interest rates and the price of cotton. We actively manage foreign currency and
interest rate risk with the objective of reducing fluctuations in actual and
anticipated cash flows by entering into a variety of derivative instruments
including spot, forward, options and swaps. We currently do not hedge our
exposure to the price of cotton with derivative instruments.
Foreign Exchange Risk
Foreign exchange market risk exposures are primarily related to cash
management activities, raw material and finished goods purchases and
anticipated dividend and royalty flows from affiliates.
41
<PAGE>
The following table presents notional amounts, average exchange rates and
fair values for forward and swap contracts by currency. All amounts are stated
in U.S. dollar equivalents. The notional amount represents the total net
position outstanding as of the stated date. A positive amount represents a long
position in U.S. dollars, while a negative amount represents a short position
in U.S. dollars, versus the relevant currency. The net position is the sum of
all buy transactions minus the sum of all sell transactions. The unrealized
gain (loss) is the fair value of the outstanding position. The average forward
rate is the forward rate weighted by the total of the transacted amounts. All
transactions will mature during fiscal year 2000.
Outstanding Forward and Swap Transactions
(Dollars in Thousands Except Average Rates)
<TABLE>
<CAPTION>
Currency Data As of Nov. 28, 1999 As of Feb. 27, 2000
- -------- ---- ------------------- -------------------
<S> <C> <C> <C>
Australian Dollar......... Notional amount $ (16,528) $(11,059)
Unrealized gain 230 676
Average forward rate 0.65 0.65
Canadian Dollar........... Notional amount $ (50,360) $(27,446)
Unrealized gain 64 133
Average forward rate 1.46 1.45
Euro...................... Notional amount $(137,416) $(79,399)
Unrealized gain 18,672 15,884
Average forward rate 1.06 1.02
British Pound............. Notional amount $ (81,591) $(76,871)
Unrealized gain 675 1,529
Average forward rate 1.62 1.63
Japanese Yen.............. Notional amount $(115,369) $(85,646)
Unrealized gain (loss) (3,175) 4,956
Average forward rate 106.47 106.91
Mexican Peso.............. Notional amount $ (7,339) --
Unrealized gain (loss) (110) --
Average forward rate 9.47 --
Swedish Krona............. Notional amount $ (94,675) $(59,582)
Unrealized gain 655 940
Average forward rate 8.32 8.54
Other Currencies.......... Notional amount $ (10,406) $ 6,365
Unrealized gain (loss) (79) 3
Average forward rate N/A N/A
--------- --------
Total Unrealized Gain..... $ 16,932 $ 24,121
========= ========
</TABLE>
42
<PAGE>
The following table presents notional amounts, average strike rates, book
values and fair values of outstanding foreign currency options. All amounts are
stated in U.S. dollar equivalents. The notional amount represents the total net
position outstanding as of the stated date should the option be exercised. A
positive amount represents a long position in U.S. dollars, while a negative
amount represents a short position in U.S. dollars, versus the relevant
currency. The carrying value is the amount reported in our financial
statements. It equals the sum of the non-amortized portion of the option
premium and the intrinsic value of the option. The market value represents the
fair value reported by our counterparts. The average strike rate is weighted by
the total of the notional amounts. All transactions will expire during fiscal
year 2000.
Outstanding Options Transactions
(Dollars in Thousands Except Average Rates)
<TABLE>
<CAPTION>
Currency Data As of Nov. 28, 1999 As of Feb. 27, 2000
- -------- ---- ------------------- -------------------
<S> <C> <C> <C>
Australian Dollar......... Notional amount $ 3,585 --
Carrying value 30 --
Market value (250) --
Average strike rate 0.65 --
Canadian Dollar........... Notional amount $ 30,000 $ 10,000
Carrying value 6 10
Market value 25 (48)
Average strike rate 1.48 1.45
Euro...................... Notional amount $365,006 $316,079
Carrying value 9,374 8,277
Market value 6,181 6,916
Average strike rate 1.06 1.03
British Pound............. Notional amount -- $(29,400)
Carrying value (2) --
Market value 53 482
Average strike rate 1.61 1.58
Hong Kong Dollar.......... Notional amount $ 3,000 $ 3,000
Carrying value -- --
Market value (2) 0
Average strike rate 7.93 7.93
Japanese Yen.............. Notional amount $ 55,000 $ 75,000
Carrying value (1,602) 1,189
Market value (3,749) 1,600
Average strike rate 111.83 112.55
Swedish Krona............. Notional amount $ 30,902 $ 39,200
Carrying value -- --
Market value 30 (144)
Average strike rate 8.40 8.82
-------- --------
Total Carrying Value...... $ 7,806 $ 9,476
======== ========
Total Market Value........ $ 2,288 $ 8,806
======== ========
</TABLE>
43
<PAGE>
Interest Rate Risk
We have an interest rate risk management policy designed to manage the
interest rate risk on our borrowings by entering into a variety of interest
rate derivatives.
The following table provides information about our derivative financial
instruments and other financial instruments that are sensitive to changes in
interest rates. For debt obligations, the table presents principal cash flows
and related weighted average interest rates by expected maturity dates. For
interest rate swaps, the table presents notional amounts and interest rates by
contractual maturity dates. The applicable floating rate index is included for
variable rate instruments. Notional amounts are the amounts outstanding at the
end of the stated period. All amounts are stated in U.S. dollar equivalents.
Interest Rate Sensitivity as of February 27, 2000
(Dollars in Thousands Unless Otherwise Stated)
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------------------------
Fair Value
Q1 2000 2000 2001 2002 2003 2004 2005 Q1 2000
---------- ---------- ---------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt Instruments
Fixed Rate (US$)......... $ 859,500 $ 855,833 $ 850,548 $844,774 $488,465 $481,571 $450,000 $ 569,729
Average Interest Rate... 7.05% 7.05% 7.02% 7.02% 7.15% 7.13% 7.00% --
Fixed Rate (Yen 20
billion)................ $ 180,180 $ 180,180 $ 180,180 $180,180 $180,180 $180,180 $180,180 $ 72,072
Average Interest Rate... 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% --
Variable Rate (US$)...... $1,333,000 $1,332,180 $1,331,138 $ 36,995 $ 25,741 $ 24,365 -- $1,338,687
Average Interest Rate*.. 7.87% 7.87% 7.87% 9.39% 9.39% 9.39% -- --
Interest Rate Derivative
Financial Instruments
Related to Debt
Interest Rate Swaps
Payer swaps (Pay
fix/Receive variable).. $ 425,000 -- -- -- -- -- -- $ (1,002)
Average rate received =
US$ 3 month LIBOR...... 6.11% -- -- -- -- -- -- --
Average rate paid....... 6.72% -- -- -- -- -- -- --
Receiver swaps (Receive
fix/Pay variable)...... $ 325,000 $ 325,000 $ 325,000 $325,000 $200,000 $200,000 $200,000 $ (7,590)
Average rate received... 6.84% 6.84% 6.84% 6.84% 6.80% 6.80% 6.80% --
Average rate paid = US$
3 month LIBOR.......... +6.22bp +6.15bp +6.15bp +6.15bp +10.00bp +10.00bp +10.00bp --
Receiver swaps (Receive
fix/Pay variable) with
periodic "Knock-Out'
option................. $ 50,000 $ 50,000 $ 50,000 $ 50,000 -- -- -- $ (1,726)
Average rate received... 6.58% 6.58% 6.58% 6.58% -- -- -- --
Average rate paid = US$
6 month LIBOR.......... 6.13% -- -- -- -- -- -- --
</TABLE>
- --------
* Assumes no change in short-term interest rates
44
<PAGE>
Interest Rate Sensitivity as of November 28, 1999
(Dollars in Thousands Unless Otherwise Stated)
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------------------------
Fair
Value
Q4 1999 2000 2001 2002 2003 2004 2005 Q4 1999
---------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt Instruments
Fixed Rate (US$)......... $ 800,000 $800,000 $800,000 $800,000 $450,000 $450,000 $450,000 $ 626,307
Average Interest Rate... 6.91% 6.91% 6.91% 6.91% 7.00% 7.00% 7.00% --
Fixed Rate (Yen 20
billion)................ $ 188,679 $188,679 $188,679 $188,679 $188,679 $188,679 $188,679 $ 148,113
Average Interest Rate... 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% --
Variable Rate (US$)...... $1,642,836 $631,800 $631,800 -- -- -- -- $1,650,315
Average Interest Rate*.. 6.12% 6.16% 6.16% -- -- -- -- --
Interest Rate Derivative
Financial Instruments
Related to Debt
Interest Rate Swaps
Payer swaps (Pay
fix/Receive variable).. $ 425,000 -- -- -- -- -- -- $ (2,119)
Average rate received =
US$ 3 month LIBOR...... 5.49% -- -- -- -- -- -- --
Average rate paid....... 6.72% -- -- -- -- -- -- --
Receiver swaps (Receive
fix/Pay variable)...... $ 325,000 $325,000 $325,000 $325,000 $200,000 $200,000 $200,000 $ (1,596)
Average rate received... 6.91% 6.84% 6.84% 6.84% 6.80% 6.80% 6.80% --
Average rate paid = US$
3 month LIBOR.......... +5.69bp +6.15bp +6.15bp +6.15bp +10.00bp +10.00bp +10.00bp --
Receiver swaps (Receive
fix/Pay variable) with
periodic "Knock-Out'
option................. $ 50,000 $ 50,000 $ 50,000 $ 50,000 -- -- -- $ (1,124)
Average rate received... 6.58% 6.58% 6.58% 6.58% -- -- -- --
Average rate paid = US$
6 month LIBOR.......... 6.13% -- -- -- -- -- -- --
</TABLE>
- --------
* Assumes no change in short-term interest rates
New Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). In June 1999, the FASB
delayed the effective date of SFAS 133 to fiscal years beginning after June 15,
2000. We will adopt SFAS 133 the first day of fiscal year 2001. SFAS 133
establishes accounting and reporting standards for derivative instruments
including certain derivative instruments embedded in other contracts, and for
hedging activities. In summary, SFAS 133 requires all derivatives to be
recognized as assets or liabilities at fair value. Fair value adjustments are
made either through earnings or equity, depending upon the exposure being
hedged and the effectiveness of the hedge. We have not yet quantified all
effects of adopting SFAS 133 on its financial statements. However, the adoption
of SFAS 133 could increase volatility in earnings and other comprehensive
income or result in certain changes in our business practices. We currently
have an implementation team in place that is determining the method of
implementation and evaluating all effects of adopting SFAS 133.
45
<PAGE>
BUSINESS
Overview
We are one of the world's leading branded apparel companies with operations
in more than 40 countries. We design and market jeans and jeans-related pants,
casual and dress pants, shirts, jackets and related accessories for men, women
and children under our Levi's(R), Dockers(R) and Slates(R) brands. Our products
are primarily distributed in the United States through chain retailers and
department stores and abroad through department stores and specialty retailers.
We also maintain a network of approximately 750 franchised or independently
owned stores dedicated to our products outside the United States and operate a
small number of company-owned stores.
We believe there is no other apparel company with a comparable global
presence in either the jeans or casual pants segment of the apparel market.
Since our founder Levi Strauss invented the blue jean in 1873, Levi's(R) jeans
have become one of the most successful and widely recognized brands in the
history of the apparel industry. According to a 1999 study performed on our
behalf by an international market research firm, the Levi's(R) brand is the
most recognized casual clothing brand in all 17 of the markets in which the
study was conducted, including the United States, Canada, Germany, Italy,
France, the United Kingdom, Japan and Australia. More 15 to 39 year old
consumers in these markets name the Levi's(R) brand first as a casual clothing
brand than any other competitor. Our Dockers(R) brand of casual pants,
introduced in 1986, is also widely recognized in the United States and a
growing number of markets abroad. According to industry research, approximately
71% of U.S. male consumers ages 18 to 45 own Dockers(R) brand casual pants.
According to NPD Group's point of sale tracking, in the United States our
Slates(R) brand of dress pants sold the most units of any single dress pant
brand within traditional department stores in 1999. Jeans and casual and dress
pants represented approximately 85% of our total units sold in 1999. Basic
jeans are our key generator of sales and gross profits.
<TABLE>
<CAPTION>
Levi's(R) Brand Dockers(R) Brand Slates(R) Brand
--------------- ---------------- ---------------
<S> <C> <C> <C>
Products: Men's, women's and Men's, women's and Men's and in Fall
kids' -jeans, jeans boys' -casual pants, 2000 women's - dress
related products, shorts, skirts, knit pants, skirts, tops,
knits and woven tops, and woven tops, jackets, outerwear
outerwear and outerwear and and accessories
accessories accessories
Geographic Men's and women's - Men's and women's - Men's and women's -
Markets: global global U.S. only
Kids' - primarily Boys' - U.S. only
U.S.
Percentage
of 1999
Net
Sales: 76% 22% 2%
</TABLE>
Our business is currently organized into three geographic divisions: the
Americas, consisting of the United States, Canada and Latin America; Europe,
including the Middle East and Africa; and Asia Pacific. Our operations in the
United States are conducted primarily through Levi Strauss & Co., while our
operations outside the United States are conducted primarily through foreign
subsidiaries owned directly or indirectly by Levi Strauss & Co. In 1999 we had
net sales of $5.1 billion, of which the Americas, Europe and Asia Pacific
accounted for 66.5%, 26.5% and 7.0%, respectively. In 1999, we had EBITDA of
$295.1 million and adjusted EBITDA of $448.9 million. For the three months
ended February 27, 2000, we had net sales of $1.1 billion and EBITDA and
adjusted EBITDA of $148.5 million.
Our operating performance has deteriorated in recent years. Our net sales
fell from $7.1 billion in 1996 to $5.1 billion in 1999, and our brand equity
and market position have declined in all three of our operating regions. This
deterioration is attributable to both industry-wide and company-specific
factors. Industry-wide factors include consumer market trends towards more
fashion denim and non-denim products and intense competition from designer and
private label products. Company-specific factors include brand equity erosion,
insufficient product innovation, poor presentation of our products at retail,
operational problems in our supply
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chain and weakness in our key distribution channels. In response to these
developments, we have, among other things, taken the following restructuring
actions:
. reduced overhead expenses and eliminated excess manufacturing capacity
through extensive restructuring initiatives executed during the past
three years, including reducing the number of our employees by
approximately 18,500 since 1997 and closing 29 of our owned and operated
production and finishing facilities in North America and Europe;
. shifted from manufacturing two-thirds of our U.S. jeans internally in
1997 to manufacturing one-third internally in 1999;
. reduced corporate infrastructure at our San Francisco and regional
headquarters and consolidated and streamlined merchandising, marketing
and sales functions in all three of our operating regions; and
. hired a new senior management team, including a chief executive officer,
a chief financial officer, senior vice presidents responsible for
worldwide supply chain and worldwide human resources and heads for each
of our three operating regions.
We intend our restructuring efforts to help us achieve our strategic goals
of reversing the recent deterioration in our performance and repositioning our
business to support future growth. We do not anticipate taking any material
restructuring actions relating to additional capacity reductions or
reorganization efforts in 2000 or 2001.
Our Business Strategy
Going forward, our primary strategic goals are to leverage the worldwide
recognition of our brand names and our history of product innovation and high
product quality to reverse the recent deterioration in our performance and to
reposition our business to support future growth. To achieve these goals, we
have three key business strategies:
Reinvigorate our brands through better product innovation and increased
consumer and channel relevance.
We believe that an integrated presentation of new and innovative products
and marketing programs targeted to specific consumer and retail segments is
crucial to generating consumer demand for our products. We intend to:
. focus on continually updating our core products and creating new
products, such as our Levi's(R) Engineered Jeans(TM), that incorporate
design innovations, new fabrics and new finishes and that draw on our
long heritage of originality in product design and fabrication;
. design and market sub-brands and products that are relevant to our
various consumer segments ranging from teenagers and trend initiators
who demand fashion-forward styles, to urban professionals who desire
sophisticated casual wear, as well as to the broad group of consumers
who want mainstream, quality branded jeanswear and khaki pants for
everyday and business wear;
. leverage our global brand recognition and marketing capabilities by
adopting products and design concepts developed in one region and
introducing them to other geographic markets in which we operate;
. target our sub-brands and product offerings to specific distribution
channels in order to reach discrete consumer segments, create
differentiation for our retail customers and between our brands,
strengthen our position in our existing channels and address shifts in
retail distribution channels in both the United States and Europe; and
. develop product-focused marketing programs using both traditional
advertising vehicles such as television, print and point-of-sale
materials and non-traditional vehicles such as concert sponsorships,
product placement and Internet sites.
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Upgrade the presentation of our product at retail and improve our
relationships with our customers.
We distribute our products in a wide variety of retail formats around the
world including through chain and department stores in the United States,
Europe and Asia, franchise stores dedicated to our brands and specialty
retailers. We intend to:
. engage in more collaborative planning and performance monitoring
processes with our retail customers to achieve better product
presentation, assortment and inventory management;
. improve the presentation of our product at retail through new retailing
formats, better fixturing and visual merchandising, on-floor
merchandising services and other sales area upgrade programs; and
. increase the number of franchised or other retail formats dedicated to
our Dockers(R) brand products outside the United States in order to
present the brand in a focused, image-enhancing environment.
Improve our supply chain execution and continue to focus on cost reduction.
We made extensive restructuring changes during the last three years to shift
our sourcing base and reduce manufacturing costs and overhead expenses. We must
continue improving our supply chain in order to capture the benefits of these
changes and become a more effective competitor. We intend to:
. focus on improving the coordination of our design, merchandising,
forecasting, sourcing and logistics processes to reduce product lead
times and ensure product availability;
. improve the linkage of product supply to consumer demand and our ability
to ship complete and timely orders to our customers by increasing the
efficiency and effectiveness of our business processes; and
. leverage our restructuring initiatives to further reduce cost of goods
sold, operating expenses and inventory costs.
Our Brands and Products
We market a broad line of branded jeanswear, casual wear and dress pants
that appeal to diverse demographic groups in markets around the world. Through
a number of sub-brands and product lines under the Levi's(R), Dockers(R) and
Slates(R) brands, we target specific consumer segments and provide product
differentiation for our retail customers in our selected distribution channels.
We focus on creating new, innovative products relevant to our target consumers,
as well as ensuring that our core, traditional products are updated with new
finishes, fabrications and colors. We strive to leverage our global brand
recognition, product design and marketing capabilities to take products and
design concepts developed in one region and introduce them in other geographic
markets.
Levi's(R) Brand
We market jeans and jeans-related products under the Levi's(R) brand around
the world. Since their invention in 1873 by our founder, Levi Strauss,
Levi's(R) jeans have become one of the most successful and widely recognized
brands in the history of the apparel industry. In fiscal year 1999, sales of
our Levi's(R) brand products represented approximately 76% of our net sales,
and accounted for 69% of net sales in the Americas, 91% of net sales in Europe
and 96% of net sales in Asia Pacific.
According to a 1999 study performed on our behalf by an international market
research firm, the Levi's(R) brand was the first brand mentioned 29% of the
time by consumers ages 15 to 29 when asked to name a brand of jeans in the
United States, 40% in Germany and 53% in Japan, compared with 8%, 14% and 25%
for the next brand named in each of those countries. According to consumer
purchase tracking studies performed by the market research firms NPD, GfK, AC
Nielsen, CAMM and Taylor-Nelson, consumers purchased approximately 800 million
pairs of jeans in the United States, Europe and Asia during the 12 months ended
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September 1999. The same data indicates that we sold 15% of the jeans sold in
the United States, 10% of the jeans sold in key European markets and 21% of the
jeans sold in key Asian markets. In each region we believe we sold more jeans
than any other single brand of jeans.
Our Levi's(R) brand offerings include:
. Red Tab(TM) Products. Our Red Tab(TM) product line, identified by our
Tab device trademark on the back pocket, encompasses a variety of basic
jeans with different silhouettes, fits and finishes intended to appeal
to a wide range of consumers. Our core line is anchored by the classic
501(R) button-fly jean, named by Time Magazine as the "Best Fashion of
the Century" in its December 31, 1999 edition. We distribute Red Tab(TM)
products worldwide through many of our distribution channels.
. Silvertab(R) Brand. Our Silvertab(R) brand targets 15 to 19 year olds
and offers a more fashion-forward product range featuring
technologically advanced fabrics, such as microfiber, nylon ripstop and
"oily" canvas and innovative finishes for denim jeans. We distribute
Silvertab(R) products primarily through department stores and Original
Levi's Store(R) retail shops in the Americas.
. L2(R) Brand. Our L2(R) brand targets 15 to 24 year old suburban youth
who want fashionable products at value pricing. We distribute the L2(R)
brand through chain stores in the United States and in Asia.
. Levi's(R) Engineered Jeans(TM). In December 1999, we introduced
Levi's(R) Engineered Jeans(TM) in the first international jeanswear
launch in our history. Developed in Europe, the product represents our
reinvention of the blue jean. They are ergonomically engineered to fit
the body's contours and have a three-dimensional shape that we believe
provides innovative design, unique style, superior comfort and ease of
movement. We target Levi's(R) Engineered Jeans(TM) to 15 to 24 year olds
and are introducing them throughout Asia, Europe and the United States
through independent retailers, specialty stores, department stores and
Original Levi's Store(R) retail shops.
. Other. Our other Levi's(R) brand product lines include Lot 53(TM)
premium denim jeans, targeted to teenagers and distributed through
department stores in the United States; Levi's(R) Vintage Clothing for
jean "aficionados," a premium line available through high-end specialty
stores and independent retailers in Europe, Asia and the United States;
the Levi's(R) Red(TM) collection, a European-developed product designed
to reflect both our heritage and modern design concepts; the Sta-
Prest(R) product line, originally developed in the 1960s in the United
States and later adopted and updated in Europe, featuring a distinctive
permanent crease and sharp, clean look; and the All-Duty(TM) product
line sold in Europe, which features non-denim functional, military and
workwear style products.
Dockers(R) Brand
We market casual clothing, primarily pants and tops, under the Dockers(R)
brand, in more than 40 countries. We launched the brand in 1986 to address an
emerging consumer interest in khaki pants. We believe that the Dockers(R)
brand, through its product offering and marketing, played a major role in the
resurgence of khaki pants and the movement toward casual attire in the
workplace by helping create a standard for casual clothing. Today, according to
Cotton, Inc., approximately 70% of U.S. workplaces allow casual business wear
at least one day a week. In fiscal year 1999, sales of Dockers(R) brand
products represented approximately 22% of our net sales, accounting for 29% of
net sales in the Americas, 9% of net sales in Europe and 4% of net sales in
Asia Pacific.
The Dockers(R) brand has been a leader in the U.S. khaki category since its
launch. According to Market Facts, Inc., an independent market research firm,
71% of U.S. male consumers ages 18 to 45 own Dockers(R) casual pants. A 1999
tracking study conducted by Russell Research, Inc. reported that 22% of U.S.
female consumers ages 25 to 49 own Dockers(R) khakis.
Our Dockers(R) brand offerings are primarily targeted to men and women ages
25 to 39 and include:
. Dockers(R) brand. Dockers(R) brand products are the core line of the
brand. They include a broad range of casual khaki pants and are
complemented by a variety of tops and seasonal pant products in
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a range of fits, fabrics and styles. We distribute these products
through a variety of channels in all three of our operating regions,
including department stores and chain stores.
. Dockers(R) Premium. The Dockers(R) Premium pant line provides a range of
cotton pants constructed from premium fabrics with sophisticated details
in a range of finishes, fits, styles and colors. We distribute these
products through department stores in the United States.
. Dockers(R) Recode(TM). In Spring 2000, we launched the sub-brand
Dockers(R) Recode(TM) exclusively in U.S. department stores in order to
appeal to more fashion-involved consumers who want modern casual
clothes. A slightly more fashion-forward line of pants and tops, the
sub-brand consists of cotton-blended fabrications in a sophisticated
color spectrum. Beginning in Fall 2000, the collection will be expanded
with an offering of sweaters, outerwear, shoes and belts marketed by our
licensees.
. Dockers(R) K-1 Khakis. The brand's first global product launch,
Dockers(R) K-1 Khakis is a premium khaki pant inspired by the authentic
army khaki and made from the original Cramerton(R) army cloth. In Fall
2000, we will introduce a complete collection with new colors and
fabrics in shirts, sweaters, belts, outerwear and a variety of pants,
all inspired by military and antique workwear themes. We distribute
Dockers(R) K-1 Khakis through specialty and department stores in the
Americas, Europe and Asia.
. Other. Our other Dockers(R) product lines include Exact(TM) clothing, a
Dockers(R) brand, a collection of more refined casual dress styling
available through chain stores; Equipment for Legs(TM), performance wear
primarily available in Europe; and D(TM) Line products, a new boys' line
distributed in the United States targeted towards boys ages 7 to 14.
We work with established licensees to develop and market complementary
products under the Dockers(R) brand, including outerwear and leather goods,
men's and women's footwear, men's sweaters, hosiery and golf apparel.
Slates(R) Brand
We market dress pants and other products under the Slates(R) brand in the
United States. Launched in Fall 1996, the Slates(R) brand became the leading
dress pant brand at department stores by the end of 1997. According to the NPD
Group's point of sale tracking data, in 1999 the Slates(R) brand sold the most
dress pant units of any single brand in traditional department stores,
accounting for 21% of units sold. Sales of Slates(R) brand products
represented approximately 2% of our net sales in 1999.
Our Slates(R) brand offerings include:
. Men's Slates(R). The men's Slates(R) brand collection of pants, shirts,
sweaters and outerwear, combines contemporary styles with modern fabrics
and colors. We position the brand between casual pants and tailored
clothing and design and market it to meet the 25 to 34 year old
consumer's desire for a younger and more sophisticated casual look. This
brand is distributed to department stores and specialty stores.
. Women's Slates(R). In Fall 2000, we will add a new line of women's
dress-casual clothing to the Slates(R) brand. The line, named "Slates(R)
Janet Howard(R)" and designed by Janet Howard, will target women ages 24
to 35 with a designer-inspired line of dress pants, skirts, tops,
sweaters and dress jackets. We plan to distribute this line of products
to higher-end department stores to fill a gap between the classic and
contemporary women's apparel categories.
For men's products, we produce the pants in the Slates(R) line and work
with established licensees to develop and market complementary products under
the Slates(R) brand, including a broad assortment of knit and woven tops,
sweaters, hosiery and outerwear and, planned for Spring 2001, sportcoats and
suits.
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Sales, Distribution and Customers
We distribute our products on a worldwide basis through selected retail
channels, including chain stores, department stores, specialty stores,
dedicated franchised stores, outlets, Internet sites and mail-order catalogs.
Our distribution strategy focuses on:
. improving the presentation of our products at retail through introducing
new retailing formats, executing new fixturing, visual merchandising and
other sales area upgrade programs and providing on-floor merchandising
services; and
. strengthening our relationships with our retail customers through more
collaborative planning and performance monitoring processes, providing
sub-brands and products to specific distribution channels in order to
create points of differentiation for our customers and providing them
with products targeted for their core consumers.
Americas
In the Americas, we distribute our products through national and regional
chains, department stores, specialty stores and Original Levi's Store(R) and
Dockers(R) Store retail shops. We have approximately 3,000 retail customers
operating more than 16,800 locations in the United States and Canada. Sales of
Levi's(R), Dockers(R) and Slates(R) products to our top five and top 10
customers in the United States accounted for approximately 34% and 46% of our
total net sales in fiscal year 1999, and 51% and 69% of our Americas net sales
in fiscal year 1999, as compared to 32% and 43% of our total net sales in
fiscal year 1998, and 48% and 65% of our Americas net sales in fiscal year
1998. Our top 10 customers in 1999, on both an Americas and total company
basis, were American Retail, Designs, Inc., Dillards, Inc., Federated
Department Stores, Inc., Goody's Family Clothing, Inc., J.C. Penney, Kohl's
Corporation, The May Department Stores Company, the Mervyn's unit of Target and
Sears, Roebuck & Co. J.C. Penney is the only customer that represented more
than 10% of our total net sales, accounting for 11%, 12% and 11% of our total
net sales in fiscal years 1999, 1998 and 1997. We also target limited
distribution premium products like Levi's(R) Vintage Clothing to independent,
image-conscious specialty stores in major metropolitan areas who cater to more
fashion-forward, trend-influential consumers.
Europe
Our European customers include large department stores, such as Corte Ingles
in Spain, Galeries Lafayette in France and Karstadt Quelle AG in Germany;
dedicated, single-brand Original Levi's Store(R) and Dockers(R) Store retail
shops; mail order accounts; and a substantial number of independent retailers
operating either a single or small group of jeans-focused stores or general
clothing stores. We depend for nearly half our European sales on these
independent retailers, who are under increasing pressure from both vertically
integrated specialty stores and department stores. The more varied and
fragmented nature of European retailing means that we are less dependent on
major customers than we are in the United States. In 1999, our top 10 European
customers accounted for only 11% of our total European net sales.
Asia Pacific
In Asia Pacific, we generate nearly half of our sales through the specialty
store channel, which includes multi-brand as well as independently owned
Original Levi's Store(R) retail shops. Over 35% of our products are sold
through national jean stores, such as Right On Co. LTD and Jeans Mate Corp. in
Japan, with the balance distributed through department stores and general
merchandise stores. As in Europe, the varied and fragmented nature of Asian
retailing means we are less dependent on individual customers in the region.
Our Asia Pacific business is heavily weighted toward Japan, which represented
approximately 61% of our 1999 net sales in the region.
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Dedicated Stores
We have a network of approximately 750 franchised or other independently
owned stores selling Levi's(R) brand or Dockers(R) brand products exclusively
under the "Original Levi's Store(R)," "Levi's(R) Store" and "Dockers(R) Store"
names in Europe, Asia, Canada and Latin America. These dedicated-format stores
are strategically important as vehicles for demonstrating the breadth of our
product line, enhancing brand image and generating sales. These stores also are
an important distribution channel in newer and smaller markets in Eastern
Europe, Asia Pacific and Latin America. We own and operate a small number of
stores dedicated to the Levi's(R) brand, including stores in the United States
located in New York, Chicago, Orange County, San Francisco, San Diego, Boston
and Seattle and abroad in London, Milan, Paris and Berlin.
We also own in the United States and Japan, and license third parties in the
United States and abroad to operate, outlet stores for the disposition of
closeout, irregular and return goods. Sales in fiscal year 1999 through our
outlet channels in the United States represented 7% of our Americas net sales
and 4% of our total net sales. Our strategy is to use the outlet store channel
to support our brands by moving closeout and irregular goods as quickly as
possible through the stores and by reducing the flow of goods to channels that
are not consistent with brand image and distribution strategies. In order to
better meet consumer needs, we supplement the product offering to the outlet
stores in the United States by producing selected basic products, including
jeans, khaki pants and denim shirts, specifically for those stores.
Internet
We operate websites devoted to each of the Levi's(R), Dockers(R) and
Slates(R) brands as marketing vehicles to enhance consumer understanding of our
brands. We currently do not sell products directly to consumers through the
Internet. In the United States, our products are currently sold online through
www.macys.com, operated by Federated, and www.jcpenney.com, operated by J.C.
Penney, each of which is linked to our brand sites. In Europe, authorized
dealers and mail order accounts who meet our standards relating to customer
service, return policy, site content, trademark use and other matters may sell
our products to consumers through Internet sites.
Advertising and Promotion
We make substantial investments in advertising, retail and promotion
activities in support of our brands to increase consumer relevance and to drive
consumer demand. We spent approximately $490.2 million, or approximately 10% of
total net sales, on these activities in fiscal year 1999. We advertise through
a broad mix of media, including television, national publications, billboards
and other outdoor vehicles. We execute both global and region-specific
marketing programs to achieve consistent brand positioning while allowing
flexibility to optimize program execution in local markets. Recent examples of
our global marketing initiatives include our sponsorships of World AIDS Day and
the MTV Awards, and advertising campaigns associated with the global launch of
Levi's(R) Engineered Jeans(TM).
Our marketing strategy focuses on:
. developing clear consumer value propositions that drive product
development and messaging in order to differentiate our brands and
products;
. developing integrated marketing programs that effectively coordinate
product launches and promotions with specific traditional and non-
traditional advertising and retail point of sales activities;
. creating superior quality advertising and continuing our tradition of
award-winning commercials; and
. enhancing presentation of product at retail through innovative retail
initiatives.
We are increasing our use of less traditional marketing vehicles, including
event and music sponsorships, product placement in television shows, music
videos and films and alternative marketing techniques, including
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street-level and nightclub events and similar targeted, small-scale activities.
For example, we promote our L2(R) sub-brand through both traditional media and
less traditional programs including sponsorship of the Aggressive Skating
Association pro in-line skating tour involving a high school exhibition tour
and retail partnerships; a tie-in with the teen movie "Whatever it Takes,"
including wardrobing the stars, personal appearances and in store promotions
with a key retailer; and creating a website, www.L2.com, featuring interactive
programs for teens.
Competition
The worldwide apparel industry is highly competitive and fragmented. We
compete in all of our markets with numerous designers, manufacturers, private
labels and specialty store retailers, both domestic and foreign. The success of
our business depends on our ability to shape and stimulate consumer tastes and
demands by producing innovative, attractive, and competitively priced fashion
products. In fashion sensitive markets such as the jeans and casual wear
markets, barriers to entry are sufficiently low so that talented designers and
others can become meaningful competitors soon after establishing a new label.
We believe that the primary factors upon which we compete are:
. anticipating and responding to changing consumer demands in a timely
manner;
. maintaining favorable brand recognition;
. developing innovative, high-quality products in sizes, colors and styles
that appeal to consumers;
. pricing products;
. providing strong and effective marketing support;
. creating an acceptable value proposition for retail customers;
. ensuring product availability and optimizing supply chain efficiencies
with retailers; and
. obtaining sufficient retail floor space.
We believe our competitive strengths include:
. strong worldwide brand recognition;
. competitive product quality and value;
. long-standing relationships with leading department stores and other
chain stores worldwide;
. our network of franchised and other Original Levi's Store(R) and
Dockers(R) Store retail shops in Europe, Asia, Canada and Latin America;
and
. our commitment to ethical conduct and social responsibility.
We believe that the total unit sales of Levi's(R) brand jeans in the United
States is second only to the combined total unit sales of VF Corporation's
principal jeans brands, Wrangler, Lee and Rustler. We believe that the total
unit sales of Levi's(R) brand jeans on a pan-European basis and on a pan-Asia
Pacific basis is greater than the total unit sales of jeans of any single brand
in those regions and that there is no single competitor offering multiple
brands with greater total sales of jeans in either of those regions.
Americas
We face intense competition across all of our brands from designer labels,
vertically integrated specialty stores, mass merchandisers, private labels and
fashion labels. Because we sell both basic and fashion-oriented products under
the Levi's(R), Dockers(R) and Slates(R) brands to retailers in diverse channels
across a wide range of retail price points, we face a wide range of
competitors, including:
. other jeanswear manufacturers, including VF Corporation, marketer of the
Lee, Wrangler and Rustler brands;
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. fashion-oriented designer apparel marketers, including Polo Ralph Lauren
Corporation, Calvin Klein, Nautica Enterprises, Guess?, Inc. and Tommy
Hilfiger Corp.;
. vertically integrated specialty stores, including Gap Inc., Abercrombie
& Fitch, American Eagle Outfitters Inc., J. Crew and Eddie Bauer, Inc.;
. lower-volume but high visibility fashion-forward jeanswear brands that
appeal to the teenage market, including the FUBU, JNCO, Lucky, MUDD and
Diesel brands;
. casual wear manufacturers, including Haggar Corp., Liz Claiborne, Inc.
and Savane International Corp.;
. retailer private labels, including J.C. Penney's Arizona brand and
Sears' Canyon River Blues and Canyon River Khakis brands; and
. mass merchandisers, including Wal-Mart Stores, Inc., Target and Kmart.
Europe
While there is no one particular brand with a strong pan-European presence,
strong local brands and retailers exist in certain markets, including Diesel in
Italy and Scandinavia, Pepe in Spain and Lee Cooper in France. Zara, Hennes &
Mauritz AB, Energie and other vertically integrated specialty retailers, and
athletic wear firms such as adidas-Salomon, also offer competitive products and
are an increasing competitive force in the market. Our principal U.S.
competitors, including Gap Inc. and VF Corporation, are expanding their
collective presence in Europe. While these U.S. competitors generally lack the
presence in Europe they enjoy in the United States, we believe they view Europe
as a significant growth opportunity, and we anticipate increased competition
from them going forward.
Asia Pacific
Competitors in the jeanswear market consist of both regional brands, such as
Edwin, our principal competitor in Japan, and U.S. brands, including Guess, Lee
and Wrangler, which offer basic products available in local markets.
Competitors in both jeanswear and casual apparel also include vertically
integrated specialty stores, such as UNIQLO, Gap Inc., Esprit and Eddie Bauer
in Japan, and Giordano, a more value-focused retailer that operates throughout
the region.
Sourcing, Manufacturing and Raw Materials
We obtain our products from a combination of company-owned facilities and
independent manufacturers. Over the last three years, we shifted our sourcing
base substantially toward outsourcing by closing 29 company-owned production
and finishing facilities in North America and Europe. In 1999, we purchased
approximately two-thirds of our U.S. jeans units from independent
manufacturers, as compared to approximately one-third in 1997. We believe that
outsourcing allows us to maintain production flexibility while avoiding the
substantial capital expenditures and costs related to maintaining a large
internal production capability.
Each of our operating regions operates a supply chain network that provides
product management, demand-forecasting, quality assurance, manufacturing and
logistics support to our brands. Within each of our brands, merchandisers and
designers create seasonal product plans that are intended to reflect consumer
preferences, market trends and retail customer requirements. During the
development phase, the merchandisers and designers work closely with the
product managers to ensure completion of manufacturing specifications and
costing for each product in the seasonal plan. They also consult with forecast
specialists and sales representatives to determine the potential unit volume
for the fashion and replenishment products in the plan. Once the brand's
seasonal plan is finalized, product managers focus on sourcing the products in
the plan.
We purchase the fabric and raw materials used in our business, particularly
denim and twill, from several suppliers, including Cone Mills, Burlington
Industries, Galey & Lord, including its Swift Denim subsidiary and
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American Cotton Growers. In addition, we purchase thread, trim, buttons,
zippers, snaps and various other product components from numerous suppliers. We
do not have long-term raw materials or production contracts with any of our
principal suppliers, except for Cone Mills, which is the sole worldwide
supplier of the denim used for our 501(R) jeans, and which supplied
approximately 22%, 24% and 27% in 1999, 1998 and 1997 of the total volume of
fabrics we purchased worldwide. Our contract with Cone Mills provides for a
rolling five-year term unless either Cone Mills or we elect not to extend the
agreement, upon which the agreement will terminate at the end of the then-
current term. The contract also ensures our supply for three years following a
change of control of Cone Mills. We may terminate the Cone Mills contract at
any time upon 30 days notice. We have not experienced any material difficulty
in obtaining fabric and other raw materials to meet production needs in the
past.
Our purchased fabrics are shipped directly from fabric manufacturers to our
owned manufacturing plants, to cutting facilities for cutting and shipment on
to third party contractors or directly to third party contractors for garment
construction. In most cases where we use contractors, we retain ownership of
the fabric throughout the manufacturing process. We use numerous independent
manufacturers, principally in Latin America and Asia, for the production of our
garments. We also use contractors who both produce or purchase fabric and sew
the garments. These package contractors represent a small but growing
percentage of our production and they enable us to reduce working capital
relating to work-in-process inventories. We typically conduct business with our
contractors on an order-by-order basis. We inspect fabrics and finished goods
as part of our quality control program.
We require all third party contractors who manufacture or finish products on
our behalf to abide by a stringent code of conduct that sets guidelines for
employment practices such as wages and benefits, working hours, health and
safety, working age and disciplinary practices, and for environmental, ethical
and legal matters. We assess working conditions and contractors' compliance
with our standards on a regular basis and implement continuous improvement
plans as needed.
We operate 22 dedicated distribution centers in 19 countries. Distribution
center activities include receiving finished goods from our plants and
contractors, inspecting those products and shipping them to our customers. In
some instances, we outsource distribution activities to third party logistics
providers.
Trademarks
We regard our trademarks as our most valuable assets and believe they have
substantial value in the marketing of our products. Our core trademarks include
Levi's(R), Silvertab(R), L2(R), 501(R), Dockers(R), Slates(R), the Arcuate
trademark, the Tab device and the Two Horse Brand trademark. We protect these
trademarks by registering them with the U.S. Patent and Trademark Office and
with governmental agencies in other countries where our products are
manufactured and sold. We work vigorously to enforce and protect our trademark
rights by engaging in regular market reviews, helping local law enforcement
authorities detect and prosecute counterfeiters, issuing cease-and-desist
letters against third parties infringing or denigrating our trademarks and
initiating litigation as necessary. We also work with trade groups and industry
participants seeking to strengthen laws relating to the protection of
intellectual property rights in markets around the world. We grant licenses to
other parties to manufacture and sell products with our trademarks in product
categories and in geographic areas in which we do not operate.
Social Responsibility
We have a long-standing corporate culture characterized by ethical conduct
and social responsibility. Our culture and values are reflected in policies and
initiatives that we believe distinguish us from others in the apparel industry.
We were a pioneer in many social and cultural areas:
. We were the first multinational company to develop a comprehensive code
of conduct intended to ensure that workers making our products anywhere
in the world would do so in safe and healthy working conditions and be
treated with dignity and respect.
55
<PAGE>
. Our commitment to social justice is highlighted by a unique initiative
that addresses racial prejudice and seeks to improve race relations by
supporting community organizations working together to eliminate racism.
. We were among the first companies to offer employee benefits such as
flexible time-off policies and domestic partner benefits.
. We have been a leader in promoting AIDS awareness and education since
1982.
We are active in the communities where we have a presence. We and the Levi
Strauss Foundation jointly contributed $20.3 million during fiscal year 1999 to
community agencies in over 40 countries to support employee volunteerism and
programs in AIDS prevention and care, economic empowerment, youth empowerment
and social justice. In addition, we support more than 100 community involvement
teams worldwide that facilitate employee volunteerism and raise funds for
community projects.
Employees
As of February 27, 2000, we employed approximately 17,500 people,
approximately 8,900 of whom were located in the United States. Most of our
production and distribution employees in the United States are covered by
various collective bargaining agreements. Outside the United States, most of
our production and distribution employees are covered by either industry-
sponsored and/or state-sponsored collective bargaining mechanisms. We consider
our relations with our employees to be good and have not recently experienced
any material job actions or labor shortages.
Properties
We conduct manufacturing, distribution and administrative activities in
owned and leased facilities. We have renewal rights in most of our property
leases. We anticipate that we will be able to extend these leases on terms
satisfactory to us or, if necessary, locate substitute facilities on acceptable
terms. We believe our facilities and equipment are in good condition and are
suitable for our needs. Information about manufacturing, finishing and
distribution facilities and other key operating properties in use as of April
28, 2000 is summarized in the following table:
56
<PAGE>
<TABLE>
<CAPTION>
Location Primary Use Leased/Owned
- -------- ----------- ------------
<S> <C> <C>
United States
Little Rock, AR......... Distribution Owned
Hebron, KY.............. Distribution Owned
Canton, MS.............. Distribution Owned
Henderson, NV........... Distribution Owned
San Antonio, TX......... Finishing Owned
San Antonio, TX......... Manufacturing Owned
San Francisco, CA....... Manufacturing Owned
Blue Ridge, GA.......... Manufacturing Owned
Powell, TN.............. Manufacturing Owned
Brownsville, TX......... Manufacturing Owned
El Paso (Kastrin), TX... Manufacturing Owned
San Benito, TX.......... Manufacturing Owned
Westlake, TX............ Data Center Leased
Other Americas
Buenos Aires,
Argentina.............. Distribution Leased
Cotia, Brazil........... Distribution Leased
Rexdale, Canada......... Distribution Owned
Stoney Creek, Canada.... Manufacturing Owned
Brantford, Canada....... Finishing Leased
Edmonton, Canada........ Manufacturing Leased
Naucalpan, Mexico....... Distribution Leased
Europe
Schoten, Belgium........ Distribution Leased
Les Ulis, France........ Distribution Leased
Heustenstamm, Germany... Distribution Owned
Kiskunhalas, Hungary.... Manufacturing, Finishing and Distribution Owned
Milan, Italy............ Distribution Leased
Amsterdam, Netherlands.. Distribution Leased
Plock, Poland........... Manufacturing and Finishing Leased
Warsaw, Poland.......... Distribution Leased
Dundee, Scotland........ Manufacturing Owned
Bellshill, Scotland..... Finishing Owned
Northhampton, U.K....... Distribution Owned
Cape Town, South
Africa................. Manufacturing, Finishing and Distribution Leased
Sabedell, Spain......... Distribution Leased
Bonmati, Spain.......... Manufacturing Owned
Olvega, Spain........... Manufacturing Owned
Helsingborg, Sweden..... Distribution Owned
Corlu, Turkey........... Manufacturing, Finishing and Distribution Owned
Asia Pacific
Auckland, New Zealand... Distribution Leased
Adelaide, Australia..... Manufacturing and Distribution Owned
Bangalore, India........ Distribution Leased
Jawa Barat, Indonesia... Distribution Leased
Jawa Barat, Indonesia... Finishing Leased
Hiratsuka Kanagawa,
Japan.................. Distribution Owned
Makati, Philippines..... Distribution Leased
Makati, Philippines..... Manufacturing Leased
</TABLE>
57
<PAGE>
Our global headquarters and the headquarters of our Americas business are
both located in leased premises in San Francisco, California. Our Europe and
Asia Pacific headquarters are located in leased premises in Brussels, Belgium
and Singapore. We also lease or own over 110 administrative and sales offices
in 44 countries, as well as lease a number of small warehouses in nine
countries. In addition, we have 52 company- operated retail and outlet stores
in eight countries in owned and leased premises, of which 10 stores are outlet
stores in the United States, and 15 stores are located in Poland. We also own
or lease several facilities we formerly operated and have closed.
Legal Proceedings
We are subject to claims against us, and we make claim against others, in
the ordinary course of our business, including claims arising from the use of
our trademarks. We do not believe that the resolution of any pending claims
will materially adversely affect our business.
58
<PAGE>
MANAGEMENT
Set forth below is information concerning our directors and executive
officers as of April 28, 2000.
<TABLE>
<CAPTION>
Name Age Office and Position
- ---- --- -------------------
<S> <C> <C>
Peter E. Haas, Sr. ...... 81 Director, Chairman of the Executive Committee
Robert D. Haas........... 58 Director, Chairman of the Board of Directors
Philip A. Marineau....... 53 Director, President and Chief Executive Officer
Angela Glover Blackwell.. 54 Director
Robert E. Friedman....... 50 Director
Tully M. Friedman........ 58 Director
James C. Gaither......... 62 Director
Peter A. Georgescu....... 61 Director
Peter E. Haas, Jr. ...... 52 Director
Walter J. Haas........... 50 Director
F. Warren Hellman........ 65 Director
Patricia Salas Pineda.... 48 Director
T. Gary Rogers........... 57 Director
G. Craig Sullivan........ 60 Director
R. John Anderson......... 49 Senior Vice President and President, Levi Strauss
Asia Pacific
William B. Chiasson...... 47 Senior Vice President and Chief Financial Officer
Karen Duvall............. 37 Senior Vice President, Worldwide Supply Chain
Linda S. Glick........... 52 Senior Vice President and Chief Information Officer
James Lewis.............. 49 Senior Vice President and President, Levi Strauss
Americas
Joseph Middleton......... 44 Senior Vice President and President, Levi Strauss
Europe, Middle East, Africa
Albert F. Moreno......... 56 Senior Vice President, General Counsel and Assistant
Secretary
Fred Paulenich........... 35 Senior Vice President, Worldwide Human Resources
</TABLE>
All members of the Haas family are descendants of our founder, Levi Strauss.
Peter E. Haas, Sr. is the father of Peter E. Haas, Jr. and the uncle of Robert
D. Haas and Walter J. Haas. Robert E. Friedman is a descendant of Daniel E.
Koshland, who joined his brother-in-law, Walter A. Haas, Sr., in our management
in 1922.
Peter E. Haas, Sr. became Chairman of the Executive Committee of our Board
of Directors in 1989 after serving as Chairman of our Board since 1981. He has
been a member of our Board since 1948. He joined us in 1945, became President
in 1970 and Chief Executive Officer in 1976. Mr. Haas is a former Director of
American Telephone and Telegraph Co., Crocker National Corporation and Crocker
National Bank.
Robert D. Haas is the Chairman of our Board. He was named Chairman in 1989
and served as Chief Executive Officer from 1984 until 1999. Mr. Haas joined us
in 1973 and served in a variety of marketing, planning and operating positions
before becoming Chief Executive Officer.
Philip A. Marineau, a director since 1999, is our President and Chief
Executive Officer. Prior to joining us, Mr. Marineau was the President and
Chief Executive Officer of Pepsi-Cola North America from 1997 to 1999. From
1996 to 1997, Mr. Marineau was President and Chief Operating Officer of Dean
Foods Company. From 1972 to 1996, Mr. Marineau held a series of positions at
Quaker Oats Company including President and Chief Operating Officer from 1993
to 1996.
Angela Glover Blackwell, a director since 1994, is founder and president of
PolicyLink, a nonprofit research, advocacy and communications organization
devoted to eliminating poverty and strengthening communities. From 1995 to
1998, Ms. Blackwell was Senior Vice President of the Rockefeller Foundation
where she oversaw the foundation's domestic and cultural divisions. Ms.
Blackwell was the founder of Oakland, California's Urban Strategies Council, a
nonprofit organization focused on reducing persistent urban poverty.
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<PAGE>
Robert E. Friedman, a director since 1998, is founder and Chairman of the
Board of the Corporation for Enterprise Development, a Washington, D.C.-based
not-for-profit economic development research, technical assistance and
demonstration organization which he founded in 1979. The Corporation for
Enterprise Development works with public and private policymakers in
governments, international organizations, corporations, private foundations,
labor unions and community groups to design and implement economic development
strategies.
Tully M. Friedman, a director since 1985, is Chairman and Chief Executive
Officer of Friedman Fleischer & Lowe LLC, a private equity investment firm he
founded in 1997. Formerly, Mr. Friedman was a founding partner of Hellman &
Friedman, a private investment firm formed in 1984. Prior to forming Hellman &
Friedman in 1984, he was a managing director and general partner of Salomon
Brothers Inc. Mr. Friedman currently serves on the board of directors of The
Clorox Company, Mattel, Inc., McKesson Corporation, Archimedes Technology Group
and Brand Farm, Inc.
James C. Gaither, a director since 1988, is a partner of the law firm of
Cooley Godward LLP in San Francisco, California. Prior to joining Cooley
Godward in 1969, he served as law clerk to the Honorable Earl Warren, Chief
Justice of the United States, special assistant to the Assistant Attorney
General in the U.S. Department of Justice and staff assistant to the President
of the United States, Lyndon B. Johnson. Mr. Gaither is currently a director of
Amylin Pharmaceuticals, Inc., Basic American, Inc., Blue Martini Software,
Nvidia and Siebel Systems, Inc.
Peter A. Georgescu, a director since February 2000, is Chairman Emeritus of
Young & Rubicam Inc., a global advertising agency. Prior to his retirement in
January 2000, Mr. Georgescu served as Chairman and Chief Executive Officer of
Young & Rubicam since 1993 and, prior to that, as President of Y&R Inc. from
1990 to 1993, Y&R Advertising from 1986 to 1990 and President of its Young &
Rubicam international division from 1982 to 1986. Mr. Georgescu is currently a
director of IFF Corporation and Briggs & Stratton, Inc.
Peter E. Haas, Jr., a director since 1985, is a director or trustee of each
of the Levi Strauss Foundation, Red Tab Foundation, San Francisco Foundation,
The Stern Grove Festival Foundation, Walter and Elise Haas Fund and the Novato
Youth Center Honorary Board. Mr. Haas was one of our managers from 1972 to
1989. He was Director of Product Integrity of The Jeans Company, one of former
operating units, from 1984 to 1989. He served as Director of Materials
Management for Levi Strauss USA in 1982 and Vice President and General Manager
in the Menswear Division in 1980.
Walter J. Haas, a director since 1995, served as Chairman and Chief
Executive Officer of the Oakland A's Baseball Company from 1993 to 1995,
President and Chief Executive Officer from 1991 to 1993 and in other management
positions with the club from 1980 to 1991.
F. Warren Hellman, a director since 1985, served as chairman and general
partner of Hellman & Friedman LLC, a private investment firm, since its
inception in 1984. Previously, he was a general partner of Hellman Ferri (now
Matrix Partners) and managing director of Lehman Brothers Kuhn Loeb, Inc. Mr.
Hellman is currently a director of Franklin Resources, Inc., Il Fornaio
(America) Corp., DN&E Walter & Co., Young and Rubicam, Inc. and Sugar Bowl
Corporation.
Patricia Salas Pineda, a director since 1991, is currently Vice President of
Legal, Human Resources, Government Relations and Environmental Affairs and
Corporate Secretary of New United Motor Manufacturing, Inc. She has held this
position since 1996. Prior to assuming that position, she served as General
Counsel from 1990 to 1996. Ms. Pineda is currently a trustee of the RAND
Corporation and a director of the James Irvine Foundation.
T. Gary Rogers, a director since 1998, is Chairman of the Board and Chief
Executive Officer of Dreyer's Grand Ice Cream, Inc., a manufacturer and
marketer of premium ice cream products. He has held this position since 1977.
He serves as a director of Shorenstein Company, L.P., Stanislaus Food Products
and Gardonjim Farms.
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<PAGE>
G. Craig Sullivan, a director since 1998, is Chairman of the Board and Chief
Executive Officer of The Clorox Company, a major consumer products firm. Prior
to his election as Vice Chairman and Chief Executive Officer of Clorox in 1992,
Mr. Sullivan was group vice president with overall responsibility for
manufacturing and marketing, the company's laundry and cleaning products in the
United States, the international business, the manufacturing and marketing of
products for the food service industry and the corporate purchasing and
distribution functions.
R. John Anderson, President of our Asia Pacific Division since 1998, joined
us in 1979. Mr. Anderson served as General Manager of Levi Strauss Canada and
as President of Levi Strauss Canada and Latin America from 1996 to 1998. He has
held a series of merchandising positions with us in Europe and the United
States, including Vice President, Merchandising and Product Development for the
Levi's(R) brand in 1995.
William B. Chiasson, our Senior Vice President and Chief Financial Officer,
joined us in 1998. From 1988 to 1998, Mr. Chiasson held various positions with
Kraft Foods Inc., a subsidiary of Philip Morris Companies, including Senior
Vice President of Finance and Information Systems. Prior to joining Kraft
Foods, he was Vice President and Controller for Baxter Healthcare Corporation,
Hospital Group.
Karen Duvall, our Senior Vice President of Worldwide Supply Chain, joined us
in 2000. Ms. Duvall was Executive Vice President of Global Operations for
Warner Lambert Company, a major pharmaceutical firm, from 1997 to 2000. At
Warner Lambert, Ms. Duvall also served as Director of Global Sourcing for
Marketing Services from 1996 to 1997. From 1994 to 1996, Ms. Duvall was a
management consultant at Booz Allen & Hamilton.
Linda S. Glick, our Senior Vice President and Chief Information Officer
since 1996, joined the Company in 1976. She has held a number of positions
including Vice President of Information Resources for Levi Strauss
International from 1993 to 1996, Director of Information Resources and Business
Systems from 1989 to 1993 and Director of Information Resources for The Jeans
Company from 1987 to 1989. Ms. Glick has announced her retirement, effective
upon appointment of her successor.
James Lewis, our Senior Vice President and President, Levi Strauss Americas,
joined us in 2000. From 1995 to 2000, Mr. Lewis held various positions with Liz
Claiborne, Inc., including Group President (responsible for all of Liz
Claiborne's operating units), Group President for the Liz Claiborne women's
casual apparel division and Division President for LizWear. Before joining Liz
Claiborne, Mr. Lewis was for 10 years Senior Vice President, Merchandise,
Design and Production Planning for Haggar Clothing Company.
Joseph Middleton, our Senior Vice President and President of Levi Strauss
Europe, Middle East and Africa since 1999, joined us in 1981. He held the
position of General Manager of the Dockers(R) brand in Europe from 1993 to
1999, General Manager of Levi Strauss New Zealand from 1990 to 1993 and a
variety of other positions from 1981 to 1990.
Albert F. Moreno, our Senior Vice President and General Counsel since 1996,
joined us in 1978. He held the position of Chief Counsel for Levi Strauss North
America from 1994 to 1996 and Deputy General Counsel from 1985 to 1994. He is a
member of the Board of Directors of New Century Energies, Inc.
Fred Paulenich, our Senior Vice President of Worldwide Human Resources,
joined us in 2000. Prior to joining us, Mr. Paulenich was Vice President and
Chief Personnel Officer of Pepsi-Cola North America from 1999 to 2000. At
Pepsi-Cola, he has held a series of management positions including Vice
President of Headquarters Human Resources from 1996 to 1998, Vice President of
Personnel from 1995 to 1996, Director of Compensation from 1993 to 1994 and
Senior Manager of Organizational Capability from 1992 to 1993.
Our Board of Directors
Our board of directors has 14 members. Directors are elected annually by the
trustees of the voting trust and serve for one-year terms. Directors may be
removed, with or without cause, by the trustees of the voting trust.
61
<PAGE>
Committees. Our board of directors currently has three committees.
. Audit. Our audit committee reviews, with management and with independent
and internal auditors, our accounting and reporting policies and
internal controls, the scope, cost and outcome of the independent audit
and the selection of an auditor.
-- Members: Blackwell, T. Friedman, Georgescu, P.E. Haas, Jr., W. J.
Haas, Hellman, Pineda and Sullivan.
. Personnel. Our personnel committee reviews our employee compensation and
benefit programs, approves and monitors incentive programs, establishes
the compensation of and approves the perquisites and reimbursed expenses
for members of senior management and administers a number of our
executive and employee compensation plans.
-- Members: R. Friedman, Gaither, Georgescu, Hellman, Pineda, Rogers
and Sullivan.
. Corporate Ethics and Social Responsibility. Our corporate ethics and
social responsibility committee reviews our efforts to meet our social
responsibilities and to maintain policies, programs and practices that
conform with moral, legal and social standards. In addition, the
corporate ethics and social responsibility committee also reviews our
employment practices, our equal employment opportunity compliance and
compliance with our code of worldwide business ethics and recommends
contributions to outside beneficiaries and the Levi Strauss Foundation.
-- Members: Blackwell, R. Friedman, T. Friedman, Gaither, Georgescu,
P.E. Haas, Jr., P.E. Haas, Sr., R.D. Haas, W.J. Haas, Marineau and
Rogers.
Compensation. Directors who are also stockholders or employees do not
receive compensation for their services as directors. Directors who are not
stockholders or employees, Mr. Gaither, Ms. Blackwell, Ms. Pineda, Mr. Rogers,
Mr. Sullivan and Mr. Georgescu, receive annual compensation of approximately
$62,000. This amount includes an annual retainer fee of $6,000, meeting fees of
$1,000 per meeting day attended and long-term variable pay in the form of 1,800
Leadership Shares units, for a target value of $45,000 per year. The actual
amount for each payment varies depending on the years of service, the number of
meetings attended and the actual value of the granted units upon vesting.
Mr. Gaither, Ms. Blackwell and Ms. Pineda each received 1,800 Leadership
Shares units in 1999. Mr. Gaither, Ms. Blackwell and Ms. Pineda each received
payments under the Long-Term Incentive Plan and the Long-Term Performance Plan
of approximately $59,000 in 1999. If the Global Success Sharing Plan were to
pay out at target levels in 2002, the outside directors' effective target
compensation would be approximately $82,000. During 1999 we concluded that,
based on our financial performance, the targets under the plan would not be
achieved and that the probability of a payment in 2002 is highly unlikely.
Directors who are not employees or stockholders are eligible to participate in
a deferred compensation plan.
Personnel Committee Interlocks and Insider Participation
The members of our personnel committee in 1999 were Mr. Friedman, Mr.
Gaither, Mr. Hellman, Ms. Pineda, Mr. Rogers and Mr. Sullivan. Mr. Georgescu
joined the Personnel Committee when he joined our board of directors in
February 2000.
Mr. Hellman is a general partner of Hellman & Friedman, a private investment
firm that has provided financial advisory services to us in the past. We did
not pay any fees to Hellman & Friedman during fiscal year 1999. Mr. Gaither is
a partner of the law firm Cooley Godward LLP. Cooley Godward provided legal
services to us in 1999 and received approximately $78,000 in fees.
62
<PAGE>
Executive Compensation
This table provides compensation information for our chief executive officer
and other executive officers who were our most highly compensated officers in
1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
LTIP All Other
Name/Principal Position Year Salary Bonus(1) Awards(2) Compensation(3)
- ----------------------- ---- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert D. Haas............. 1999 $1,248,462 -- $187,000 $ 90,000
Chairman and Chief
Executive Officer
Philip A. Marineau......... 1999 153,846 -- -- 3,172,234
President and Chief
Executive Officer(4)
Gordon D. Shank............ 1999 412,712 -- 14,201 65,079
Senior Vice President and
Chief Marketing Officer(5)
William B. Chiasson........ 1999 450,449 -- -- --
Senior Vice President and
Chief Financial Officer
John L. Ermatinger......... 1999 356,462 -- 16,522 123,057
Senior Vice President and
President Levi Strauss
Americas(5)
Donna J. Goya.............. 1999 348,404 -- 26,851 26,130
Senior Vice President,
Human Resources(5)
Peter A. Jacobi............ 1999 402,908 -- 55,000 4,202,481
President and Chief
Operating Officer(5)
</TABLE>
- --------
(1) We did not pay any bonus amounts for 1999 performance. We paid Mr. Marineau
a $3.0 million signing bonus, reported in the table under "All Other
Compensation," as provided under our employment agreement with him.
(2) These reflect amounts earned during 1999 under our Long-Term Incentive
Plan, a performance unit plan now replaced by our Leadership Shares Plan.
Under the Long-Term Incentive Plan, we granted performance units to
participants with an initial target value. At the end of a three-year
measurement period, we determine the actual per unit value based on our
estimated relative shareholder return and return on investment over that
period. Once valued, we pay out the unit value in equal installments over a
three-year period. Interest at the prime rate is added to the second and
third installments. The amounts shown in the table relate to the 1997 to
1999 measurement period and will be paid in equal installments in 2000,
2001 and 2002.
(3) For all officers except Mr. Marineau, the amounts shown include
contributions we made on their behalf to our Capital Accumulation Plan. The
Capital Accumulation Plan is a non-qualified investment plan that permits
eligible employees to contribute up to 10% of their pay, on an after-tax
basis, to an individual retail brokerage account established in the
employee's name. We generally match 75% of the employee's contributions. We
established the Capital Accumulation Plan because Internal Revenue Code
rules limit savings opportunities under tax-qualified plans for a number of
our employees. The amount shown for Mr. Marineau reflects a $3.0 million
signing bonus under his employment agreement and reimbursement of
relocation expenses. The amount shown for Mr. Shank reflects an unused time
off payment of $32,072 paid upon his departure from us in addition to a
Capital Accumulation Plan contribution of $33,007. The amount shown for Mr.
Ermatinger reflects an unused time off payment of $91,577 and a Capital
Accumulation Plan contribution of $31,480. The amount shown for Mr. Jacobi
reflects a severance payment of $4,012,500 and an unused time off payment
of $148,617 paid upon his departure from us, in addition to a Capital
Accumulation Plan contribution of $41,364.
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<PAGE>
(4) Mr. Marineau joined us on September 27, 1999.
(5) Mr. Shank and Mr. Ermatinger left us at the beginning of the 2000 fiscal
year. Mr. Jacobi left us on July 1, 1999. Ms. Goya retired in March 2000.
Mr. Shank has a supplemental retirement agreement with us that is
integrated with his regular retirement plan benefits and provides a total
benefit of approximately $13,700 per month.
Long-Term Incentive Plans--Awards in Last Fiscal Year (1999)
<TABLE>
<CAPTION>
Number of Estimated Future
Leadership Payouts(1)
Shares Performance ------------------
Name/Principal Position Awarded Period(2) Minimum Target
- ----------------------- ---------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Robert D. Haas....................... 100,000 5 years -- $2,500,000
Chairman and Chief Executive Officer
Philip A. Marineau................... -- N/A N/A N/A
President and Chief Executive
Officer(3)
Gordon D. Shank...................... 20,000 5 years -- 500,000
Senior Vice President and
Chief Marketing Officer(4)
William B. Chiasson.................. 45,000 5 years -- 1,125,000
Senior Vice President and Chief
Financial Officer
John L. Ermatinger................... 45,000 5 years -- 1,125,000
Senior Vice President and President
Levi Strauss Americas(4)
Donna J. Goya........................ 17,500 5 years -- 437,500
Senior Vice President, Human
Resources(4)
Peter A. Jacobi...................... -- N/A N/A N/A
President and Chief Operating Officer
</TABLE>
- --------
(1) The Leadership Shares Plan is a long-term cash performance unit plan. Under
this plan, we establish a five-year financial performance target for each
grant based on, among other things, our performance and expected
shareholder value growth at comparable companies. We also look at external
long-term incentive pay practices. The actual value of the units is
determined based on performance against these measures. Performance at the
target level will yield a per unit value of $25. If performance does not
meet a threshold standard, then the units will have no value. Performance
above target yields correspondingly larger unit values; there is no limit
on maximum award potential.
(2) The performance period is five years from the time of award. The awards
vest in one-third increments on the last day of the third, fourth and fifth
fiscal years of the performance period. Unless deferred, we pay the awards
in the year after they vest.
(3) Mr. Marineau joined us after the award date for 1999 Leadership Share
grants. As provided in Mr. Marineau's employment agreement, in February
2000 we granted him 170,000 Leadership Shares units as his annual grant for
the year. We also granted him an additional 810,000 Leadership Shares units
to compensate him for the potential value of stock options he forfeited
upon leaving his previous employer to join us.
(4) The awards to Mr. Shank, Mr. Ermatinger and Ms. Goya terminated upon their
departure from us.
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<PAGE>
Pension Plan Table
The following table shows the estimated annual benefits payable upon
retirement under our Home Office Pension Plan, benefit restoration plans and
deferred compensation plan to persons in various compensation and years-of-
service classifications prior to mandatory offset of Social Security benefits:
<TABLE>
<CAPTION>
Years of Service
Covered -------------------------------------------------------
Compensation 5 10 15 20 25 30 35
- ------------ ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
150,000 15,000 30,000 45,000 60,000 75,000 76,875 78,750
225,000 22,500 45,000 67,500 90,000 112,500 115,313 118,125
300,000 30,000 60,000 90,000 120,000 150,000 153,750 157,500
375,000 37,500 75,000 112,500 150,000 187,500 192,188 196,875
450,000 45,000 90,000 135,000 180,000 225,000 230,625 236,250
525,000 52,500 105,000 157,500 210,000 262,500 269,063 275,625
600,000 60,000 120,000 180,000 240,000 300,000 307,500 315,000
675,000 67,500 135,000 202,500 270,000 337,500 345,938 354,375
750,000 75,000 150,000 225,000 300,000 375,000 384,375 393,750
825,000 82,500 165,000 247,500 330,000 412,500 422,813 433,125
900,000 90,000 180,000 270,000 360,000 450,000 481,250 472,500
975,000 97,500 195,000 292,500 390,000 487,500 499,688 511,875
1,050,000 105,000 210,000 315,000 420,000 525,000 538,125 551,250
1,125,000 112,500 225,000 337,500 450,000 562,500 576,563 590,625
1,200,000 120,000 240,000 360,000 480,000 600,000 615,000 630,000
1,275,000 127,500 255,000 382,500 510,000 637,500 653,438 669,375
</TABLE>
The table assumes retirement at the age of 65, with payment to the employee
in the form of a single-life annuity. As of year-end 1999, the credited years
of service for Mr. Haas, Mr. Marineau, Mr. Shank, Mr. Chiasson, Mr. Ermatinger,
Ms. Goya, and Mr. Jacobi were 26, 0, 3, 1, 23, 29 and 29 respectively. The 1999
compensation covered by the pension plan, benefit restoration plans and
deferred compensation plan for Mr. Haas, Mr. Marineau, Mr. Shank, Mr. Chiasson,
Mr. Ermatinger, Ms. Goya, and Mr. Jacobi were $1,248,462, $153,846, $457,836,
$450,449, $466,368, $348,404 and $551,524 respectively. The 1999 compensation
covered by the pension plan alone for these individuals was the same, except
for Mr. Shank's which was $445,043.
Employment Agreements
Philip Marineau. We have an employment agreement with Philip Marineau, our
President and Chief Executive Officer. The agreement provides for a minimum
base salary of $1.0 million in accordance with our executive salary policy and
a target annual cash bonus of 90% of base salary, with a maximum bonus of 180%
of base salary. In addition, Mr. Marineau is eligible to participate in all
other executive compensation and benefit programs, including the Leadership
Shares Plan. Under the employment agreement, we made a one-time grant of
810,000 Leadership Shares units to compensate him for the potential value of
stock options he forfeited upon leaving his previous employer to join us. We
also provide under the agreement a supplemental pension benefit to Mr.
Marineau.
The agreement terminates in September 2002 but extends automatically after
this date until terminated by either Mr. Marineau or us. We may terminate the
agreement upon Mr. Marineau's death or disability, for cause (as defined in the
agreement), and without cause upon 30 days notice. Mr. Marineau may terminate
the agreement for good reason (as defined in the agreement) or other than for
good reason upon 30 days notice to us. The consequences of termination depend
on the basis for the termination:
. If we terminate without cause or if Mr. Marineau terminates for good
reason, Mr. Marineau will be entitled to: (i) severance payments equal
to three times the sum of his base salary as of the termination date
plus his most recent target or, if greater, annual bonus, (ii) amounts
accrued or earned under our compensation and benefit plans and (iii) an
amount in respect of the Leadership Shares units granted in the one-time
grant described above.
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. If we terminate for cause or if Mr. Marineau terminates for other than
good reason, then the agreement will terminate without our having
further obligations to Mr. Marineau other than for amounts accrued or
earned under our compensation and benefit programs (which does not
include unvested Leadership Shares units or target bonus amounts not
payable as of the date of termination).
. If we terminate for any reason other than cause or if Mr. Marineau
terminates for good reason within 12 months after a change in control
(as defined in the agreement), Mr. Marineau will be entitled to:
(i) severance payments equal to three times the sum of his base salary
as of the termination date plus his most recent target or, if greater,
annual bonus, (ii) amounts accrued or earned under our compensation and
benefit plans, (iii) an amount in respect of the Leadership Shares units
granted in the one-time grant described above, (iv) full and immediate
vesting in all outstanding Leadership Shares grants; (v) full and
immediate vesting in his supplemental pension benefit; and (vi) if any
amounts paid are treated as parachute payments (as defined in Section
280G(b)(2) of the Internal Revenue Code), an amount equal to the
applicable excise tax and any taxes on this reimbursement payment.
James Lewis. We have an employment agreement with James Lewis, our Senior
Vice President, and President, Levi Strauss Americas. The agreement provides
for a minimum base salary of $750,000 per year with a bonus target equal to 55%
of base salary, and a maximum bonus equal to 110% of base salary. For fiscal
year 2000, which is the first year of Mr. Lewis' employment, he is guaranteed
under the agreement to earn at least his target bonus amount; later years'
bonus payouts are not guaranteed. Under the agreement, Mr. Lewis received a
one-time lump sum of $300,000 net of taxes to assist with relocation expenses.
Mr. Lewis is eligible to participate in all of our executive compensation
and benefit programs, including the Leadership Shares Plan. Under his
employment agreement, Mr. Lewis received 108,000 Leadership Shares units for
his 2000 grant. This award reflects three elements: a signing bonus, a normal
grant for the year and a replacement for options forfeited upon leaving his
previous employer to join us. In addition, we will compensate Mr. Lewis for
other incentive amounts he forfeited upon leaving his previous employer. Under
the terms of the agreement, Mr. Lewis will be eligible for a supplemental
pension benefit. If Mr. Marineau leaves us during the first five years of Mr.
Lewis' employment and Mr. Lewis remains with us through that five-year period,
Mr. Lewis will receive an additional five years of credited service under the
supplemental pension benefit.
The agreement has a five-year term ending in April 2005. We may terminate
Mr. Lewis' employment agreement upon death or disability, for cause, as defined
in the agreement, or without cause upon 60 days' notice. Mr. Lewis may
terminate the agreement for good reason, as defined in the agreement, or other
than for good reason upon 60 days' notice to us. The consequences of
termination depend on the basis for the termination:
. If we terminate without cause or if Mr. Lewis terminates for good
reason, Mr. Lewis will be entitled to: (i) severance payments equal to
two times the sum of his base salary as of the termination date plus his
most recent target bonus; (ii) payment in respect of the vested portions
of his Leadership Shares units; (iii) in the case of termination by Mr.
Lewis for good reason, full and immediate vesting in all outstanding
Leadership Shares units and immediate vesting in his supplemental
retirement benefit unless at the time of termination Mr. Marineau is no
longer the chief executive officer; and (iv) amounts accrued or earned
under our compensation and benefit plans.
. If we terminate for cause or if Mr. Lewis terminates for other than good
reason, then the agreement will terminate without our having further
obligations to Mr. Lewis other than payment of base salary and accrued
vacation pay through the date of termination and vested amounts under
our compensation and benefit plans.
. If within 12 months following a change in control, as defined in the
agreement, we terminate for any reason other than for cause or if Mr.
Lewis terminates due to good reason, Mr. Lewis will be entitled to: (i)
two times the sum of his base salary as of the termination date plus his
most recent target bonus; (ii) accelerated vesting of his unvested
Leadership Shares units; (iii) full vesting in his supplemental pension
benefit; and (iv) amounts accrued or earned under our compensation and
benefit plans. Mr. Lewis in his sole discretion shall be able to accept
these benefits or choose to have these benefits capped at the Internal
Revenue Service limit in order to avoid excise taxes.
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PRINCIPAL STOCKHOLDERS
All shares of our common stock are deposited in a voting trust, a legal
device that transfers the voting power of the shares to a trustee or group of
trustees. The four voting trustees are Peter E. Haas, Sr., Peter E. Haas, Jr.,
Robert D. Haas and F. Warren Hellman. The voting trustees have the exclusive
ability to elect and remove directors, amend our by-laws and take certain other
actions which would normally be within the power of stockholders of a Delaware
corporation. Our equity holders who, as a result of the voting trust, legally
hold "voting trust certificates," not stock, retain the right to direct the
trustees on specified mergers and business combinations, liquidations, sales of
substantially all of our assets and specified amendments to our certificate of
incorporation.
The voting trust will last until April 2011, unless the trustees unanimously
decide, or holders of at least two-thirds of the outstanding voting trust
certificates decide, to terminate it earlier. If Robert D. Haas ceases to be a
trustee for any reason, then the question of whether to continue the voting
trust will be decided by the holders. If Peter E. Haas, Sr. ceases to be a
trustee, his successor will be his spouse, Miriam L. Haas. The existing
trustees will select the successors to the other trustees. The agreement among
the stockholders and the trustees creating the voting trust contemplates that,
in selecting successor trustees, the trustees will attempt to select
individuals who share a common vision with the sponsors of the 1996 transaction
that gave rise to the voting trust, represent and reflect the financial and
other interests of the equity holders and bring a balance of perspectives to
the trustee group as a whole. A trustee may be removed if the other three
trustees unanimously vote for removal or if holders of at least two-thirds of
the outstanding voting trust certificates vote for removal.
This table contains information about the beneficial ownership of our voting
trust certificates as of May 1, 2000, by:
. Each of our directors and each of our five most highly compensated
officers;
. Each person known by us to own beneficially more than 5% of our voting
trust certificates; and
. All of our directors and officers as a group.
You should keep in mind as you read the following table that, under the
rules of the SEC, a person is deemed to be a "beneficial owner" of a security
if that person has or shares "voting power," which includes the power to vote
or to direct the voting of the security, or "investment power," which includes
the power to dispose of or to direct the disposition of the security. A person
is also deemed to be a beneficial owner of any securities of which that person
has a right to acquire beneficial ownership within 60 days. Under these rules,
more than one person may be deemed a beneficial owner of the same securities
and a person may be deemed to be a beneficial owner of securities as to which
that person has no economic interest. Except as described in the footnotes to
the table below, the individuals named in the table have sole voting and
investment power with respect to all voting trust certificates beneficially
owned by them, subject to community property laws where applicable.
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<TABLE>
<CAPTION>
Percentage of
Number of Voting Voting Trust
Trust Certificates Certificates
Name Beneficially Owned Outstanding
- ---- ------------------ -------------
<S> <C> <C>
Peter E. Haas, Sr. .......................... 10,439,593(1) 28.00%
Peter E. Haas, Jr. .......................... 4,642,472(2) 12.45%
Josephine B. Haas............................ 4,103,750(3) 11.01%
Robert D. Haas............................... 3,723,679(4) 9.99%
Evelyn D. Haas............................... 3,515,116(5) 9.43%
Miriam L. Haas............................... 2,980,200(6) 7.99%
Margaret E. Haas............................. 2,643,110(7) 7.09%
F. Warren Hellman............................ 527,342(8) 1.41%
Walter J. Haas............................... 258,348(9) *
Tully M. Friedman............................ 246,196(10) *
Robert E. Friedman........................... 114,300(11) *
James C. Gaither............................. -- --
Peter A. Georgescu(12)....................... -- --
Angela Glover Blackwell...................... -- --
Philip A. Marineau........................... -- --
Patricia Salas Pineda........................ -- --
T. Gary Rogers............................... -- --
G. Craig Sullivan............................ -- --
William B. Chiasson.......................... -- --
Directors and executive officers as a group
(22 persons)(13)............................ 19,951,930 53.52%
</TABLE>
- --------
* Represents beneficial ownership of less than 1%.
(1) Includes 2,733,167 voting trust certificates held by a trust for the
benefit of Josephine B. Haas, former spouse of Mr. Haas. Mr. Haas has
sole voting powers and Mrs. Josephine B. Haas has sole investing powers
with respect to those voting trust certificates. Excludes 2,980,200
voting trust certificates held by Mr. Haas' wife, Miriam L. Haas. Also
excludes 3,515,116 voting trust certificates held by a trust for which
Mr. Haas is co-trustee. Mr. Haas disclaims beneficial ownership of those
voting trust certificates.
(2) Includes a total of 2,243,684 voting trust certificates held by Mr. Haas'
wife, children and trusts for the benefit of his children for which Mr.
Haas is trustee; 61,709 voting trust certificates held by trusts, for
which Mr. Haas is trustee, for the benefit of Michael S. Haas; and
148,500 voting trust certificates held by a charitable annuity lead
trust. Mr. Haas disclaims beneficial ownership of all of those voting
trust certificates.
(3) Includes 721,029 voting trust certificates held by a trust, for which
Mrs. Haas is trustee, for the benefit of Michael S. Haas. Excludes
1,203,255 voting trust certificates held by a trust, for which Mrs. Haas
is co-trustee, for the benefit of Margaret E. Haas. Mrs. Haas disclaims
ownership of all of those voting trust certificates. Includes 300,272
voting trust certificates held by the Josephine B. Haas Family
Partnership, for which Mrs. Haas is a limited partner.
(4) Includes 527,674 voting trust certificates owned by the spouse and
daughter of Mr. Haas and by trusts for the benefit of his daughter. Mr.
Haas disclaims beneficial ownership of those voting trust certificates.
(5) These voting trust certificates are held by the Walter A. Haas, Jr. QTIP
Trust, for which Evelyn D. Haas and Peter E. Haas, Sr. are co-trustees.
(6) Excludes 40,000 voting trust certificates held by Mrs. Haas' sons. Mrs.
Haas disclaims beneficial ownership of those voting trust certificates.
Excludes 7,706,426 voting trust certificates held by Peter E. Haas, Sr.
Mrs. Haas disclaims beneficial ownership of those voting trust
certificates.
(7) Includes 133 voting trust certificates held by a trust for the benefit of
Ms. Haas' son. Ms. Haas disclaims beneficial ownership of those voting
trust certificates.
(8) Excludes 360,314 voting trust certificates held by a trust, for which Mr.
Hellman is co-trustee, for the benefit of the daughter of Robert D. Haas.
Mr. Hellman disclaims beneficial ownership of those voting trust
certificates.
(9) Includes 248,348 voting trust certificates held by trusts, for which Mr.
Haas is trustee or co-trustee, for the benefit of Mr. Haas' children. Mr.
Haas disclaims beneficial ownership of those voting trust certificates.
(10) Includes 24,115 voting trust certificates held by a trust, for which Mr.
Friedman is trustee, for the benefit of Mr. Friedman's former wife, Ann
Barry.
(11) Includes 92,500 voting trust certificates held by Mr. Friedman's children
and by trusts, for which Mr. Friedman is co-trustee, for the benefit of
his children. Mr. Friedman disclaims beneficial ownership of those voting
trust certificates.
(12) Mr. Georgescu was elected to the Board on February 10, 2000.
(13) As of May 1, 2000, there were 162 record holders of voting trust
certificates.
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The percentage of beneficial ownership shown in the table is based on
37,278,238 shares of common stock and related voting trust certificates
outstanding as of December 31, 1999. The business address of all persons
listed, including the trustees under the voting trust, is 1155 Battery Street,
San Francisco, California 94111.
Stockholders' Agreement
Our common stock and the voting trust certificates are not publicly held or
traded. All shares and the voting trust certificates are subject to a
stockholders' agreement. The agreement, which expires in April 2016, limits the
transfer of shares and certificates to other holders, family members, specified
charities and foundations and to us. The agreement does not provide for
registration rights or other contractual devices for forcing a public sale of
shares, certificates or other access to liquidity. The scheduled expiration
date of the stockholders' agreement is five years later than that of the voting
trust agreement in order to permit an orderly transition from effective control
by the voting trust trustees to direct control by the stockholders.
Estate Tax Repurchase Policy
We have a policy under which we will repurchase a portion of the shares
offered by the estate of a deceased stockholder in order to generate funds for
payment of estate taxes. The purchase price will be based on a valuation
received from an investment banking or appraisal firm. Estate repurchase
transactions are subject to applicable laws governing stock repurchases, board
approval and restrictions under our credit agreements. Our current bank credit
facilities prohibit repurchases without the consent of the lenders. The policy
does not create a contractual obligation on our part. We may amend or terminate
this policy at any time.
Valuation Policy
We have a policy under which we obtain, and make available to our
stockholders, an annual valuation of our voting trust certificates. The policy
provides that we will make reasonable efforts to defend valuations we obtain
which are challenged in any tax or regulatory proceeding involving a
stockholder (including an estate) that used the valuation and that was
challenged on that use. The policy provides that we will not indemnify any
stockholder against any judgment or settlement amounts or expenses specific to
any individual stockholder arising from the use of a valuation. We may amend or
terminate this policy at any time.
Voting Trustee Compensation
The voting trust agreement provides that trustees who are also beneficial
owners of 1% or more of our stock are not entitled to compensation for their
services as trustees. Trustees who are not beneficial owners of more than 1% of
our outstanding stock may receive such compensation, upon approval of our
Board. All trustees are entitled to reimbursement for reasonable expenses and
charges, which may be incurred in carrying out their duties as trustees. Of the
current trustees, Mr. Hellman beneficially owns less than 1% of our outstanding
stock. He is not currently receiving compensation from us for his service as a
trustee. All of the other trustees each beneficially owns more than 1% of our
outstanding stock.
Voting Trustee Indemnification
Under the voting trust agreement, the trustees are not liable to us or to
the holders of voting trust certificates for any actions undertaken in their
capacity as trustees, except in cases of willful misconduct. The voting trust
will indemnify the trustees in respect of actions taken by them under the
voting trust agreement in their capacity as trustees, except in cases of
willful misconduct.
We have agreed to reimburse the voting trust for any amounts paid by the
trust as a result of its indemnity obligation on behalf of the trustees.
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Limitation of Liability and Indemnification Matters
As permitted by Delaware law, we have included in our certificate of
incorporation a provision to eliminate generally the personal liability of
directors for monetary damages for breach or alleged breach of their fiduciary
duties as directors. In addition, our by-laws provide that we are required to
indemnify our officers and directors under a number of circumstances, including
circumstances in which indemnification would otherwise be discretionary, and we
are required to advance expenses to our officers and directors as incurred in
connection with proceedings against them for which they may be indemnified. In
addition, our board adopted resolutions making clear that officers and
directors of our foreign subsidiaries are covered by these indemnification
provisions. We are not aware of any pending or threatened litigation or
proceeding involving a director, officer, employee or agent of ours in which
indemnification would be required or permitted. We believe that these
indemnification provisions are necessary to attract and retain qualified
persons as directors and officers.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be granted to directors, officers or persons controlling us under the
foregoing provisions, we have been informed that in the opinion of the SEC this
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
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MATERIAL RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
F. Warren Hellman, one of our directors, is a general partner of Hellman &
Friedman, a private investment firm that has provided financial advisory
services to us in the past. We did not pay any fees to Hellman & Friedman
during 1999 and 1998.
James C. Gaither, one of our directors, is a partner of the law firm Cooley
Godward LLP. Cooley Godward provided legal services to us in 1999 and 1998, for
which we paid fees of approximately $78,000 and $74,000 in those years.
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DESCRIPTION OF OTHER INDEBTEDNESS
Bank Credit Facilities
In January 2000, we amended each of our three existing credit agreements
with Bank of America, N.A., as administrative agent and collateral agent, and
other lenders and entered into one new $450 million credit agreement with five
of those lenders. The following is a summary description of the material terms
of the bank credit facilities and is subject to, and qualified in its entirety
by, reference to the credit agreements themselves, which have been filed as
exhibits to the registration statement of which this prospectus is a part and
which are incorporated by reference in this prospectus.
Structure. Our credit facilities consist of the following:
. a new $450 million revolving bridge facility;
. an amended $300 million revolving credit facility;
. an amended $545 million credit facility; and
. an amended $584 million credit facility.
The January 2000 amendments increased our financial and operating
flexibility in exchange for securing the loans, as described below. We used the
proceeds of the new bridge facility in part to replace a domestic receivables
securitization facility that we terminated at the time we entered into these
agreements, to refinance several foreign bank lines, to support letters of
credit, interest-rate and foreign exchange risk-management activities and for
working capital and other general corporate purposes.
Security; Guarantees. Our bank credit facilities are guaranteed by our
material domestic subsidiaries. All four facilities and the guarantees are
secured by substantially all of our assets and the assets of those
subsidiaries, including:
. U.S. receivables;
. U.S. inventories;
. U.S. equipment, other than the principal equipment at our customer
service centers;
. U.S. real property, other than our customer service centers and one
plant in Texas;
. U.S. and foreign trademarks and other intellectual property;
. 100% of the capital stock of our U.S. subsidiaries; and
. 65% of the capital stock of most of our foreign subsidiaries, other than
our affiliates in Germany and United Kingdom.
Excluded from the assets securing the bank credit facilities are all of our
most valuable real property interests and all of the capital stock and debt of
our restricted subsidiaries. See the caption "Description of the Exchange
Notes--Restrictive Covenants--Limitations on Liens" for a more detailed
discussion of our ability to grant liens on our property.
Amortization; Interest. All of our bank credit facilities mature on January
31, 2002. Prior to that date, the commitments under our bank credit facilities
will be reduced by the following amounts:
. $50 million at May 25, 2000;
. $50 million at August 24, 2000;
. $100 million at November 22, 2000;
. $50 million at February 22, 2001;
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. $50 million at May 24, 2001; and
. $100 million at August 23, 2001.
These reductions will first be applied ratably to our three amended bank
credit facilities and will then be applied to the new bridge facility once the
commitments outstanding under our other three bank credit facilities have been
reduced to zero.
Borrowings under the bank credit facilities bear interest at the London
Interbank Offered Rate or the agent bank's base rate plus an incremental
borrowing spread. For the bridge facility, the spread is 3.00% over the London
Interbank Offered Rate or 1.75% over the base rate. For each of the three
amended facilities, the spread is 3.25% over the London Interbank Offered Rate
or 2.00% over the base rate.
In addition, if by February 1, 2001 we have not completed one or more
private or public capital-raising transactions yielding net proceeds to us of
at least $300 million which have been used to reduce commitments under our bank
credit facilities, we will be required to pay our lenders an additional
borrowing spread of 1.00% on outstanding borrowings under our bank credit
facilities, plus a one-time additional fee of 2.00% of total commitments as of
January 31, 2001. Our borrowing spread will be increased by 0.25% quarterly
until those capital-raising transactions are completed.
Prepayments. We are obligated to prepay borrowings under our bank credit
facilities with proceeds from specified transactions we may effect during the
term of the facilities, including equipment and real estate financings, asset
dispositions and foreign subsidiary receivables securitizations. We are also
required to prepay borrowings ratably under our bank credit facilities with up
to 60% of our excess cash flow (after voluntary prepayments) as defined in the
credit agreements. In addition, in limited circumstances we are obligated to
prepay our borrowings with the proceeds of insurance on collateral securing
those borrowings.
Covenants. The credit agreements contain customary covenants restricting our
activities as well as those of our subsidiaries, including limitations on our
and their ability to sell assets; engage in mergers; enter into operating
leases or capital leases; enter into transactions involving related parties,
derivatives or letters of credit; enter into intercompany transactions; incur
indebtedness or grant liens or negative pledges on our assets; make loans or
other investments; pay dividends or repurchase stock or other securities;
guaranty third party obligations; make capital expenditures; and make changes
in our corporate structure. The credit agreements also contain financial
covenants that we must satisfy on an ongoing basis, including a maximum
leverage ratio, a minimum coverage ratio and minimum consolidated EBITDA.
Events of Default. The credit agreements contain customary events of
default, including payment failures; failures to satisfy other obligations
under the credit agreements; material judgments; pension plan terminations or
specified underfunding; substantial voting trust certificate or stock ownership
changes; specified changes in the composition of our Board; and invalidity of
the guaranty or security agreements. If an event of default occurs, our lenders
could terminate their commitments, declare immediately payable all borrowings
under the credit facilities and foreclose on the collateral, including our
trademarks.
Yen-denominated Eurobond Placement
In November 1996, we issued a (Yen)20 billion principal amount eurobond
(equivalent to approximately $180.0 million at the time of issuance) due
November 22, 2016, with interest payable at 4.25% per annum. The bond is
redeemable at our option at a make-whole redemption price, based on market
rates at the time of redemption, commencing in November 2006 and on any
subsequent semi-annual interest payment date. We treat the bond as a hedge of
our net investment in our Japanese subsidiary.
The bond includes covenants limiting our activities similar to the covenants
governing the exchange notes and customary events of default described in the
caption "Description of the Exchange Notes--Restrictive Covenants."
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European Receivables Financing
In February 2000, several of our European subsidiaries, including Levi
Strauss Germany GmbH, Levi Strauss (U.K.) Limited, Levi Strauss Continental
S.A., Levi Strauss Italia s.r.l., and Levi Strauss De Espana, S.A., each
entered into a receivables-backed securitization financing agreement with ABN
AMRO BV and other lenders. The maximum amount of permitted outstanding loans
under the program would vary based upon the amount of eligible receivables as
defined under each agreement. The program currently provides for the
subsidiaries to borrow in aggregate up to $125.0 million on a committed basis
for 364 days. Proceeds from any net borrowings under the securitization
agreements must be used to reduce commitments under our bank credit facilities.
All borrowings under the securitization agreements bear interest at a variable
rate based on market commercial paper rates. As of April 28, 2000, the
subsidiaries were working with lenders to operationalize certain reporting and
other systems functions. As a result, they have not yet borrowed under the
securitization agreements.
The securitization agreements contain covenants governing the activities of
the subsidiaries and the quality of the receivables that may be used to support
the borrowings, including, among other things, a requirement that our
subsidiaries service the receivables securing their borrowings.
We would provide a limited guaranty to support borrowings under the
agreements. We would guaranty performance by the subsidiaries of their
servicing obligations. We would also guaranty the collectibility of the
receivables in an amount not to exceed 10% of the outstanding amount as of the
termination date under the securitization agreements.
The securitization agreements contain customary termination events for these
arrangements, including the subsidiaries' failure to make payments or otherwise
comply with their obligations under the securitization agreements, bankruptcy
events, material adverse changes in financial position or receivables
collection procedures, cross default to other indebtedness, failure of the
portfolio to meet certain performance standards or a change in control.
We expect that some of our other European subsidiaries will enter into the
program during the next 12 months. We and our Japanese subsidiary, Levi Strauss
Japan K.K., are currently negotiating a similar receivables-backed
securitization financing agreement which we expect to complete by July 2000.
Customer Service Center Equipment Financing
In December 1999, we borrowed $89.5 million from a group of lenders under a
five-year credit facility secured by most of the equipment located at our
customer service centers in Nevada, Mississippi and Kentucky. These customer
service centers are our principal product distribution facilities in the United
States. The equipment in the customer service centers securing this facility is
not part of the collateral securing our bank credit facilities. As of May 1,
there was approximately $88.0 million principal amount outstanding under this
facility. Approximately $25.0 million in excess collateral equipment value
remains available to secure additional third party funding. Borrowings of $59.5
million under the first tranche bear interest at a fixed rate equal to the
yield on four-year U.S. Treasury notes at the time of funding plus an
incremental borrowing spread. Borrowings of $30.0 million under the second
tranche bear interest at a floating quarterly rate equal to the 90-day London
Interbank Offered Rate plus an incremental borrowing spread based on our
leverage ratio at the time of the interest payment. The borrowings amortize
over five years, with 50% and 80% of the principal amount of the first tranche
and second tranche, respectively, due at maturity. We are also permitted to
prepay the debt in whole at any time and to prepay in part in $5 million or
greater increments.
The credit facility is structured as a lease intended as security. This
means that we retain ownership of the equipment, the lenders have a security
interest in the equipment and the transaction is considered a secured
financing, and not a lease, for tax, accounting, bankruptcy, financial
reporting and commercial law purposes.
The transaction documents include customary covenants governing our
activities, including, among other things, limitations on our ability to sell,
lease, relocate or grant liens in the equipment held in these customer service
centers.
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In some circumstances, we are permitted to sell or, with the lenders'
approval, obtain a release of the lenders' security interest in, the equipment
in the customer service centers upon repayment of a portion of the debt
attributable to that equipment. We can also enter into agreements with third
party "outsource" providers to operate one or more of the customer service
centers.
The transaction documents include customary events of default. If we
default, the lenders could accelerate the maturity date of our loans, enter
these customer service centers and take possession of our equipment held there.
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DESCRIPTION OF THE EXCHANGE NOTES
We will issue the exchange notes under the indenture, dated as of November
6, 1996, as supplemented, between us and Citibank, N.A., as trustee, under
which we issued the old notes. We will provide you with a copy of the
indenture, as supplemented, upon request. The indenture contains provisions
that define your rights under the exchange notes. In addition, the indenture
governs our obligations under the exchange notes. The terms of the exchange
notes include those stated in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939, as amended.
The following description is meant to be only a summary of the indenture. It
does not restate the terms of the indenture in their entirety. We urge you to
read the indenture carefully, as it, and not this description, governs your
rights as holders.
General
The exchange notes will be unsecured obligations, will not be subject to
redemption before maturity and will not be subject to any sinking fund.
We will issue up to $350.0 million aggregate principal amount of 6.80%
exchange notes. We will receive no proceeds from this issuance. The 6.80%
exchange notes will mature on November 1, 2003. Each 6.80% exchange note we
issue will accrue interest at an annual rate of 6.80%.
We will issue up to $450.0 million aggregate principal amount of 7.00%
exchange notes. We will receive no proceeds from this issuance. The 7.00%
exchange notes will mature on November 1, 2006. Each 7.00% exchange note we
issue will accrue interest at an annual rate of 7.00%.
We will pay accrued interest semiannually to holders of record of exchange
notes at the close of business on the May 1 or November 1 immediately preceding
the relevant interest payment date. We will issue the exchange notes in fully
registered form, without coupons, in denominations of $1,000 and any integral
multiple of $1,000.
Payment
We will pay the principal of, premium, if any, and interest on the exchange
notes at any office of ours or any agency designated by us which is located in
the Borough of Manhattan, the City of New York. We may pay the principal or
interest on the exchange notes by wire transfer to a U.S. dollar account
maintained by any holder of an aggregate principal amount in excess of
U.S.$1,000,000 with a bank in the City of New York. We will not make any
transfer to a dollar account unless the trustee has received written wire
instructions at least 10 days prior to the relevant payment date. We reserve
the right to pay interest by check mailed directly to holders at their
registered addresses. We may make any payment on the exchange notes that is due
on any day which is not a business day on the following business day without
penalty or additional interest as if that payment had been made on the date
due.
Restrictive Covenants
Limitations on Liens. The indenture provides that we will not, and will not
permit any restricted subsidiary to, create, incur, issue, assume or guarantee
any indebtedness secured by a lien upon any Principal Property, or upon shares
of capital stock or indebtedness issued by any restricted subsidiary and owned
by us or any restricted subsidiary, without providing concurrently that the
exchange notes are secured equally and ratably with or, at our option, prior to
such indebtedness so long as such indebtedness shall be so secured.
The indenture provides that this restriction shall not apply to, and there
shall be excluded from indebtedness in any computation under this restriction,
indebtedness secured by:
(1) liens on any property existing at the time of its acquisition;
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(2) liens on property of a corporation existing at the time such
corporation is merged into or consolidated with us or a restricted
subsidiary or at the time of a sale, lease or other disposition of all
or substantially all the properties of such corporation (or a division
thereof) to us or a restricted subsidiary, provided that any such lien
does not extend to any property owned by us or any restricted
subsidiary immediately prior to such merger, consolidation, sale, lease
or disposition;
(3) liens on property of a corporation existing at the time such
corporation becomes a restricted subsidiary;
(4) liens in favor of us or a restricted subsidiary;
(5) liens to secure all or part of the cost of acquisition, construction,
development or improvement of the underlying property, or to secure
indebtedness incurred to provide funds for any such purpose, provided
that the commitment of the creditor to extend the credit secured by any
such lien shall have been obtained not later than 180 days after the
later of:
. the completion of the acquisition, construction, development or
improvement of such property or
. the placing in operation of such property or of such property as so
constructed, developed or improved;
(6) liens in favor of the United States of America or any State thereof, or
any department, agency or instrumentality or political subdivision
thereof, to secure partial, progress, advance or other payments;
(7) liens securing industrial revenue or pollution control bonds; and
(8) liens existing on the date of the indenture or any extension, renewal
or replacement or refunding of any Indebtedness secured by a lien
existing on the date of the indenture or referred to in clause (1),
(2), (3) or (5);
provided, however, that the principal amount of indebtedness secured thereby
and not otherwise authorized by clauses (1) through (7) shall not exceed the
principal amount of indebtedness, plus any premium or fee payable in connection
with any such extension, renewal, replacement, or refunding, so secured at the
time of such extension, renewal, replacement or refunding.
Notwithstanding the restrictions described above, the indenture provides
that we and our restricted subsidiaries may create, incur, issue, assume or
guarantee indebtedness secured by liens without equally and ratably securing
the exchange notes of each series then outstanding if, at the time of such
creation, incurrence, issuance, assumption or guarantee, after giving effect
thereto and to the retirement of any indebtedness which is concurrently being
retired, the aggregate amount of all outstanding indebtedness secured by liens
which would otherwise be subject to such restrictions (other than any
indebtedness secured by liens permitted as described in clauses (1) through (8)
of the immediately preceding paragraph) plus indebtedness in respect of sale
and leaseback transactions with respect to Principal Properties (with the
exception of such transactions which are permitted under clauses (1) through
(5) of the first sentence of the first paragraph under the caption "--
Limitation on Sale and Leaseback Transactions") does not exceed 10% of our
consolidated net tangible assets.
Limitation on Sale and Leaseback Transactions. The indenture provides that
we will not, and will not permit any restricted subsidiary to, enter into any
sale and leaseback transaction with respect to any Principal Property unless:
(1) the sale and leaseback transaction is solely with us or another
restricted subsidiary;
(2) the lease is for a period not in excess of three years, including
renewal rights;
(3) the lease secures or relates to industrial revenue or pollution control
bonds;
(4) we or the restricted subsidiary would (at the time of entering into
such arrangement) be entitled as described in clauses (1) through (8)
of the second preceding paragraph, without equally and ratably securing
the exchange notes of each series then outstanding, to create, incur,
issue, assume or
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guarantee indebtedness secured by a lien on such Principal Property in
the amount of the indebtedness arising from such sale and leaseback
transaction;
(5) we or the restricted subsidiary, within 180 days after the sale of such
Principal Property in connection with such sale and leaseback
transaction is completed, applies an amount equal to the greater of:
. the net proceeds of the sale of the Principal Property leased or
. the fair market value of the Principal Property leased to:
-- the retirement of exchange notes, other Funded Indebtedness of
ours ranking on a parity with the exchange notes or Funded
Indebtedness of a restricted subsidiary or
-- the purchase of other property which will constitute a Principal
Property having a value at least equal to the value of the
Principal Property leased; or
(6) the indebtedness of us and our restricted subsidiaries in respect of
such sale and leaseback transaction and all other sale and leaseback
transactions entered into after the date of the indenture (other than
any such sale and leaseback transactions as would be permitted as
described in clauses (1) through (5) of this sentence), plus the
aggregate principal amount of indebtedness secured by liens on
Principal Properties then outstanding (not including any such
indebtedness secured by liens described in clauses (1) through (8) of
the second preceding paragraph) which do not equally and ratably secure
such outstanding exchange notes (or secure such outstanding exchange
notes on a basis that is prior to other indebtedness secured thereby),
would not exceed 10% of our consolidated net tangible assets.
Mergers and Sales of Assets by the Company. The indenture provides that we
may not consolidate with or merge into, or convey, transfer, sell or lease all
or substantially all of its properties and assets to, any person, and may not
permit any person to merge into, or convey, transfer or lease all or
substantially all of its properties and assets to, us, unless, among other
things:
(1) the successor person (if any) is a corporation, partnership, trust or
other entity organized and validly existing under the laws of any U.S.
domestic jurisdiction and expressly assumes our obligations on the
exchange notes and under the indenture;
(2) immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time, or both,
would become an event of default, shall have occurred and be continuing
under the indenture; and
(3) if, as a result of the transaction, property of ours would become
subject to a lien that would not be permitted under the limitation on
liens described under the caption "--Limitations on Liens", we take
such steps as shall be necessary to secure the exchange notes equally
and ratably with (or prior to) the indebtedness secured by such lien.
Definitions
"Funded Indebtedness" means:
(1) all indebtedness having a maturity of more than 12 months from the date
as of which the determination is made or having a maturity of 12 months
or less but by its terms being renewable or extendible beyond 12 months
from such date at the option of the borrower; and
(2) rental obligations payable more than 12 months from such date under
leases which are capitalized in accordance with generally accepted
accounting principles (such rental obligations to be included as Funded
Indebtedness at the amount so capitalized as of such date of
determination).
"Principal Property" means any contiguous or proximate parcel of real
property owned by, or leased to, us or any of our restricted subsidiaries, and
any equipment located at or comprising a part of any such property, having a
gross book value (without deduction of any depreciation reserves), as of the
date of determination, in excess of 1.0% of our consolidated net tangible
assets.
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Events of Default
The following are events of default with respect to the exchange notes under
the indenture:
(1) failure to pay principal of any exchange note when due;
(2) failure to pay any interest on any exchange note when due, continuing
for 30 days;
(3) failure to perform any of our other covenants or warranties in the
indenture, continuing for 60 days after written notice to us by the
trustee as provided in the indenture;
(4) any indebtedness for money borrowed by us in an outstanding principal
amount in excess of $25,000,000 is not paid at final maturity or upon
acceleration thereof and such default in payment or acceleration is not
cured or rescinded within 30 days after written notice as provided in
the indenture; and
(5) certain events of bankruptcy, insolvency or reorganization.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default occurs, the trustee is under no obligation
to exercise any of its rights or powers under the indenture at the request or
direction of any of the holders, unless the holders have offered the trustee
reasonable indemnity. Subject to the provisions for the indemnification of the
trustee, the holders of a majority in aggregate principal amount of the
outstanding exchange notes have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the trustee with
respect to such series or exercising any trust or power conferred on the
trustee with respect to such exchange notes.
If an event of default with respect to either series of exchange notes
(other than an event of default specified in subsection (5) above) occurs, the
trustee shall, at the written request of the holders of not less than 25% in
aggregate principal amount of the outstanding exchange notes of that series, by
notice in writing to us, declare the principal of all the exchange notes of
that series to be due and payable immediately, and upon any such declaration
such principal and any accrued interest will become immediately due and
payable. If an event of default specified in subsection (5) occurs, the
principal and any accrued interest on all of the exchange notes then
outstanding shall become due and payable immediately without any declaration or
other act on the part of the trustee or any holder.
At any time after a declaration of acceleration with respect to exchange
notes of either series has been made but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding exchange notes of that series may, under certain circumstances,
rescind and annul such acceleration if all events of default, other than the
nonpayment of accelerated principal and interest, have been cured or waived as
provided in the indenture.
No holder of any exchange note of any series has any right to institute any
proceeding with respect to the indenture or for any remedy thereunder, unless
the holder shall have previously given to the trustee written notice of a
continuing event of default and unless also the holders of at least 25% in
aggregate principal amount of the outstanding exchange notes of that series
shall have made written request, and offered reasonable indemnity, to the
trustee to institute such proceeding as trustee, and the trustee shall not have
received from the holders of a majority in aggregate principal amount of the
outstanding exchange notes of that series a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, these limitations do not apply to a suit instituted by a holder of an
exchange note for the enforcement of payment of the principal of or interest on
such exchange note on or after the respective due dates expressed in such
exchange note.
We are required to furnish to the trustee annually a statement as to the
performance by us of our obligations under the indenture and as to any default
in such performance.
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Meetings, Modification and Waiver
The indenture contains provisions for convening meetings of the holders of
exchange notes to consider matters affecting their interests.
Modifications and amendments of the indenture may be made, and certain past
defaults by us may be waived, either:
(1) with the written consent of the holders of not less than a majority in
aggregate principal amount of the outstanding exchange notes of each
series affected; or
(2) by the adoption of a resolution, at a meeting of holders of the
exchange notes at which a quorum is present, by the holders of at least
66 2/3% in aggregate principal amount of the outstanding exchange notes
of each series affected represented at such meeting.
However, no modification or amendment may, without the consent of the holder
of each outstanding exchange note affected thereby:
(1) change the stated maturity of the principal of, or any installment of
interest on, any exchange note;
(2) reduce the principal amount of or rate of interest on, any exchange
note;
(3) change the coin or currency of payment of principal of or interest on,
any exchange note;
(4) impair the right to institute suit for the enforcement of any payment
on or with respect to any exchange note;
(5) reduce the above-stated percentage of outstanding exchange notes
necessary to modify or amend the indenture;
(6) reduce the percentage of aggregate principal amount of outstanding
exchange notes necessary for waiver of compliance with certain
provisions of the indenture or for waiver of certain defaults;
(7) reduce the percentage in aggregate principal amount of exchange notes
outstanding required for the adoption of a resolution or the quorum
required at any meeting of holders of exchange notes at which a
resolution is adopted; or
(8) modify our obligation to deliver information required under Rule 144A
to permit resales of exchange notes in the event we are not subject to
certain reporting requirements under the U.S. securities laws. The
quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the
exchange notes at the time outstanding of the series as to which a
meeting has been called and, at any reconvened meeting adjourned for
lack of a quorum, 25% of such aggregate principal amount.
The holders of a majority in aggregate principal amount of the outstanding
exchange notes of either series may waive compliance by us with certain
restrictive provisions of the indenture with respect to such series. The
holders of a majority in aggregate principal amount of the outstanding exchange
notes may waive any past default under the indenture with respect to such
series, except a default in the payment of principal or interest.
Purchase and Cancellation
We or any subsidiary may at any time and from time to time purchase exchange
notes at any price in the open market or otherwise.
All exchange notes surrendered for payment or registration of transfer or
exchange shall, if surrendered to any person other than the trustee, be
delivered to the trustee. All exchange notes so delivered to the trustee shall
be cancelled promptly by the trustee. No exchange notes shall be authenticated
in lieu of or in exchange for any exchange notes cancelled as provided in the
indenture. Unless otherwise requested by us and confirmed
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in writing, the trustee shall, from time to time but not less than once
annually, destroy all cancelled exchange notes and deliver to us a certificate
of destruction, which certificate shall specify the number, principal amount
and, in the case of exchange notes, the form of each cancelled exchange note so
destroyed.
Title
We and the trustee may treat the registered owner of any exchange note as
the absolute owner thereof, whether or not such exchange note shall be overdue,
for the purpose of making payment and for all other purposes.
Notices
Notice to holders of the exchange notes will be given by mail to the
registered addresses of such holders. Such notices will be deemed to have been
given on the date of the first such publication or on the date of such mailing,
as the case may be.
Replacement of Exchange Notes
Exchange notes that become mutilated, destroyed, stolen or lost will be
replaced by us at the expense of the holder upon delivery to the trustee or to
a transfer agent of the mutilated exchange notes or evidence of their loss,
theft or destruction satisfactory to us and the trustee. In the case of a lost,
stolen or destroyed exchange note, indemnity satisfactory to the trustee and us
may be required at the expense of the holder of the exchange note before a
replacement exchange note will be issued.
Payment of Stamp and Other Taxes
We will pay all stamp and other duties, if any, which may be imposed by the
United States or the United Kingdom or any political subdivision thereof or
taxing authority thereof or therein with respect to the issuance of the
exchange notes. We will not be required to make any payment with respect to any
other tax, assessment or governmental charge imposed by any government or any
political subdivision thereof or taxing authority therein.
Governing Law
The indenture, the exchange notes and the coupons will be governed by and
construed in accordance with the laws of the State of New York.
The Trustee
In case an event of default shall occur, and shall not be cured, the trustee
will be required to use the degree of care of a prudent person in the conduct
of his own affairs in the exercise of its powers. Subject to these provisions,
the trustee will be under no obligation to exercise any of its rights or powers
under the indenture at the request of any of the holders of exchange notes,
unless they shall have offered to the trustee reasonable security or indemnity.
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BOOK-ENTRY, DELIVERY AND FORM
The exchange notes will initially be represented by one or more permanent
global notes in definitive, fully registered book-entry form, without interest
coupons, that will be deposited with, or on behalf of, DTC and registered in
the name of Cede and Co., as nominee of DTC, on behalf of the acquirors of
exchange notes for credit to the accounts of the acquirors or to other accounts
as they may direct at DTC, or Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System, or Cedel Bank, societe
anonyme.
The global notes may be transferred in whole and not in part, solely to
another nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the global notes may not be exchanged for exchange notes in
physical, certificated form except in the limited circumstances described
below.
All interests in the global notes, including those held through Euroclear or
Cedel, may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Cedel may also be subject to the procedures
and requirements of those systems.
Book-Entry Procedures for the Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and
Cedel set forth below are provided as a matter of convenience. These operations
and procedures are solely within the control of the settlement systems and are
subject to change by them from time to time. We take no responsibility for
these operations or procedures, and you are urged to contact the relevant
system or its participants directly to discuss these matters.
DTC has advised us that it is:
. a limited purpose trust company organized under the laws of the State of
New York;
. a "banking organization" within the meaning of the New York Banking Law;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended; and
. a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
DTC was created to hold securities for its participants and facilitates the
clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants,
eliminating the need for physical transfer and delivery of certificates. DTC's
participants include securities brokers and dealers, including the initial
purchasers in the private offering of the old notes, banks and trust companies,
clearing corporations and similar organizations. Indirect access to DTC's
system is also available to indirect participants, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Investors who
are not participants may beneficially own securities held by or on behalf of
DTC only through participants or indirect participants.
We expect that pursuant to procedures established by DTC ownership of the
exchange notes will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC, with respect to the interests
of participants, and the records of participants and the indirect participants,
with respect to the interests of persons other than participants.
The laws of some jurisdictions may require that purchasers of securities
take physical delivery of purchased securities in definitive form. Accordingly,
the ability to transfer interests in the exchange notes represented by a global
note to those persons may be limited. In addition, because DTC can act only on
behalf
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of its participants, who in turn act on behalf of persons who hold interests
through participants, the ability of a person having an interest in exchange
notes represented by a global note to pledge or transfer that interest to
persons or entities that do not participate in DTC's system, or to otherwise
take actions in respect of that interest, may be affected by the lack of a
physical definitive security in respect of that interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or its nominee will be considered the sole owner or holder of the exchange
notes represented by the global note for all purposes under the indenture.
Except as provided below, owners of beneficial interests in a global note will
not be entitled to have exchange notes represented by that global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated exchange notes and will not be considered the owners
or holders thereof under the indenture for any purpose, including with respect
to the giving of any direction, instruction or approval to the trustee.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if the holder is not a participant or an
indirect participant, on the procedures of the participant through which the
holder owns its interest, to exercise any rights of a holder of exchange notes
under the indenture or the global note. We understand that, under existing
industry practice, in the event that we request any action of holders of
exchange notes, or a holder that is an owner of a beneficial interest in a
global note desires to take any action that DTC, as the holder of that global
note, is entitled to take, DTC would authorize the participants to take that
action and the participants would authorize holders owning through the
participants to take that action or would otherwise act upon the instruction of
the holders. Neither we nor the trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of exchange notes by DTC, or for maintaining, supervising or reviewing any
records of DTC relating to exchange notes.
Payments with respect to the principal of, and premium, if any, liquidated
damages, if any, and interest on, any exchange notes represented by a global
note registered in the name of DTC or its nominee on the applicable record date
will be payable by the trustee to or at the direction of DTC or its nominee in
its capacity as the registered holder of the global note representing the
exchange notes under the indenture. Under the terms of the indenture, we and
the trustee may treat the persons in whose names the exchange notes, including
the global notes, are registered as the owners for the purpose of receiving
payment thereon and for any and all other purposes whatsoever. Accordingly,
neither we nor the trustee has or will have any responsibility or liability for
the payment of these amounts to owners of beneficial interests in a global
note, including principal, premium, if any, liquidated damages, if any, and
interest. Payments by the participants and the indirect participants to the
owners of beneficial interests in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
exchange notes, cross-market transfers between the participants in DTC, on the
one hand, and Euroclear or Cedel participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary. However, these cross-
market transactions will require delivery of instructions to Euroclear or Cedel
by the counterparty in the appropriate system in accordance with the rules and
procedures and within the established deadlines, Brussels time, of the
appropriate system. Euroclear or Cedel will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant global notes in DTC and making or receiving payment
in accordance with normal procedures for same-day funds settlement applicable
to DTC. Euroclear participants and Cedel participants may not deliver
instructions directly to the depositories for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a global note from a participant in
DTC will be credited, and that crediting will be reported to the
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relevant Euroclear or Cedel participant, during the securities settlement
processing day, which must be a business day for Euroclear and Cedel,
immediately following the settlement date of DTC. Cash received in Euroclear or
Cedel as a result of sales of interest in a global note by or through a
Euroclear or Cedel Participant to a participant in DTC will be received with
value on the settlement date of DTC, but will be available in the relevant
Euroclear or Cedel cash account only as of the business day for Euroclear or
Cedel following DTC's settlement date.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the global notes among participants in
DTC, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform these procedures, and these procedures may be discontinued
at any time. Neither we nor the trustee will have any responsibility for the
performance by DTC, Euroclear or Cedel or their participants or indirect
participants of their obligations under the rules and procedures governing
their operations.
Certificated Exchange Notes
If:
. we notify the Trustee in writing that DTC is no longer willing or able
to act as a depositary or DTC ceases to be registered as a clearing
agency under the Exchange Act and a successor depositary is not
appointed within 90 days of that notice or cessation;
. we, at our option, notify the trustee in writing that we elect to cause
the issuance of exchange notes in definitive form under the indenture;
or
. upon the occurrence of other events as provided in the indenture,
then, upon surrender by DTC of the global notes, certificated exchange notes
will be issued to each person that DTC identifies as the beneficial owner of
the exchange notes represented by the global notes. Upon that issuance, the
trustee is required to register the certificated exchange notes in the name of
that person, or the nominee of any thereof, and cause the same to be delivered
to that person.
Neither we nor the trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related exchange notes, and each beneficial owner of exchange notes may
conclusively rely on, and shall be protected in relying on, instructions from
DTC for all purposes, including with respect to the registration and delivery,
and the respective principal amounts, of the exchange notes to be issued.
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FEDERAL INCOME TAX CONSIDERATIONS
Scope of Discussion
This general discussion of certain U.S. federal income and estate tax
consequences applies to you if you acquired old notes at original issue for
cash in the amount of the issue price, exchange your old notes for exchange
notes pursuant to the terms set forth in this prospectus and hold the exchange
notes as a "capital asset," generally, for investment, under Section 1221 of
the U.S. Internal Revenue Code. This summary, however, does not consider state,
local or foreign tax laws. In addition, it does not include all of the rules
which may affect the U.S. tax treatment of your investment in the exchange
notes. For example, special rules not discussed here may apply to you if you
are:
. a broker-dealer, a dealer in securities, a trader in securities who
elects to apply a mark-to-market method of accounting or a financial
institution;
. an S corporation;
. an insurance company;
. a tax-exempt organization;
. subject to the alternative minimum tax provisions of the Code;
. holding the exchange notes as part of a hedge, straddle, conversion
transaction or other risk reduction or constructive sale transaction;
. a nonresident alien or foreign corporation subject to net-basis U.S.
federal income tax on income or gain derived from an exchange note
because such income or gain is effectively connected with the conduct of
a U.S. trade or business; or
. an expatriate of the United States.
This discussion only represents our best attempt to describe certain federal
income tax consequences that may apply to you based on current U.S. federal tax
law. This discussion may in the end inaccurately describe the federal income
tax consequences which are applicable to you because the law may change,
possibly retroactively, and because the U.S. Internal Revenue Service or any
court may disagree with this discussion.
This summary may not cover your particular circumstances because it does not
consider foreign, state or local tax rules, disregards certain special federal
tax rules, and does not describe future changes in federal tax rules. Please
consult your tax advisor rather than relying on this general description.
The Exchange Offer
The issuance of the exchange notes to holders of the old notes pursuant to
the terms set forth in this prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no gain or loss will be recognized
by holders of the old notes upon receipt of the exchange notes, and ownership
of the exchange notes will be considered a continuation of ownership of the old
notes. For purposes of determining gain or loss upon the subsequent sale or
exchange of the exchange notes, a holder's basis in the exchange notes should
be the same as the holder's basis in the old notes exchanged. A holder's
holding period for the exchange notes should include the holder's holding
period for the old notes exchanged. The issue price and other tax
characteristics of the exchange notes should be identical to the issue price
and other tax characteristics of the old notes exchanged.
U.S. Holders
If you are a U.S. holder, as defined below, this section applies to you.
Otherwise, the caption "--Non-U.S. Holders" applies to you.
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Definition of U.S. Holder. You are a U.S. holder if you hold the exchange
notes and you are:
. a citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or
meets the "substantial presence" test under Section 7701(b) of the Code;
. a corporation or partnership created or organized in the United States
or under the laws of the United States or of any political subdivision
of the United States;
. an estate, the income of which is subject to U.S. federal income tax
regardless of its source; or
. a trust, if a U.S. court can exercise primary supervision over the
administration of the trust and one or more U.S. persons can control all
substantial decisions of the trust, or if the trust was in existence on
August 20, 1996 and has elected to continue to be treated as a U.S.
person.
Payments of Interest. Interest paid on an exchange note will generally be
taxable to a U.S. holder as ordinary interest income at the time it accrues or
is received in accordance with the U.S. holder's method of accounting for
federal income tax purposes.
Sale or Other Taxable Disposition of the Exchange Notes. You must recognize
taxable gain or loss on the sale, exchange, redemption, retirement or other
taxable disposition of an exchange note. The amount of your gain or loss equals
the difference between the fair market value of the cash or other property you
receive for the exchange note, minus the amount attributable to accrued
interest on the exchange note, minus your adjusted tax basis in the exchange
note. Your initial tax basis should equal the price you paid for the old note.
Your adjusted tax basis in an exchange note will equal the initial tax basis,
reduced by any payments on the exchange note or the old note exchanged
therefor.
Your gain or loss will generally be a long-term capital gain or loss if your
holding period for the exchange note is more than one year. Otherwise, it will
be a short-term capital gain or loss. Payments attributable to accrued interest
which you have not yet included in income will be taxed as ordinary interest
income.
Backup Withholding. You may be subject to a 31% backup withholding tax when
you receive interest payments on an exchange note or proceeds upon the sale or
other disposition of an exchange note. Certain holders (including, among
others, corporations and certain tax-exempt organizations) are generally not
subject to backup withholding. In addition, the 31% backup withholding tax will
not apply to you if you provide your taxpayer identification number in the
prescribed manner unless:
. the IRS notifies us or our agent that the taxpayer identification number
you provided is incorrect;
. you fail to report interest and dividend payments that you receive on
your tax return and the IRS notifies us or our agent that withholding is
required; or
. you fail to certify under penalties of perjury that you are not subject
to back up withholding.
If the 31% backup withholding tax does apply to you, you may use the amounts
withheld as a refund or credit against your U.S. federal income tax liability
as long as you provide certain information to the IRS.
Non-U.S. Holders
Definition of Non-United States Holder. A "non-U.S. holder" is any person
who holds exchange notes other than a U.S. holder. Please note that if you are
subject to U.S. federal income tax on a net basis on income or gain with
respect to an exchange note because such income or gain is effectively
connected with the conduct of a U.S. trade or business, this disclosure does
not cover the U.S. federal tax rules that apply to you.
86
<PAGE>
Interest
Portfolio Interest Exemption. You will generally not have to pay U.S.
federal income tax on interest paid on the exchange notes because of the
"portfolio interest exemption" if either:
. you represent that you are not a U.S. person for U.S. federal income tax
purposes and you provide your name and address to us or our paying agent
on a properly executed IRS Form W-8 (or a suitable substitute form)
signed under penalties of perjury; or
. a securities clearing organization, bank, or other financial institution
that holds customers' securities in the ordinary course of its business
holds the exchange note on your behalf, certifies to us or our agent
under penalties of perjury that it has received IRS Form W-8 (or a
suitable substitute form) from you or from another qualifying financial
institution intermediary, and provides a copy to us or our agent.
You will not, however, qualify for the portfolio interest exemption described
above if:
. you own, actually or constructively, 10% or more of the total combined
voting power of all classes of our capital stock;
. you are a controlled foreign corporation with respect to which we are a
"related person" within the meaning of Section 864(d)(4) of the Code; or
. you are a bank receiving interest described in Section 881(c)(3)(A) of
the Code.
Withholding Tax if the Interest Is Not Portfolio Interest. If you do not
claim, or do not qualify for, the benefit of the portfolio interest exemption,
you may be subject to a 30% withholding tax on interest payments made on the
exchange notes. However, you may be able to claim the benefit of a reduced
withholding tax rate under an applicable income tax treaty. The required
information for claiming treaty benefits is generally submitted, under current
regulations, on Form 1001. Successor forms will require additional information,
as discussed below under the caption "--Backup Withholding and Information
Reporting--New Withholding Regulations."
Reporting. We may report annually to the IRS and to you the amount of
interest paid to, and the tax withheld, if any, with respect to you.
Sale or Other Disposition of Exchange Notes. You will generally not be
subject to U.S. federal income tax or withholding tax on gain recognized on a
sale, exchange, redemption, retirement, or other disposition of an exchange
note. You may, however, be subject to tax on such gain if you are an individual
who was present in the United States for 183 days or more in the taxable year
of the disposition, in which case you may have to pay a U.S. federal income tax
of 30% (or a reduced treaty rate) on such gain.
U.S. Federal Estate Taxes. If you qualify for the portfolio interest
exemption under the rules described above when you die, the exchange notes will
not be included in your estate for U.S. federal estate tax purposes.
Backup Withholding and Information Reporting
Payments From U.S. Office. If you receive payments of interest or principal
directly from us or through a U.S. office of a custodian, nominee, agent or
broker, there is a possibility that you will be subject to both backup
withholding at a rate of 31% and information reporting.
With respect to interest payments made on the exchange notes, however,
backup withholding will not apply if you certify, generally on a Form W-8 or a
substitute form, that you are not a U.S. person in the manner described above
under the caption "--Interest."
Moreover, with respect to proceeds received on the sale, exchange,
redemption, or other disposition of an exchange note, backup withholding or
information reporting generally will not apply if you properly provide,
87
<PAGE>
generally on Form W-8 or a substitute form, a statement that you are an "exempt
foreign person" for purposes of the broker reporting rules, and other required
information. If you are not subject to U.S. federal income or withholding tax
on the sale or other disposition of an exchange note, as described above under
the heading "--Interest--Sale or Other Disposition of Exchange Notes," you will
generally qualify as an "exempt foreign person" for purposes of the broker
reporting rules.
Payments From Foreign Office. If payments of principal and interest are made
to you outside the United States by or through a foreign office of your foreign
custodian, nominee or other agent, or if you receive the proceeds of the sale
of an exchange note through a foreign office of a "broker," as defined in the
pertinent U.S. Treasury regulations, you will generally not be subject to
backup withholding or information reporting. You will, however, be subject to
backup withholding and information reporting if the foreign custodian, nominee,
agent or broker has actual knowledge or, after December 31, 2000, reason to
know, that the payee is a U.S. person. You will also be subject to information
reporting, but not backup withholding, if the payment is made by a foreign
office of a custodian, nominee, agent or broker that is a U.S. person or a
controlled foreign corporation for U.S. federal income tax purposes, or that
derives 50% or more of its gross income from the conduct of a U.S. trade or
business for a specified three year period, unless the broker has in its
records documentary evidence that you are a non-U.S. holder and certain other
conditions are met.
Refunds. Any amounts withheld under the backup withholding rules may be
refunded or credited against the non-U.S. holder's U.S. federal income tax
liability, provided that the required information is furnished to the IRS.
New Withholding Regulations. New regulations relating to withholding tax on
income paid to foreign persons will generally be effective for payments made
after December 31, 2000, subject to certain transition rules. The new
withholding regulations modify and, in general, unify the way in which you
establish your status as a non-U.S. "beneficial owner" eligible for withholding
exemptions including the portfolio interest exemption, a reduced treaty rate or
an exemption from backup withholding. For example, the new withholding
regulations will require new forms, which you will generally have to provide
earlier than you would have had to provide replacements for expiring existing
forms.
The new withholding regulations clarify withholding agents' reliance
standards. They also require additional certifications for claiming treaty
benefits. The new withholding regulations also provide somewhat different
procedures for foreign intermediaries and flow-through entities (such as
foreign partnerships) to claim the benefit of applicable exemptions on behalf
of non-U.S. beneficial owners for which or for whom they receive payments. For
example, the new withholding regulations would require, in the case of exchange
notes held by a foreign partnership, that the certification be provided by the
partners rather than by the foreign partnership and that the partnership
provide certain information, including a U.S. taxpayer identification number. A
look-through rule would apply in the case of tiered partnerships.
When you purchased the old notes, you were required to submit certification
that complies with the currently effective temporary Treasury regulations in
order to obtain an available exemption from or reduction in withholding tax.
The new withholding regulations provide that certifications satisfying the
requirements of the new withholding regulations will be deemed to satisfy the
requirements of the temporary Treasury regulations now in effect. If you are a
non-U.S. holder claiming benefit under an income tax treaty (and not relying on
the portfolio interest exemption), you should be aware that you may be required
to obtain a taxpayer identification number and to certify your eligibility
under the applicable treaty's limitations on benefits article in order to
comply with the new withholding regulations' certification requirements.
The new withholding regulations are complex and this summary does not
completely describe them. Please consult your tax advisor to determine how the
new withholding regulations will affect your particular circumstances.
88
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for old notes where the old
notes were acquired as a result of market-making activities or other trading
activities. We have agreed that, for at least 90 days after the exchange offer
is completed, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any resale of
exchange notes.
We will not receive any proceeds from any sales of the exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of
methods of resale, at market prices prevailing at the time of resale, at prices
related to those prevailing market prices or at negotiated prices. Any resale
may be made directly to the purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from the
broker-dealer and/or the purchasers of the exchange notes. Any broker-dealer
that resells the exchange notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of the exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any resale of exchange
notes and any commissions or concessions received by any of those persons may
be deemed to be underwriting compensation under the Securities Act. The letter
of transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
We have agreed to pay the expenses incident to the exchange offer, other
than commission or concessions of any brokers or dealers and the fees of any
counsel or other advisors or experts retained by the holders of old notes, and
will indemnify the holders of the exchange notes (including any broker-dealers)
against related liabilities, including liabilities under the Securities Act.
EXPERTS
The audited financial statements and schedules included in this prospectus
and elsewhere in the registration statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and is included herein in reliance upon the authority of said
firm as experts (or, as experts in accounting and auditing) in giving said
reports.
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by Wachtell,
Lipton, Rosen & Katz, New York, New York.
89
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Levi Strauss & Co. and Subsidiaries
Independent Auditors' Report............................................ F-2
Consolidated Balance Sheets--November 28, 1999 and November 29, 1998.... F-3
Consolidated Statements of Income--Years Ended November 28, 1999,
November 29, 1998 and November 30, 1997................................ F-4
Consolidated Statements of Stockholders' Deficit--Years Ended November
28, 1999, November 29, 1998, November 30, 1997 and November 24, 1996... F-5
Consolidated Statements of Cash Flows--Years Ended November 28, 1999,
November 29, 1998 and November 30, 1997................................ F-6
Notes to Consolidated Financial Statements--Years Ended November 28,
1999, November 29, 1998 and November 30, 1997.......................... F-7
Consolidated Balance Sheets--February 27, 2000 (Unaudited) and November
28, 1999 .............................................................. F-34
Consolidated Statements of Income (Loss)--Three Months Ended February
27, 2000 and February 28, 1999 (Unaudited)............................. F-35
Consolidated Statements of Cash Flows--Three Months Ended February 27,
2000 and February 28, 1999 (Unaudited)................................. F-36
Notes to Consolidated Financial Statements--Three Months Ended February
27, 2000 and February 28, 1999 (Unaudited)............................. F-37
</TABLE>
F-1
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Levi Strauss & Co.:
We have audited the accompanying consolidated balance sheets of Levi Strauss
& Co. (a Delaware corporation) and subsidiaries as of November 28, 1999 and
November 29, 1998, and the related consolidated statements of income,
stockholders' deficit and cash flows for each of the three fiscal years in the
period ended November 28, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Levi Strauss & Co. and
subsidiaries as of November 28, 1999 and November 29, 1998, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended November 28, 1999 in conformity with accounting principles
generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule II listed in the index of
financial statements (not presented herein) is presented for purposes of
complying with the Securities and Exchange Commission rules and is not part of
the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Arthur Andersen LLP
San Francisco, California
January 31, 2000
F-2
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
November 28, November 29,
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents........................ $ 192,816 $ 84,565
Trade receivables, net of allowance for doubtful
accounts of $30,017 in 1999 and $39,987 in
1998............................................ 759,273 856,637
Income taxes receivable.......................... 70,000 --
Inventories:
Raw materials.................................. 137,082 163,100
Work-in-process................................ 100,523 108,836
Finished goods................................. 433,882 546,096
----------- -----------
Total inventories............................ 671,487 818,032
Deferred tax assets.............................. 300,972 248,604
Other current assets............................. 172,195 127,552
----------- -----------
Total current assets......................... 2,166,743 2,135,390
Property, plant and equipment, net of accumulated
depreciation of $548,437 in 1999 and $728,137 in
1998.............................................. 685,026 828,251
Goodwill and other intangibles, net of accumulated
amortization of $158,052 in 1999 and $148,857 in
1998.............................................. 275,318 299,505
Non-current deferred tax assets.................... 478,235 555,046
Other assets....................................... 60,195 66,466
----------- -----------
Total Assets................................. $ 3,665,517 $ 3,884,658
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current maturities of long-term debt and short-
term borrowings................................. $ 233,992 $ 238,701
Accounts payable................................. 262,389 296,248
Restructuring reserves........................... 258,784 236,552
Accrued liabilities.............................. 415,273 451,479
Accrued salaries, wages and employee benefits.... 194,130 244,517
Accrued taxes.................................... 2,548 21,993
----------- -----------
Total current liabilities.................... 1,367,116 1,489,490
Long-term debt, less current maturities............ 2,430,617 2,176,629
Long-term employee related benefits................ 325,518 721,330
Postretirement medical benefits.................... 541,815 518,667
Long-term tax liabilities.......................... 241,542 247,843
Other long-term liabilities........................ 20,696 14,685
Minority interest.................................. 26,775 29,761
----------- -----------
Total liabilities............................ 4,954,079 5,198,405
----------- -----------
Stockholders' Deficit:
Common stock--$.01 par value; 270,000,000 shares
authorized; 37,278,238 shares issued and
outstanding..................................... 373 373
Additional paid-in capital....................... 88,812 88,812
Accumulated deficit.............................. (1,395,256) (1,400,611)
Accumulated other comprehensive income........... 17,509 (2,321)
----------- -----------
Stockholders' deficit........................ (1,288,562) (1,313,747)
----------- -----------
Total Liabilities and Stockholders' Deficit.. $ 3,665,517 $ 3,884,658
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 28, November 29, November 30,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales................................ $5,139,458 $5,958,635 $6,861,482
Cost of goods sold....................... 3,180,845 3,433,081 3,962,719
---------- ---------- ----------
Gross profit........................... 1,958,613 2,525,554 2,898,763
Marketing, general and administrative
expenses................................ 1,629,845 1,834,058 2,045,938
Excess capacity reduction/restructuring.. 497,683 250,658 386,792
Global Success Sharing Plan.............. (343,873) 90,564 114,833
---------- ---------- ----------
Operating income....................... 174,958 350,274 351,200
Interest expense......................... 182,978 178,035 212,358
Other (income) expense, net.............. (16,519) 9,539 (45,439)
---------- ---------- ----------
Income before taxes.................... 8,499 162,700 184,281
Provision for taxes...................... 3,144 60,198 46,070
---------- ---------- ----------
Net income............................. $ 5,355 $ 102,502 $ 138,211
========== ========== ==========
Earnings per share--basic and diluted.... $ 0.14 $ 2.75 $ 3.71
========== ========== ==========
Weighted-average common shares
outstanding............................. 37,278,238 37,278,238 37,278,238
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Dollars in Thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-In Accumulated Comprehensive Stockholders'
Stock Capital Deficit Income Deficit
------ ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at November 24,
1996................... $373 $88,812 $(1,641,324) $ 70,562 $(1,481,577)
---- ------- ----------- -------- -----------
Net income.............. -- -- 138,211 -- 138,211
Translation adjustment
(net of tax of
$13,896)............... -- -- -- (26,896) (26,896)
---- ------- ----------- -------- -----------
Total comprehensive
income................. -- -- 138,211 (26,896) 111,315
---- ------- ----------- -------- -----------
Balance at November 30,
1997................... 373 88,812 (1,503,113) 43,666 (1,370,262)
---- ------- ----------- -------- -----------
Net income.............. -- -- 102,502 -- 102,502
Translation adjustment
(net of tax of
$3,811)................ -- -- -- (45,987) (45,987)
---- ------- ----------- -------- -----------
Total comprehensive
income................. -- -- 102,502 (45,987) 56,515
---- ------- ----------- -------- -----------
Balance at November 29,
1998................... 373 88,812 (1,400,611) (2,321) (1,313,747)
---- ------- ----------- -------- -----------
Net income.............. -- -- 5,355 -- 5,355
Minimum pension
liability (net of tax
of $457)............... -- -- -- (778) (778)
Translation adjustment
(net of tax of
$8,686)................ -- -- -- 20,608 20,608
---- ------- ----------- -------- -----------
Total comprehensive
income................. -- -- 5,355 19,830 25,185
---- ------- ----------- -------- -----------
Balance at November 28,
1999................... $373 $88,812 $(1,395,256) $ 17,509 $(1,288,562)
==== ======= =========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 28, November 29, November 30,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income............................ $ 5,355 $ 102,502 $ 138,211
Adjustments to reconcile net cash
(used for) provided by operating
activities:
Depreciation and amortization....... 120,102 128,773 138,894
Unrealized foreign exchange (gains)
losses............................. (10,130) 27,219 (23,220)
Decrease in trade receivables....... 57,643 31,806 90,593
Increase in income taxes
receivable......................... (70,000) -- --
Decrease in inventories............. 106,979 45,754 45,440
(Increase) decrease in other current
assets............................. (47,284) (29,410) 34,550
Decrease (increase) in net deferred
tax assets......................... 29,340 (43,761) (278,492)
Increase (decrease) in accounts
payable and accrued liabilities.... 11,362 31,595 (120,511)
Increase (decrease) in restructuring
reserves........................... 20,176 (79,339) 386,792
Decrease in accrued salaries, wages
and employee benefits.............. (22,974) (23,404) (32,212)
Decrease in accrued taxes........... (32,640) (22,520) (35,328)
(Decrease) increase in long-term
employee related benefits.......... (376,204) 127,823 195,859
(Decrease) increase in long-term tax
liabilities........................ (6,300) (16,113) 16,496
Other, net.......................... 40,803 (57,156) 16,818
----------- ----------- -----------
Net cash (used for) provided by
operating activities............. (173,772) 223,769 573,890
----------- ----------- -----------
Cash Flows from Investing Activities:
Purchases of property, plant and
equipment............................ (61,062) (116,531) (121,595)
Proceeds from sale of property, plant
and equipment........................ 69,455 31,185 12,907
Decrease (increase) in net investment
hedges............................... 53,736 (2,532) 27,284
Other, net............................ 228 5,171 4,509
----------- ----------- -----------
Net cash provided by (used for)
investing activities............. 62,357 (82,707) (76,895)
----------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term
debt................................. 1,462,052 1,959,611 1,633,921
Repayments of long-term debt.......... (1,230,145) (2,037,627) (2,260,445)
Net (decrease) increase in short-term
borrowings........................... (7,688) (116,437) 96,219
Other, net............................ -- (36) 3
----------- ----------- -----------
Net cash provided by (used for)
financing activities............. 224,219 (194,489) (530,302)
----------- ----------- -----------
Effect of exchange rate changes on
cash................................. (4,553) (6,492) (18,061)
----------- ----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents..................... 108,251 (59,919) (51,368)
Beginning cash and cash equivalents... 84,565 144,484 195,852
----------- ----------- -----------
Ending Cash and Cash Equivalents...... $ 192,816 $ 84,565 $ 144,484
=========== =========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for:
Interest............................ $ 172,688 $ 167,907 $ 209,211
Income taxes........................ 82,675 146,717 337,984
Restructuring initiatives........... 416,123 313,700 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of Levi Strauss & Co. and its wholly-
owned foreign and domestic subsidiaries ("LS&CO." or "Company") are prepared in
conformity with generally accepted accounting principles. All significant
intercompany balances and transactions have been eliminated. LS&CO. is
privately held primarily by descendants and relatives of its founder, Levi
Strauss.
The Company's fiscal year consists of 52 or 53 weeks, ending on the last
Sunday of November in each year. The 1999 and 1998 fiscal years consisted of 52
weeks and ended November 28, 1999 and November 29, 1998, respectively, and
fiscal year 1997 consisted of 53 weeks and ended November 30, 1997. All
references to years relate to fiscal years rather than calendar years. Certain
prior year amounts have been reclassified to conform to the 1999 presentation.
Nature of Operations
The Company is one of the world's leading branded apparel companies with
operations in more than 40 countries. The Company designs and markets jeans and
jeans-related pants, casual and dress pants, shirts, jackets and related
accessories, for men, women and children, under the Levi's(R), Dockers(R) and
Slates(R) brands. The Company markets its Levi's(R) and Dockers(R) brand
products in three geographic regions: the Americas, Europe and Asia Pacific.
The Slates(R) brand products are marketed in the United States. As of
November 28, 1999, the Company employed approximately 18,000 people.
The Company relies on a number of suppliers for its manufacturing processes,
particularly Cone Mills Corporation, which has been and remains the sole
supplier of the denim used for 501(R) jeans through the Company's only long-
term supply contract. In 1999, 1998 and 1997, Cone Mills Corporation supplied
approximately 22%, 24% and 27%, respectively, of the total volume of fabrics
purchased worldwide by the Company. The loss of Cone Mills Corporation or other
principal suppliers could have an adverse effect on the Company's results of
operations.
Minority Interest
Minority interest is included in other (income) expense, net, and includes a
16.4% minority interest of Levi Strauss Japan K.K. and a 49.0% minority
interest of Levi Strauss Istanbul Konfeksigon.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
the related notes to the financial statements. Changes in such estimates, based
on more accurate future information, may affect amounts reported in future
periods.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at amortized cost, which approximates fair market value.
Inventory Valuation
Inventories are valued at the lower of average cost or market value and
include materials, labor and manufacturing overhead. Market value is calculated
on the basis of anticipated selling price less allowances to maintain a
targeted gross margin for each product.
F-7
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Income Taxes
Deferred income tax assets and liabilities are recognized for the expected
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using the enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to reverse.
Property, Plant and Equipment
Property, plant and equipment are carried at cost, less accumulated
depreciation. The cost is depreciated on a straight-line basis over the
estimated useful lives of the related assets. Buildings are depreciated over
40 years, and machinery and equipment is depreciated over an average of ten
years. Leasehold improvements are depreciated over the lesser of the life of
the improvement or the initial lease term.
Goodwill and Other Intangible Assets
Goodwill and other intangibles are carried at cost, less accumulated
amortization. Goodwill resulted primarily from a 1985 acquisition of LS&CO. by
Levi Strauss Associates Inc., a former parent company that was subsequently
merged into the Company in 1996. This merger was accounted for as a
reorganization of entities under common control. Goodwill is being amortized on
a straight-line basis over 40 years through the year 2025. Other intangibles
consist primarily of tradenames, which were valued as a result of the 1985
acquisition. Tradenames and other intangibles are being amortized over the
estimated useful lives of the related assets, which range from six to 40 years.
Long-Lived Assets
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" ("SFAS 121"), the Company reviews long-lived assets,
including goodwill and other intangibles, for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If the carrying amount of an asset exceeds the expected future
undiscounted cash flows, the Company measures and records an impairment loss
for the excess of the carrying value of the asset over its fair value.
Self-Insurance
The Company is partially self-insured for workers' compensation and certain
employee health benefits. Accruals for losses are made based on the Company's
claims experience and actuarial assumptions followed in the insurance industry.
Actual losses could differ from accrued amounts.
Translation Adjustment
The functional currency for most of the Company's foreign operations is the
applicable local currency. For those operations, assets and liabilities are
translated into United States ("U.S.") dollars using period-end exchange rates
and income and expense accounts are translated at average monthly exchange
rates. Net changes resulting from such translations are recorded as a separate
component of accumulated other comprehensive income in the consolidated
financial statements.
The U.S. dollar is the functional currency for foreign operations in
countries with highly inflationary economies and certain other subsidiaries.
The translation adjustments for these entities are included in other (income)
expense, net.
F-8
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Interest Rate Swaps
The Company enters into interest rate swap transactions to manage interest
rate exposures on its debt. Net interest receivable or payable on the swap
transactions is included in interest expense. Gains or losses that result from
the early termination of swap agreements are deferred and amortized over the
remaining term of the associated debt as a component of interest expense.
Foreign Exchange Contracts
The Company enters into foreign exchange contracts to hedge against known
foreign currency denominated exposures, particularly dividends and intercompany
royalties, loans, sourcing and other transactions with its foreign affiliates
and licensees. The accounting treatment of these hedges is dependent on the
item being hedged. Forward and swap transactions hedging our cash management
and sourcing exposures are reported at market value, with gains and losses
included in current earnings in other (income) expense, net. Option premium on
these hedges is amortized straight-line over the life of the option and is also
included in other (income) expense, net. The intrinsic value is used to mark
the option value to market through current earnings.
Forward and swap transactions hedging unremitted earnings and royalties are
also reported at market value but the market gain or loss is included in
translation equity adjustment, a component of comprehensive income, which is
included in stockholders' equity on the balance sheet. Similarly, option
premiums on hedges of unremitted earnings and royalties are amortized to the
translation equity account. The intrinsic value of the options is used to mark
the instruments to market at each financial statement date with the change in
value recorded in translation equity adjustment. At November 28, 1999 and
November 29, 1998, the net effect of exchange rate changes related to net
investment hedge transactions was a $48.7 million decrease and a $18.8 million
decrease respectively, to the translation adjustment.
Advertising Costs
In accordance with Statement of Position ("SOP") 93-7, "Reporting on
Advertising Costs," the Company expenses advertising costs as incurred. For
fiscal years 1999, 1998 and 1997 total advertising expense was $490.2 million,
$466.7 million and $473.0 million, respectively.
Research and Development Costs
Research and development costs, which are not material to the consolidated
statements of income, are expensed as incurred.
Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing net income by the
weighted-average number of common shares outstanding for the period and
excludes the dilutive effect of common shares that could potentially be issued.
Diluted EPS is computed by dividing net income by the weighted-average number
of common shares outstanding plus all potential dilutive common shares. The
Company does not have any potentially dilutive securities, and therefore, basic
and diluted EPS are the same. The weighted-average number of common shares
outstanding is 37,278,238 for all periods presented.
Computer Software Costs
The costs of computer software purchased or developed for internal use are
expensed as incurred due to the indeterminate life resulting from rapid
technological changes, except when the software is included with
F-9
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
capitalized hardware and the cost cannot be separately identified. The Company
will adopt SOP 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use," in the first quarter of fiscal year 2000. SOP
98-1 requires certain costs related to internal-use computer software to be
capitalized. The adoption of SOP 98-1 is not expected to have a material effect
on the Company's financial position or results of operations.
Revenue Recognition
Revenue from the sale of product is recognized upon shipment of products to
customers. Allowances for estimated returns and discounts are recognized when
sales are recorded.
New Accounting Standards
In 1999, the Company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS 130"). This statement establishes
standards for the reporting of comprehensive income and its components.
Comprehensive income consists of net income, foreign currency translation
adjustments and minimum pension liability adjustments and is presented in the
consolidated statements of stockholders' deficit. The adoption of SFAS 130 had
no impact on total stockholders' deficit. Prior year financial statements have
been reclassified to conform to this statement.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). In June 1999, the FASB
delayed the effective date of SFAS 133 to fiscal years beginning after June 15,
2000. The Company will adopt SFAS 133 the first day of fiscal year 2001. SFAS
133 establishes accounting and reporting standards for derivative instruments
including certain derivative instruments embedded in other contracts, and for
hedging activities. In summary, SFAS 133 requires all derivatives to be
recognized as assets or liabilities at fair value. Fair value adjustments are
made either through earnings or equity, depending upon the exposure being
hedged and the effectiveness of the hedge. The Company has not yet quantified
all effects of adopting SFAS 133 on its financial statements. However, the
adoption of SFAS 133 could increase volatility in earnings and other
comprehensive income or involve certain changes in the Company's business
practices. The Company currently has an implementation team in place that is
determining the method of implementation and evaluating all effects of adopting
SFAS 133.
Note 2: Excess Capacity Reductions/Restructuring Reserves
North America Plant Closures
Over the last three years, the Company has closed 29 of its owned and
operated production and finishing facilities in North America and Europe in
order to reduce costs, eliminate excess capacity and align its sourcing
strategy with changes in the industry and in consumer demand. Plant closures
were announced in November 1997, in which ten manufacturing facilities as well
as a finishing center in the U.S. were closed by the end of 1998 and displaced
approximately 6,400 employees. The Company recorded an initial charge of $386.8
million in 1997 that consisted of $47.7 million for asset write-offs, $323.8
million for severance and employee benefits and $15.3 million for other
restructuring costs. The ending liability balances for this initial charge is
displayed in the table below.
In line with the above plans, the Company announced in November 1998 the
closure of two more finishing centers in the U.S. that were closed by the end
of 1999, displacing approximately 990 employees. The Company recorded an
initial charge of $82.1 million in 1998 that consisted of $25.5 million for
asset write-
F-10
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
offs, $55.1 million for severance and employee benefits and $1.5 million for
other restructuring costs. The ending liability balances for this initial
charge is displayed in the table below.
Also in conjunction with such plans, the Company announced in February 1999
the closure of 11 additional manufacturing facilities in North America and the
displacement of approximately 5,900 employees. As of November 28, 1999, all of
these manufacturing facilities have been closed and approximately 5,860
employees have been displaced. The Company recorded an initial charge of
$394.1 million in 1999 that consisted of $54.8 million for asset write-offs,
$292.9 million for severance and employee benefits and $46.4 million for other
restructuring costs. The ending liability balances for this initial charge is
displayed in the table below.
1997 North America Plant Closures
<TABLE>
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- ------- ---------- -------- -------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $323,796 $ -- $(297,176) $26,620 $ -- $ (17,830) $ 8,790
Asset write-offs........ 47,676 -- (12,454) 35,222 -- (24,567) 10,655
Other restructuring
costs.................. 15,320 -- (4,482) 10,838 -- (8,925) 1,913
-------- ------- --------- ------- -------- --------- --------
Total................. $386,792 $ -- $(314,112) $72,680 $ -- $ (51,322) $ 21,358
======== ======= ========= ======= ======== ========= ========
1998 North America Plant Closures
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- ------- ---------- -------- -------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $ -- $55,060 $ (1,970) $53,090 $ -- $ (50,407) $ 2,683
Asset write-offs........ -- 25,469 (3,331) 22,138 -- (12,425) 9,713
Other restructuring
costs.................. -- 1,544 (250) 1,294 -- (101) 1,193
-------- ------- --------- ------- -------- --------- --------
Total................. $ -- $82,073 $ (5,551) $76,522 $ -- $ (62,933) $ 13,589
======== ======= ========= ======= ======== ========= ========
1999 North America Plant Closures
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- ------- ---------- -------- -------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $ -- $ -- $ -- $ -- $292,886 $(183,131) $109,755
Asset write-offs........ -- -- -- -- 54,828 (17,265) 37,563
Other restructuring
costs.................. -- -- -- -- 46,391 (17,865) 28,526
-------- ------- --------- ------- -------- --------- --------
Total................. $ -- $ -- $ -- $ -- $394,105 $(218,261) $175,844
======== ======= ========= ======= ======== ========= ========
</TABLE>
Corporate Reorganization Initiatives
In 1998, the Company instituted various corporate reorganization initiatives
and the displacement of approximately 770 employees. The goal of these
initiatives was to reduce overhead costs and consolidate
F-11
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
operations. The Company recorded initial charges of $61.1 million in 1998 that
consisted of $4.0 million for asset write-offs, $49.1 million for severance and
employee benefits and $7.9 million for other restructuring costs. As of
November 28, 1999, approximately 720 employees were displaced. The ending
liability balances for these initial charges are displayed in the table below.
In line with such overhead reorganization initiatives, the Company recorded
additional charges of $48.9 million in 1999 that consisted of $45.0 million for
severance and employee benefits and $3.9 million for other restructuring costs.
A total of approximately 930 employees are expected to be displaced of which
approximately 40 employees have been displaced as of the end of 1999. The
ending liability balances for these initial charges are displayed in the table
below.
1998 Corporate Reorganization Initiatives
<TABLE>
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- ------- ---------- -------- ------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $ -- $49,097 $ -- $49,097 $ -- $(45,893) $ 3,204
Asset write-offs........ -- 4,027 (360) 3,667 -- (623) 3,044
Other restructuring
costs.................. -- 7,938 (740) 7,198 -- (786) 6,412
----- ------- ------- ------- ------- -------- -------
Total................. $ -- $61,062 $(1,100) $59,962 $ -- $(47,302) $12,660
===== ======= ======= ======= ======= ======== =======
1999 Corporate Reorganization Initiatives
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- ------- ---------- -------- ------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $ -- $ -- $ -- $ -- $44,952 $ (1,402) $43,550
Other restructuring
costs.................. -- -- -- -- 3,937 (2,257) 1,680
----- ------- ------- ------- ------- -------- -------
Total................. $ -- $ -- $ -- $ -- $48,889 $ (3,659) $45,230
===== ======= ======= ======= ======= ======== =======
</TABLE>
Europe Reorganization and Plant Closures
In September 1998 the Company announced plans to close two manufacturing and
two finishing facilities, and reorganize operations throughout Europe,
displacing approximately 1,650 employees. These plans were prompted by
decreased demand for denim jeans products and a resulting over-capacity in the
Company's European owned and operated plants. The production facilities were
closed by the end of 1999 and approximately 1,630 employees were displaced. The
Company recorded an initial charge of $107.5 million in 1998 that consisted of
$10.0 million for asset write-offs and $97.5 million for severance and employee
benefits. The ending liability balances for this initial charge is displayed in
the table below.
In conjunction with such plans in Europe, the Company announced in September
1999 plans to close a production facility and reduce capacity at a finishing
facility in the United Kingdom, to further reduce overhead costs and
consolidate operations, and to displace approximately 960 employees. The
production facility closed in December 1999 and as of November 28, 1999,
approximately 50 employees have been displaced. The Company recorded an initial
charge of $54.7 million in 1999 that consisted of $4.5 million for asset write-
offs, $48.2 million for severance and employee benefits and $2.0 million for
other restructuring costs. The ending liability balances for this initial
charge is displayed in the table below.
F-12
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1998 Europe Reorganization and Plant Closures
<TABLE>
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- -------- ---------- -------- ------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $ -- $ 97,497 $(9,082) $88,415 $ -- $(77,762) $10,653
Asset write-offs........ -- 10,026 (152) 9,874 -- (6,478) 3,396
----- -------- ------- ------- ------- -------- -------
Total................. $ -- $107,523 $(9,234) $98,289 $ -- $(84,240) $14,049
===== ======== ======= ======= ======= ======== =======
1999 Europe Reorganization and Plant Closures
<CAPTION>
Balance Balance Balance
At At At
11/30/97 Charges Reductions 11/29/98 Charges Reductions 11/28/99
-------- -------- ---------- -------- ------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Severance and employee
benefits............... $ -- $ -- $ -- $ -- $48,160 $ (9,747) $38,413
Asset write-offs........ -- -- -- -- 4,500 (26) 4,474
Other restructuring
costs.................. -- -- -- -- 2,029 (17) 2,012
----- -------- ------- ------- ------- -------- -------
Total................. $ -- $ -- $ -- $ -- $54,689 $ (9,790) $44,899
===== ======== ======= ======= ======= ======== =======
</TABLE>
Severance and employee benefits relate to severance packages, out-placement
and career counseling for employees affected by the plant closures, and
reorganization initiatives. Reductions consists of payments for severance and
employee benefits, and other restructuring costs, as well as actual losses on
disposal of assets. The asset write-offs relate primarily to machinery and
equipment, and buildings that have been adjusted to net realizable value which
was determined by estimating the proceeds realizable on sale or lease of these
assets (see Note 4 to the Consolidated Financial Statements). The balance of
severance and employee benefits and other restructuring costs are included
under restructuring reserves on the balance sheet. The balance of asset write-
offs is included as a reduction to property, plant and equipment on the balance
sheet and is non-cash. All of the initiatives are expected to be completed by
the end of 2000 with the exception of the North America plant closures
announced in 1999 which are expected to be completed by mid-2001.
F-13
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Note 3: Income Taxes
The U.S. and non-U.S. components of income before taxes are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- ---------
(Dollars in Thousands)
<S> <C> <C> <C>
U.S........................................... $ 6,025 $ 61,197 $(199,855)
Non-U.S....................................... 2,474 101,503 384,136
-------- -------- ---------
Total....................................... $ 8,499 $162,700 $ 184,281
======== ======== =========
The provision for taxes consists of the following:
<CAPTION>
1999 1998 1997
-------- -------- ---------
(Dollars in Thousands)
<S> <C> <C> <C>
Federal-U.S.
Current..................................... $(53,441) $(36,879) $ 118,579
Deferred.................................... 20,589 1,812 (265,287)
-------- -------- ---------
$(32,852) $(35,067) $(146,708)
======== ======== =========
State-U.S.
Current..................................... $ (521) $ 458 $ 19,960
Deferred.................................... 776 4,423 (14,324)
-------- -------- ---------
$ 255 $ 4,881 $ 5,636
======== ======== =========
Non-U.S.
Current..................................... $ 32,663 $132,089 $ 186,179
Deferred.................................... 3,078 (41,705) 963
-------- -------- ---------
$ 35,741 $ 90,384 $ 187,142
======== ======== =========
Total
Current..................................... $(21,299) $ 95,668 $ 324,718
Deferred.................................... 24,443 (35,470) (278,648)
-------- -------- ---------
$ 3,144 $ 60,198 $ 46,070
======== ======== =========
</TABLE>
At November 28, 1999, cumulative non-U.S. operating losses of $162.6 million
generated by the Company were available to reduce future taxable income
primarily between the years 2002 and 2009.
Income tax expense due to translation adjustment was $8.7 million, $3.8
million and $13.9 million for 1999, 1998 and 1997, respectively.
F-14
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Temporary differences which give rise to deferred tax assets and liabilities
at November 28, 1999 and November 29, 1998 were as follows:
<TABLE>
<CAPTION>
1999 Deferred 1998 Deferred
Tax Assets Tax Assets
(Liabilities) (Liabilities)
------------- -------------
(Dollars in Thousands)
<S> <C> <C>
Postretirement benefits.......................... $215,361 $205,225
Employee compensation and benefit plans.......... 146,261 273,238
Inventory........................................ 86,311 27,972
Depreciation and amortization.................... 4,713 (3,853)
Foreign exchange gains/losses.................... (36,834) (45,113)
Restructuring and special charges................ 102,501 105,271
Tax on unremitted non-U.S. earnings.............. 209,296 196,858
State income tax................................. (21,352) (22,491)
Other............................................ 72,950 66,543
-------- --------
$779,207 $803,650
======== ========
</TABLE>
The Company's effective income tax rate for fiscal years 1999, 1998 and 1997
differs from the statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Statutory rate........................................ 35.0% 35.0% 35.0%
Changes resulting from:
State income taxes, net of federal income tax
benefit............................................ 2.0 2.0 2.0
Foreign losses, no recorded tax benefit............. 15.2 8.1 3.1
Acquisition-related book and tax bases differences.. 43.6 2.3 2.0
Reversal of prior years' accruals................... (55.0) (11.3) --
Tax benefit, prior years' foreign losses............ -- -- (21.7)
Other, net.......................................... (3.8) 0.9 4.6
----- ----- -----
Effective rate........................................ 37.0% 37.0% 25.0%
===== ===== =====
</TABLE>
The consolidated U.S. income tax returns of the Company for 1986 through
1995 are under examination by the Internal Revenue Service. The Company
believes it has made adequate provision for income taxes and interest for all
periods under review.
F-15
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Note 4: Property, Plant and Equipment
The components of property, plant and equipment ("PP&E") are as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Dollars in
Thousands)
<S> <C> <C>
Land................................................. $ 48,483 $ 52,928
Buildings and leasehold improvements................. 566,046 497,596
Machinery and equipment.............................. 613,966 787,802
Construction in progress............................. 4,968 218,062
---------- ----------
Total PP&E......................................... 1,233,463 1,556,388
Accumulated depreciation............................. (548,437) (728,137)
---------- ----------
PP&E, net............................................ $ 685,026 $ 828,251
========== ==========
</TABLE>
As a result of the excess capacity reduction and reorganization initiatives
charges (see Note 2 to the Consolidated Financial Statements), the Company
recognized impairment losses in 1999, 1998 and 1997 of $59.3 million, $39.5
million and $47.7 million, respectively, related to certain plant assets. The
adjustment to net realizable value was determined by estimating the proceeds
realizable on sale or lease of these assets.
As of November 28, 1999, the Company had $58.8 million of PP&E, net,
available for sale (see Note 18 to the Consolidated Financial Statements).
Depreciation expense for 1999, 1998 and 1997 was $108.7 million, $114.3
million and $123.1 million, respectively.
Construction in progress at November 28, 1999 related to various projects
with expected costs of approximately $2.0 million to complete these projects in
2000. Construction in progress at November 29, 1998 related primarily to the
Company's distribution centers that were completed in 1999. In addition at
November 29, 1998, construction in progress included a flagship retail store in
San Francisco that was completed in 1999.
Note 5: Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Dollars in
Thousands)
<S> <C> <C>
Goodwill............................................... $ 351,474 $ 364,748
Tradenames............................................. 77,534 77,403
Other intangibles...................................... 4,362 6,211
--------- ---------
Total intangible assets.............................. 433,370 448,362
Accumulated amortization related to goodwill........... (125,208) (117,543)
Other accumulated amortization......................... (32,844) (31,314)
--------- ---------
Intangible assets, net............................... $ 275,318 $ 299,505
========= =========
</TABLE>
Primarily as a result of a liquidation of a small subsidiary, the Company
recognized an impairment loss in 1999 of $13.6 million related to obsolete
technology that is recorded in other (income) expense, net. In 1998 and 1997,
intangibles were adjusted by $16.4 million and $52.3 million, respectively, for
fully amortized assets.
Amortization expense for 1999, 1998 and 1997 was $11.4 million, $14.4
million and $15.8 million, respectively.
F-16
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Note 6: Debt and Lines of Credit
Debt and lines of credit are summarized below:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Dollars in
Thousands)
<S> <C> <C>
Long-Term Debt:
Unsecured:
Credit facilities................................ $1,417,000 $ 750,000
Uncommitted lines of credit...................... -- 69,000
Commercial paper program......................... -- 581,036
Notes:
6.80%, due 2003................................ 348,065 347,429
7.00%, due 2006................................ 446,735 446,405
Yen-denominated eurobond:
4.25%, due 2016................................ 188,679 166,666
---------- ----------
2,400,479 2,360,536
Secured:
Receivables-backed securitization financing
agreement....................................... 214,000 --
Industrial development revenue refunding bond.... 10,000 10,000
Notes payable, at various rates, due in
installments through 2006....................... 6,331 6,273
---------- ----------
2,630,810 2,376,809
Current maturities................................. (200,193) (200,180)
---------- ----------
Total........................................ $2,430,617 $2,176,629
========== ==========
Unused Lines of Credit:
Long-term........................................ $ -- $1,000,000
Short-term....................................... 201,689 587,017
---------- ----------
Total........................................ $ 201,689 $1,587,017
========== ==========
</TABLE>
Credit Facilities
In February 1999, the Company restructured a 1998 credit facility agreement
which consisted of three syndicated bank credit facilities totaling $1.75
billion. Since this restructuring, the Company reduced its credit facilities by
$248.0 million to approximately $1.5 billion as of November 28, 1999,
consisting of: (1) a $621.8 million five-year unsecured credit facility, (2) a
$580.2 million 364-day credit facility convertible into a two year loan at
maturity at the option of the Company, and (3) a $300.0 million 180-day
revolving credit facility (together, the "Credit Facilities"). In August 1999,
the Company renewed its 180-day credit facility. The maturity date for the
five-year credit facility is January 31, 2002, while the maturity date for the
364-day credit facility and the 180-day revolving facility is February 4, 2000.
Borrowings under the Credit Facilities bear interest at either LIBOR or the
agent bank's base rate plus an incremental percentage based on the Company's
credit ratings.
On November 12, 1999, the banks granted the Company a waiver of the
financial covenants required by the Credit Facilities. This waiver was
requested due to the Company's business conditions during the fourth quarter of
1999, primarily lower sales, and to ensure ample time to renegotiate its credit
facilities in light of the pending February 4, 2000 expiration date. This
waiver included new financial covenants consisting of a maximum leverage ratio
and a minimum interest-coverage ratio, which expire on February 3, 2000. As of
F-17
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
November 28, 1999, the Company was in compliance with the new financial
covenants. The Company amended its Credit Facilities in January 2000 (see Note
18 to the Consolidated Financial Statements).
The 1998 credit facilities amended a 1997 credit facility resulting in lower
margin borrowing rates and a reduced commitment of $1.75 billion from $2.5
billion. The commitments were designated as a $1.0 billion 364-day credit
facility (with an option to request a 364-day extension and an option to term
out outstanding borrowings for two years) and a $750.0 million five-year
unsecured credit facility.
Commercial Paper Program
A decline in the Company's credit ratings below investment grade caused the
commercial paper market to be unavailable to the Company. During 1999 the
Company eliminated its commercial paper borrowings. During 1998, the Company
reduced the size of its commercial paper program to $1.75 billion from $2.5
billion. Interest rates on the outstanding commercial paper borrowings as of
November 29, 1998, ranged from 5.2% to 6.4% with an effective weighted average
rate of 5.8%. Commercial paper outstanding in 1998 was classified as long-term
since the Company at the time intended to refinance these borrowings on a long-
term basis through continued commercial paper borrowings or other borrowing
vehicles.
Notes Offering
In 1996, the Company issued two series of notes payable totaling $800.0
million to qualified institutional investors in reliance on Rule 144A under the
U.S. Securities and Exchange Act of 1933 (the "Notes Offering"). The notes are
unsecured obligations of the Company and are not subject to redemption before
maturity. The issuance was divided into two series: $350.0 million seven-year
notes maturing in November 2003 and $450.0 million ten-year notes maturing in
November 2006. The seven- and ten-year notes bear interest at 6.8% and 7.0% per
annum, respectively, payable semi-annually in May and November of each year.
Discounts of $8.2 million on the original issue are being amortized over the
term of the notes using an approximate effective-interest rate method. Net
proceeds from the Notes Offering were used to repay a portion of the
indebtedness outstanding under a 1996 credit facility agreement. In September
and December 1999, and January 2000, the credit rating agencies lowered the
Company's debt ratings.
Yen-denominated Eurobond Placement
In 1996, the Company issued a (Yen)20 billion principal amount eurobond
(equivalent to approximately $180.0 million at the time of issuance) due in
November 2016, with interest payable at 4.25% per annum. The bond is redeemable
at the option of the Company at a make-whole redemption price commencing in
2006. Net proceeds from the placement were used to repay a portion of the
indebtedness outstanding under a 1996 credit facility agreement.
Industrial Development Revenue Refunding Bond
In 1995, the City of Canton, Mississippi issued an industrial development
revenue refunding bond with a principal amount of $10.0 million, and the
proceeds were loaned to the Company to help finance the cost of acquiring a
customer service center in Canton. Interest payments are due monthly at a
variable rate based upon the J.J. Kenny Index, reset weekly at a maximum rate
of 13.0%, and the principal amount is due June 1, 2003. The bond is secured by
a letter of credit that expires on June 15, 2000, which the Company has the
opportunity to extend or renew.
F-18
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Receivables-Backed Securitization Financing Agreement
During April 1999, the Company, through a wholly owned special purpose
entity, Levi Strauss Funding Corp. ("LSFC"), entered into a U.S. receivables-
backed securitization financing agreement. LSFC's sole business consists of
purchasing receivables from the Company and its affiliates as part of this
financing transaction. LSFC is a separate corporation with its own separate
creditors who, in any liquidation of the Company or its affiliates, will be
entitled to be satisfied out of LSFC's assets prior to any value in LSFC being
available to the equity holders of LSFC. Under the terms of the agreement as of
November 28, 1999, borrowings up to $214.0 million are collateralized by a
security interest in LSFC's receivables. The maximum amount outstanding varies
based upon the level of eligible receivables as defined under the agreement.
The Company intends to extend the commitment period beyond one year as of
November 28, 1999, and therefore borrowings under this agreement are classified
as long-term debt. Net new borrowings from this facility reduced the commitment
levels of the Credit Facilities (see note above). The fees under this agreement
are variable based on outstanding receivables and the Company's debt ratings.
Interest rates ranged from 4.90% to 5.54% with an effective weighted average
interest rate of 5.69% during 1999. The Company terminated this agreement in
January 2000 (see Note 18 to the Consolidated Financial Statements).
Principal Debt Payments
As of November 28, 1999, the required aggregate debt principal payments and
commitment reductions for the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
Principal
Year Payments
---- ----------
(Dollars
in
Thousands)
<S> <C>
2000*............................................................. $1,012,880
2001.............................................................. 1,359
2002.............................................................. 622,220
2003.............................................................. 358,300
2004.............................................................. 250
Thereafter........................................................ 635,801
----------
Total........................................................... $2,630,810
==========
</TABLE>
- --------
* The Credit Facilities have payment terms maturing in 2000. The Company
intends and is able to extend these borrowings using various funding
vehicles. Consequently, estimated debt current maturities for 2000 are $200.2
million. Subsequent to November 28, 1999, new and amended debt agreements
were put in place during December 1999 and January 2000 (see Note 18 to the
Consolidated Financial Statements).
Short-Term Credit Lines and Stand-By Letters of Credit
At November 28, 1999, the Company had unsecured and uncommitted short-term
credit lines available totaling $201.7 million at various rates. These credit
arrangements may be canceled by the bank lenders upon notice and generally have
no compensating balance requirements or commitment fees. The majority of these
short-term credit lines were refinanced with the new bank credit facilities
(see Note 18 to the Consolidated Financial Statements).
At November 28, 1999 and November 29, 1998, the Company had $89.4 million
and $96.3 million, respectively, of standby letters of credit with various
international banks, of which $70.6 million and $79.0 million, respectively,
serves as guarantees by the creditor banks to cover U.S. workers' compensation
claims. The Company pays fees on the standby letters of credit. Borrowings
against the letters of credit are subject to interest at various rates.
F-19
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Interest Rate Swaps
At November 28, 1999, the Company had interest rate swap transactions
outstanding with a total notional principal amount of $425.0 million, to
convert floating rate liabilities to fixed rates and $375.0 million to convert
fixed rate liabilities to floating rates. These swap transactions effectively
change the Company's interest rates on part of its debt to fixed rates that
range from 6.25% to 7.0% and floating rates that range from 4.87% to 6.5%,
depending on their maturities, the latest of which is in 2006.
The Company is exposed to credit loss in the event of nonperformance by the
counterparties to the interest swap transactions; however, the Company believes
these counterparties are creditworthy financial institutions and does not
anticipate nonperformance.
In addition, the Company is exposed to interest rate risk. It is the
Company's policy and practice to use derivative instruments, primarily interest
rate swaps, to manage and reduce interest rate exposures.
Interest Rates on Borrowings
The Company's weighted average interest rate on borrowings outstanding
during 1999 and 1998, including the impact of interest rate swap transactions,
was 7.3% and 7.2%, respectively.
Note 7: Commitments and Contingencies
Foreign Exchange Contracts
At November 28, 1999, the Company has U.S. dollar forward currency contracts
to sell the aggregate equivalent of $929.6 million and to buy the aggregate
equivalent of $377.9 million of various foreign currencies. The Company also
had Euro forward currency contracts to sell the aggregate equivalent of
$128.4 million and to buy the aggregate equivalent of $33.0 million of various
foreign currencies. Additionally at November 28, 1999, the Company had U.S.
dollar option contracts to sell the aggregate equivalent of $1.3 billion and to
buy the aggregate equivalent of $826.9 million of various foreign currencies.
The Company also had Euro option contracts to sell the foreign currency
aggregate equivalent of $105.0 million and buy the aggregate equivalent of
$75.0 million. These contracts are at various exchange rates and expire at
various dates through 2000.
The foreign exchange gains and losses included in other (income) expense,
net, are the realized results for the current financial year together with the
market revaluation of all outstanding foreign exchange contracts related to
both current and future years. The foreign exchange gains and losses included
in other comprehensive income, a component of stockholders' deficit in the
balance sheet, are the unrealized results for the current financial year
together with the market revaluation of all outstanding foreign exchange
contracts related to both current and future years.
The Company's market risk is generally related to fluctuations in the
currency exchange rates. The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the foreign exchange contracts; however
the Company believes these counterparties are creditworthy financial
institutions and does not anticipate nonperformance.
Other Contingencies
The Company does not believe there are any pending legal proceedings that
will have a material impact on the Company's operations. In the ordinary course
of its business, the Company has pending various cases
F-20
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
involving contractual matters, employee-related matters, distribution
questions, product liability claims, trademark infringement and other matters.
The Company believes that these cases are not material in aggregate considering
the strength of its legal positions in such matters.
Compliance with United States Federal, state and local laws enacted for the
protection of the environment has no material effect upon the Company's capital
expenditures, earnings, or competitive position to date. Although the Company
does not anticipate any material adverse effects in the future based on the
nature of its operations and the effect of such laws, no assurance can be given
that such laws, or any future laws enacted for the protection of the
environment, will not have a material adverse effect on the Company. The
Company evaluates environmental liabilities on an ongoing basis and, based on
current available information, does not consider any environmental exposure to
be material to the Company's financial position or results of operations.
Note 8: Fair Value of Financial Instruments
The estimated fair value of certain financial instruments has been
determined by the Company using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.
The carrying amount and estimated fair value (in each case including accrued
interest) of the Company's financial instrument assets and (liabilities) at
November 28, 1999 and November 29, 1998 are as follows:
<TABLE>
<CAPTION>
November 28, 1999 November 29, 1998
------------------------ --------------------
Estimated
Carrying Estimated Carrying Fair
Value Fair Value Value Value
----------- ----------- --------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Debt instruments:
Credit facilities............ $(1,424,449) $(1,424,449) $(753,766) $(753,766)
Yen-denominated eurobond
placement................... (189,274) (148,113) (169,028) (183,750)
Notes offering............... (798,640) (626,307) (812,275) (742,143)
Commercial paper............. -- -- (586,128) (586,128)
Receivables-backed
securitization.............. (215,836) (215,836) -- --
Industrial development
revenue refunding bond...... (10,030) (10,030) (10,025) (10,025)
Currency and interest rate
hedges:
Foreign exchange forward
contracts................... $ 16,972 $ 16,932 $ (3,335) $ (3,668)
Foreign exchange option
contracts................... 7,806 2,288 (1,160) (3,161)
Interest rate swap
contracts................... (2,224) (4,839) (2,978) 1,437
</TABLE>
Quoted market prices or dealer quotes are used to determine the estimated
fair value of foreign exchange contracts, option contracts and interest rate
swap contracts. Dealer quotes and other valuation methods, such as the
discounted value of future cash flows, replacement cost, and termination cost
have been used to determine the estimated fair value for long-term debt and the
remaining financial instruments. The carrying values of cash and cash
equivalents, trade receivables, current assets, current and non-current
maturities of long-term debt, short-term borrowings and taxes approximate fair
value.
The fair value estimates presented herein are based on information available
to the Company as of November 28, 1999 and November 29, 1998. Although the
Company is not aware of any factors that would substantially affect the
estimated fair value amounts, such amounts have not been updated since those
dates and, therefore, the current estimates of fair value at dates subsequent
to November 28, 1999 and November 29,
F-21
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1998 may differ substantially from these amounts. Additionally, the aggregation
of the fair value calculations presented herein do not represent and should not
be construed to represent the underlying value of the Company.
Note 9: Leases
The Company is obligated under operating leases for facilities, office space
and equipment. At November 28, 1999, obligations under long-term leases are as
follows:
<TABLE>
<CAPTION>
Minimum
Lease
Payments
----------
(Dollars
in
Thousands)
<S> <C>
2000............................................................ $ 67,985
2001............................................................ 60,623
2002............................................................ 53,440
2003............................................................ 48,341
2004............................................................ 46,164
Remaining years................................................. 241,469
--------
Total minimum lease payments.................................. $518,022
========
</TABLE>
The total minimum lease payments on operating leases have not been reduced
by estimated future income of $19.0 million from non-cancelable subleases.
In general, leases relating to real estate include renewal options of up to
20 years, except for the San Francisco headquarters office lease, which
contains multiple renewal options of up to 79 years. Some leases contain
escalation clauses relating to increases in operating costs. Certain operating
leases provide the Company with an option to purchase the property after the
initial lease term at the then prevailing market value. Rental expense for
1999, 1998 and 1997 was $86.1 million, $80.2 million and $97.8 million,
respectively.
Note 10: Pension and Postretirement Benefit Plans
The Company has numerous non-contributory defined benefit retirement plans
covering substantially all employees. It is the Company's policy to fund its
retirement plans based on actuarial recommendations, consistent with applicable
laws and income tax regulations. Plan assets, which may be denominated in
foreign currencies and issued by foreign issuers, are invested in a diversified
portfolio of securities including stocks, bonds, real estate investment funds
and cash equivalents. Benefits payable under the plans are based on either
years of service or final average compensation. The Company also sponsors other
retirement plans for certain domestic and foreign employees. Expense for these
plans in 1999, 1998 and 1997 totaled $12.0 million, $7.5 million and $6.9
million, respectively.
The Company maintains two plans that provide postretirement benefits,
principally health care, to substantially all domestic retirees and their
qualified dependents. These plans have been established with the intention that
they will continue indefinitely. However, the Company retains the right to
amend, curtail or discontinue any aspect of the plans at any time. Under the
Company's current policies, employees become eligible for these benefits when
they reach age 55 with 15 years of credited service. The plans are contributory
and contain certain cost-sharing features, such as deductibles and coinsurance.
The Company's policy is to fund postretirement benefits as claims and premiums
are paid.
F-22
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
The Company instituted early retirement programs offered to those affected
by the Company's excess capacity reduction initiatives and various
reorganization initiatives (see Note 2 to the Consolidated Financial
Statements). A reduced benefit is payable under the programs based on reduced
years of age and service than under the defined benefit retirement plans. These
programs resulted in the recognition of net curtailment gains and losses and
early retirement incentives.
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------------- -------------------------
November 28, November 29, November 28, November 29,
1999 1998 1999 1998
------------ ------------ ------------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Change in benefit
obligation:
Benefit obligation at
beginning of year........ $631,788 $ 565,966 $ 483,708 $ 488,739
Service cost.............. 23,743 31,553 7,480 10,565
Interest cost............. 43,154 41,073 33,485 35,098
Plan participants'
contributions............ 337 372 1,140 933
Actuarial (gain) loss..... (23,140) 20,649 9,698 (34,928)
Early retirement
incentives............... 12,702 2,030 37,345 964
Net curtailment (gain)
loss..................... 9,271 -- (23,571) --
Settlement loss........... 540 -- -- --
Benefits paid*............ (28,955) (29,855) (24,220) (17,663)
-------- --------- --------- ---------
Benefit obligation at end
of year.................. 669,440 631,788 525,065 483,708
-------- --------- --------- ---------
Change in plan assets:
Fair value of plan assets
at beginning of year..... 500,789 491,211 -- --
Actual return on plan
assets................... 94,976 20,866 -- --
Employer contribution..... 5,429 18,195 23,080 16,730
Plan participants'
contributions............ 337 372 1,140 933
Benefits paid*............ (28,955) (29,855) (24,220) (17,663)
-------- --------- --------- ---------
Fair value of plan assets
at end of year........... 572,576 500,789 -- --
-------- --------- --------- ---------
Funded status............. (96,864) (130,999) (525,065) (483,708)
Unrecognized actuarial
(gain) loss.............. (9,247) 50,131 (41,724) (56,359)
Unrecognized prior service
cost..................... 6,737 22,403 -- --
-------- --------- --------- ---------
Net amount recognized..... $(99,374) $ (58,465) $(566,789) $(540,067)
======== ========= ========= =========
</TABLE>
- --------
* Pension benefits are paid by a trust, postretirement benefits are paid by the
Company.
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
------------------- --------------------
1999 1998 1999 1998
--------- -------- --------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Amounts recognized in the
consolidated balance sheets
consist of:
Prepaid benefit cost............. $ 1,882 $ 12,200 $ -- $ --
Accrued benefit cost (including
short-term)..................... (107,352) (70,682) (566,789) (540,067)
Intangible asset................. 4,861 17 -- --
Accumulated other comprehensive
income.......................... 1,235 -- -- --
--------- -------- --------- ---------
Net amount recognized.............. $ (99,374) $(58,465) $(566,789) $(540,067)
========= ======== ========= =========
Weighted-average assumptions:
Discount rate...................... 7.0% 7.0% 7.0% 7.0%
Expected return on plan assets..... 9.0% 9.0% -- --
Rate of compensation increase...... 6.0% 6.0% -- --
</TABLE>
F-23
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
For postretirement benefits measurement purposes, an 8.0% and 4.0% annual
rate of increase in the per capita cost of covered health care and Medicare
Part B benefits, respectively, were assumed for 1999, declining gradually to
4.5% and 2.25% by the year 2009 and remaining at those rates thereafter.
<TABLE>
<CAPTION>
Pension Benefits
----------------------------
1999 1998 1997
-------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Components of net periodic benefit cost:
Service cost................................... $ 23,743 $ 31,553 $ 33,091
Interest cost.................................. 43,154 41,073 37,072
Expected return on plan assets................. (44,871) (42,698) (34,223)
Amortization of prior service cost............. 2,309 2,947 3,823
Recognized actuarial (gain) loss............... (487) 10 1,642
Early retirement incentives.................... 12,702 2,030 23,133
Net curtailment loss........................... 9,271 -- 5,595
Settlement loss................................ 540 -- --
-------- -------- --------
Net periodic benefit cost...................... $ 46,361 $ 34,915 $ 70,133
======== ======== ========
<CAPTION>
Postretirement Benefits
----------------------------
1999 1998 1997
-------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Components of net periodic benefit cost:
Service cost................................... $ 7,480 $ 10,565 $ 18,028
Interest cost.................................. 33,485 35,098 30,449
Expected return on plan assets................. -- -- --
Amortization of prior service cost............. -- -- --
Recognized actuarial gain...................... (345) -- (1,595)
Early retirement incentives.................... 37,345 964 5,170
Net curtailment gain........................... (23,571) -- (18,885)
-------- -------- --------
Net periodic benefit cost...................... $ 54,394 $ 46,627 $ 33,167
======== ======== ========
</TABLE>
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plan with accumulated benefit obligations
in excess of plan assets were $235.0 million, $223.8 million, and $163.8
million, respectively, as of November 28, 1999, and $213.3 million, $199.8
million, and $144.4 million, respectively, as of November 29, 1998.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plan. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1-Percentage-Point 1-Percentage-Point
Increase Decrease
------------------ ------------------
(Dollars in Thousands)
<S> <C> <C>
Effect on total of service and
interest cost components........... $ 5,934 $ (4,894)
Effect on the postretirement benefit
obligation......................... 61,380 (51,503)
</TABLE>
Note 11: Employee Investment Plans
The Company maintains three employee investment plans. The Employee
Investment Plan of Levi Strauss & Co. ("EIP") and the Levi Strauss & Co.
Employee Long-Term Investment and Savings Plan ("ELTIS") are
F-24
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
two qualified plans that cover non-highly compensated Home Office employees and
U.S. field employees. The Capital Accumulation Plan of Levi Strauss & Co.
("CAP") is a non-qualified, self-directed investment program for highly
compensated employees (as defined by the Internal Revenue Code).
EIP/ELTIS
Under EIP and ELTIS, eligible employees may contribute and direct up to 10%
of their annual compensation to various investments among a series of mutual
funds. The Company may match 50% of the contributions made by employees to all
funds maintained under the qualified plans. Employees are always 100% vested in
the Company match. The ELTIS also includes a company profit sharing provision
with payments made at the sole discretion of the Board of Directors. The EIP
and the ELTIS allow employees a choice of either pre-tax or after-tax
contributions.
CAP
The CAP allows eligible employees to contribute on an after-tax basis up to
10% of their annual compensation to an individual retail brokerage account. The
Company generally matches 75% of these contributions made by employees in cash
to each employee's account. Employees are always 100% vested in the Company
match. All investment decisions, related commissions and charges, investment
results and tax reporting requirements are the responsibility of the employee,
not the Company.
Cost of Investment Plans
The aggregate cost of employee savings plans in 1999, 1998 and 1997 was
$14.4 million, $19.7 million and $20.5 million, respectively.
Note 12: Employee Compensation Plans
Partners in Performance Plan
The Partners in Performance Plan ("PIP") is a program for all salaried
worldwide employees and is intended to align the objectives of employees with
the strategic objectives of the Company and interests of the Company
stockholders.
Annual Incentive Plan
The Annual Incentive Plan ("AIP"), the short-term portion of PIP, is
intended to reward individual and team contributions to the Company's
objectives during the year. The amount of incentive earned depends upon the
performance and salary grade level of the individual and also depends on
corporate, group, division and affiliate financial results against pre-
established targets. In 1999, the Company did not meet pre-established targets
for AIP and, therefore, reversed $3.2 million of a prior year accrual and did
not record an expense for 1999. The cost of the AIP for fiscal years 1998 and
1997 was $24.9 million and $43.9 million, respectively.
Long-Term Incentive Plans
Leadership Shares ("LS") is a feature of PIP, introduced in early 1999. LS
replaced the executive Long-Term Incentive Plan ("LTIP") with 1999 LS grants
partially based on executive performance during fiscal 1998. It places greater
emphasis on an individual's ability to contribute and affect long-term
strategic objectives with all grants based on individual performance. LS is a
performance unit plan, which grants units or "shares"
F-25
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
at an initial value of $0 each. These "shares" are not stock and do not
represent equity interests in the Company.
A competitive level of five-year Company financial performance is determined
by examining expected value growth at other companies. This growth is then tied
to competitive external long-term incentive pay so that the Company will pay
its executives at competitive levels when they achieve competitive growth. At
the end of each fiscal year, a share value will be determined and communicated
to employees. The shares vest in one-third increments at the end of the third,
fourth and fifth fiscal years of the performance period.
LTIP, which previously represented the portion of PIP related to long-term
incentives, ended for all employees during fiscal year 1999 and was replaced by
LS for employees at management levels. These incentives were awarded as
performance units with each grant's unit value measured based on the Company's
three-year cumulative earnings performance and return on investment against
pre-established targets. Awards were based on an individual's grade level,
salary and performance and are paid in one-third annual increments beginning in
the year following the three-year performance cycle of the grant. Existing LTIP
units that were previously granted will be paid out according to the plan
schedule.
The Special Long-Term Incentive Plan ("SLTIP") is intended to provide
incentive and reward performance over time for certain key senior employees
above and beyond PIP awards. Awards under this plan have the same grant unit
value, vesting period and pay-out cycle as grants made under LTIP. A Long-Term
Performance Plan ("LTPP"), which awarded grants in 1994 and 1995, will finish
paying out in 2000.
In 1999, the Company did not meet some of the pre-established targets for
these long-term incentive plans and therefore reversed a portion of prior year
accruals totaling $32.5 million. Total amounts charged to expense for these
long-term incentive plans in 1998 and 1997 were $14.9 million and $17.5
million, respectively.
Other Compensation Plans
Global Success Sharing Plan
The Global Success Sharing Plan ("GSSP") was adopted in 1996 and is designed
to allow all eligible employees to share in the Company's future success by
providing a cash payment based on the achievement of pre-established financial
targets. The plan calls for an aggregate cash payment, ranging from 3% to 10%
of the achieved cumulative cash flow (defined as earnings before interest,
taxes, depreciation, amortization and certain other items) to be paid by the
Company to all eligible employees, assuming a minimum cumulative cash flow is
reached. If the Company were to meet its planned target, at the time of
adoption, an estimated payment of $758.0 million could be due in 2002
(exclusive of all employer-related taxes). However, in 1999, the Company
lowered its estimate of financial performance through the year 2001 and
determined that payment in 2002 is highly unlikely. In 1999, the Company
reversed prior years' GSSP accruals totaling $343.9 million, less miscellaneous
plan expenses. The Company recognized GSSP expenses of $90.6 million and $114.8
million for 1998 and 1997, respectively.
Cash Performance Sharing Plan
The Cash Performance Sharing Plan awards a cash payment to production
employees worldwide based on a percentage of annual salary and certain earnings
criteria. The largest individual plan is the U.S. Field Profit Sharing Plan
that covers approximately 11,900 U.S. employees. The Company did not meet
certain earnings criteria established by the plan and therefore no expense was
recognized for the 1999 plan. Total amounts charged to expense for this plan in
1998 and 1997 were $6.9 million and $14.7 million, respectively.
F-26
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Key Employee Recognition and Commitment Plan
The Key Employee Recognition and Commitment Plan ("KEP") was adopted in 1996
and is designed to recognize and reward key employees for making significant
contributions to the Company's future success. Units awarded to employees under
the plan are subject to a four-year vesting period, which commenced in fiscal
1997. Units are exercisable in one-third increments at the end of fiscal years
2001 through 2003 upon reaching a certain minimum cumulative earnings criteria
threshold at each fiscal year-end. Employees may elect to defer the exercise of
each one-third increment, until final payment in 2004. Payments may occur
earlier under certain circumstances. Unit values will be directly related to
the excess over the threshold of the cumulative cash flow (defined as earnings
before interest, taxes, depreciation, amortization, GSSP and certain other
items) generated by the Company at the end of the fiscal years 2001 through
2003. In 1999, the Company lowered its estimate of financial performance
through the year 2003 and, consequently, decreased the KEP accrual rate to 0%
and reversed prior years KEP accruals totaling $13.6 million. The amounts
charged to expense for this plan in 1998 and 1997 were $5.9 million and $7.7
million, respectively.
Note 13: Special Deferral Plan
The Special Deferral Plan ("SDP") was adopted during 1996 and was designed
to replace the Company's Stock Appreciation Rights Plan ("SARs"). Existing SARs
were transferred in the SDP at a value of $265 per share. The SDP had grants in
1992 and 1994, both of which were fully vested as of November 28, 1999. The SDP
bases the appreciation/depreciation of units on certain tracked mutual funds or
the prime rate, at the election of the employee.
There were no additional grants under the SDP in 1999 and 1998. During 1999
and 1998, SDP grants exercised resulted in cash disbursements of $10.6 million
and $4.2 million, respectively.
The amounts charged (net of forfeitures) to expense for the plans in 1999,
1998 and 1997 were $(2.3) million, $8.0 million and $6.9 million, respectively.
Note 14: Long-Term Employee Related Benefits
Long-term employee related benefits are as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(Dollars in
Thousands)
<S> <C> <C>
Workers' compensation..................................... $ 64,004 $ 76,510
Long-term performance programs............................ 8,511 64,692
Global Success Sharing Plan*.............................. -- 344,057
Deferred compensation..................................... 101,263 114,694
Pension and profit sharing................................ 147,978 115,196
Other deferred employee benefits.......................... 3,762 6,181
-------- --------
Total................................................... $325,518 $721,330
======== ========
</TABLE>
- --------
* See Note 12 to the Consolidated Financial Statements
Included in the liability for workers' compensation are accrued expenses
related to the Company's program that provides for early identification and
treatment of employee injuries. Changes in the Company's safety programs,
medical and disability management and the long-term effects of statutory
changes have decreased workers' compensation costs substantially from prior
years. Accruals for workers' compensation of $29.7 million and $36.7 million
were recorded during fiscal years 1999 and 1998, respectively. However, these
F-27
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
amounts were reduced in 1999 and 1998 by $21.0 million and $20.0 million,
respectively, related to reversals of previously estimated costs. Included in
long-term performance programs are accrued liabilities for LTIP, SLTIP, KEP and
LTPP (see Note 12 to the Consolidated Financial Statements).
Note 15: Common Stock
The Company has a capital structure consisting of 270,000,000 authorized
shares of common stock, par value $.01 per share, of which 37,278,238 shares
are issued and outstanding.
Note 16: Related Parties
Compensation of Directors
Directors of the Company who are also stockholders or employees of the
Company do not receive compensation for their services as directors. Directors
who are not stockholders or employees (James C. Gaither, Angela G. Blackwell,
Patricia S. Pineda, T. Gary Rogers and Craig Sullivan) receive annual
compensation of approximately $62,000. This amount includes an annual retainer
fee of $6,000, meeting fees of $1,000 per meeting day attended and long-term
variable pay in the form of 1,800 LS units, for a target value of $45,000 per
year (see Note 12 to the Consolidated Financial Statements ). The actual amount
for each of the above payments varies depending on the years of service, the
number of meetings attended and the actual value of the granted units upon
vesting. Directors who are not employees or stockholders also receive travel
accident insurance while on Company business and are eligible to participate in
a deferred compensation plan.
Mr. Gaither, Ms. Blackwell and Ms. Pineda each received 1,800 LS units in
1999 and 450 performance units under LTIP in 1998. In 1999, Mr. Gaither, Ms.
Blackwell and Ms. Pineda each received payments under LTIP and LTPP of
approximately $59,000. In 1998, Mr. Gaither and Ms. Pineda each received
payments under LTPP of approximately $85,000. Ms. Blackwell received a payment
under LTPP of approximately $48,000 in 1998.
If the GSSP were to pay out at target levels in 2002, the outside directors'
effective target compensation would be approximately $82,000 (see Note 12 to
the Consolidated Financial Statements). However in 1999, the Company lowered
its estimate of financial performance through the year 2001 and, consequently,
decreased the GSSP accrual rate to 0% and does not expect to make future
payments under this plan.
Other Transactions
F. Warren Hellman, a director of the Company is a general partner of Hellman
& Friedman, an investment banking firm, and has provided financial advisory
services to the Company in the past. However, the Company did not pay any fees
to Hellman & Friedman during fiscal years 1999 and 1998. At November 28, 1999
and November 29, 1998, Mr. Hellman and his family, other partners, and former
partners of Hellman & Friedman beneficially owned an aggregate of less than 5%
of the outstanding common stock of the Company.
James C. Gaither, a director of the Company, is a partner of the law firm
Cooley Godward LLP. The firm provided legal services to the Company in 1999,
1998 and 1997 and received in fees approximately $78,000, $74,000 and $123,000,
respectively.
Estate Tax Repurchase Policy
The Company has a policy under which it will, subject to certain conditions,
repurchase a portion of the shares offered by the estate of a deceased
stockholder in order to generate funds for payment of estate taxes.
F-28
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
The purchase price will be based on a valuation received from an investment
banking or appraisal firm. Estate repurchase transactions will be subject to,
among other things, compliance with applicable laws governing stock
repurchases, board approval, and restrictions under the Company's credit
facilities (see Note 18 to the Consolidated Financial Statements). The policy
does not create a contractual obligation on the Company.
Note 17: Business Segment Information
The Company manages its only segment, the apparel business, based on
geographic regions consisting of: the Americas, which includes the United
States, Canada and Latin America; Europe, the Middle East and Africa; and Asia
Pacific. All Other consists of functions that are directed by the corporate
office and are not allocated to a specific geographic region. Under Geographic
Information for all periods presented, no other single country other than the
United States had net sales exceeding 10% of consolidated net sales.
The Company designs and markets jeans and jeans-related pants, casual and
dress pants, shirts, jackets and related accessories, for men, women and
children, under our Levi's(R), Dockers(R) and Slates(R) brands. Its products
are distributed in the United States primarily through chain retailers and
department stores and abroad through department stores, specialty retailers and
franchised stores. The Company also maintains a network of approximately
750 franchised or independently owned stores dedicated to our products outside
the United States and operates a small number of company-owned stores in eight
countries. The Company obtains its products from a combination of company-owned
facilities and independent manufacturers.
The Company evaluates performance and allocates resources based on regional
profits or losses. The accounting policies of the regions are the same as those
described in Note 1, "Summary of Significant Accounting Policies." Regional
profits exclude net interest expense, special compensation program expenses,
excess capacity reduction/restructuring charges, and expenses that are
controlled at the corporate level. Management financial information for the
Company is as follows:
<TABLE>
<CAPTION>
Asia
Americas Europe Pacific All Other Consolidated
---------- ---------- -------- --------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
1999:
Net sales from external
customers................ $3,420,326 $1,360,782 $358,350 $ -- $5,139,458
Intercompany sales........ 82,219 1,045,119 38,923 -- 1,166,261
Depreciation and amortiza-
tion expense............. 86,078 27,474 6,550 -- 120,102
Earnings contribution..... 279,900 242,700 28,500 -- 551,100
Interest expense.......... -- -- -- 182,978 182,978
Excess capacity
reduction/restructuring.. -- -- -- 497,683 497,683
Global Success Sharing
Plan..................... -- -- -- (343,873) (343,873)
Corporate and other ex-
penses................... -- -- -- 205,813 205,813
Income before income
taxes.................. -- -- -- -- 8,499
Total regional assets..... 5,154,019 1,625,396 576,533 -- 7,355,948
Elimination of
intercompany assets...... -- -- -- -- 3,690,431
Total assets............ -- -- -- -- 3,665,517
Expenditures for long-
lived assets............. 36,578 20,518 3,966 -- 61,062
</TABLE>
F-29
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
<TABLE>
<CAPTION>
United Foreign
States Countries Consolidated
1999 (cont'd): ---------- ---------- ------------
<S> <C> <C> <C>
Geographic Information:
Net sales.................................... $3,201,809 $1,937,649 $5,139,458
Long-lived assets............................ 577,618 1,089,215 1,666,833
</TABLE>
<TABLE>
<CAPTION>
Asia All
Americas Europe Pacific Other Consolidated
---------- ---------- -------- -------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
1998:
Net sales from external
customers................. $3,938,786 $1,650,479 $369,370 $ -- $5,958,635
Intercompany sales......... 130,234 1,124,962 45,322 -- 1,300,518
Depreciation and amortiza-
tion expense.............. 93,588 29,607 5,578 -- 128,773
Earnings contribution...... 420,700 361,700 53,100 -- 835,500
Interest expense........... -- -- -- 178,035 178,035
Excess capacity
reduction/restructuring... -- -- -- 250,658 250,658
Global Success Sharing
Plan...................... -- -- -- 90,564 90,564
Corporate and other ex-
penses.................... -- -- -- 153,543 153,543
Income before income tax-
es...................... -- -- -- -- 162,700
Total regional assets...... 4,846,314 1,895,210 312,358 -- 7,053,882
Elimination of intercompany
assets.................... -- -- -- -- 3,169,224
Total assets............. -- -- -- -- 3,884,658
Expenditures for long-lived
assets.................... 57,417 54,439 4,675 -- 116,531
</TABLE>
<TABLE>
<CAPTION>
United Foreign
States Countries Consolidated
---------- ---------- ------------
<S> <C> <C> <C>
Geographic Information:
Net sales.................................... $3,672,295 $2,286,340 $5,958,635
Long-lived assets............................ 884,412 1,120,338 2,004,750
</TABLE>
<TABLE>
<CAPTION>
Asia All
Americas Europe Pacific Other Consolidated
---------- ---------- -------- -------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
1997:
Net sales from external
customers................. $4,564,898 $1,828,613 $467,971 $ -- $6,861,482
Intercompany sales......... 166,522 1,178,107 57,736 -- 1,402,365
Depreciation and amortiza-
tion expense.............. 94,915 29,637 14,342 -- 138,894
Earnings contribution...... 528,900 509,800 70,700 -- 1,109,400
Interest expense........... -- -- -- 212,358 212,358
Excess capacity
reduction/restructuring... -- -- -- 386,792 386,792
Global Success Sharing
Plan...................... -- -- -- 114,833 114,833
Corporate and other ex-
penses.................... -- -- -- 211,136 211,136
Income before income tax-
es...................... -- -- -- -- 184,281
Total regional assets...... 4,847,930 1,746,017 360,119 -- 6,954,066
Elimination of intercompany
assets.................... -- -- -- -- 2,921,739
Total assets............. -- -- -- -- 4,032,327
Expenditures for long-lived
assets.................... 67,014 44,029 10,552 -- 121,595
</TABLE>
<TABLE>
<CAPTION>
United Foreign
States Countries Consolidated
---------- ---------- ------------
<S> <C> <C> <C>
Geographic Information:
Net sales.................................... $4,240,543 $2,620,939 $6,861,482
Long-lived assets............................ 962,117 1,051,572 2,013,689
</TABLE>
F-30
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
For 1999, 1998 and 1997, the Company had one customer that represented
approximately 11%, 12% and 11%, respectively, of net sales. No other customer
accounted for more than 10% of net sales.
Note 18: Subsequent Events
Customer Service Center Equipment Financing
In December 1999 the Company entered into a secured financing transaction
consisting of a five-year credit facility secured by owned equipment at
Customer Service Centers located in Nevada, Mississippi and Kentucky. The
amount financed in December 1999 is $89.5 million, comprised of a $59.5 million
tranche ("Tranche 1") and a $30.0 million tranche ("Tranche 2"). Borrowings
under Tranche 1 have a fixed interest rate equal to the yield of a four-year
Treasury note plus an incremental borrowing spread. Borrowings under Tranche 2
have a floating quarterly interest rate equal to the 90 day LIBOR plus an
incremental borrowing spread based on the Company's leverage ratio at that
time. Proceeds from the borrowings were used to reduce the commitment amounts
of the credit facilities.
Credit Facility Amendment
In January 2000 the Company amended three of its credit facility agreements
and entered into one new agreement. These agreements effectively replace
existing credit facilities consisting of three syndicated bank credit
facilities of $1.5 billion and a domestic receivables-backed securitization
financing of approximately $214.0 million, and support the majority of the
Company's unsecured and uncommitted short-term credit lines, letters of credit
and interest rate and foreign-exchange risk management activities. The new
financing package consists of four separate agreements: (1) a new $450.0
million bridge loan to fund working capital and support foreign exchange
contracts and derivatives, (2) an amended $300.0 million revolving credit
facility, extending the existing bridge facility, (3) an amended $545.0 million
364-day credit facility, and (4) an amended $584.0 million 5-year credit
facility. Simultaneously with entering into these agreements, the Company
terminated the domestic receivables-backed securitization financing.
All four facilities are secured by domestic receivables, domestic
inventories, certain domestic equipment, trademarks, other intellectual
property, 100% of the stock in domestic subsidiaries, 65% of the stock of
certain foreign subsidiaries and other assets. The maturity date for all credit
facilities is January 31, 2002. Borrowings under the bank credit facilities
bear interest at LIBOR or the agent bank's base rate plus an incremental
borrowing spread. For the bridge facility, the spread is 3.00% over LIBOR or
1.75% over the base rate. For each of the three amended facilities, the spread
is 3.25% over LIBOR or 2.00% over the base rate.
In addition, if by February 1, 2001 we have not completed one or more
private or public capital-raising transactions yielding net proceeds to us of
at least $300.0 million which have been used to reduce commitments under our
bank credit facilities, we will be required to pay our lenders an additional
borrowing spread of 1.00% on outstanding borrowings under our bank credit
facilities, plus a one-time additional fee of 2.00% of total commitments as of
January 31, 2001. Our borrowing spread will be increased by 0.25% quarterly
until those capital-raising transactions are completed.
F-31
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
The following is a pro forma table of the required aggregate debt principal
payments and commitment reductions for the next five years and thereafter that
includes the customer service center equipment financing and the credit
facility replacement.
<TABLE>
<CAPTION>
Principal
Payments
----------
(Dollars
in
Thousands)
<S> <C>
2000................................... $ 200,000
2001................................... 201,359
2002................................... 1,145,600
2003................................... 358,300
2004................................... 89,750
Thereafter............................. 635,801
----------
Total.............................. $2,630,810
==========
</TABLE>
Sale of Office Buildings
In December 1999 the Company entered into an agreement to sell two office
buildings in downtown San Francisco located adjacent to its corporate
headquarters. The transaction is expected to close in February 2000. Proceeds
from the sale will be approximately $80 million and will be used to reduce the
commitment amounts under the amended credit facilities. As a result of the
sale, the Company is expected to recognize a gain of approximately $26.1
million in its fiscal first quarter ending February 27, 2000.
F-32
<PAGE>
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
Note 19: Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
---------- ---------- ---------- ----------
(Dollars in Thousands, Except Per Share
Data)
<S> <C> <C> <C> <C>
1999
Net sales..................... $1,278,322 $1,227,910 $1,226,413 $1,406,813
Cost of goods sold............ 814,673 737,303 747,766 881,103
---------- ---------- ---------- ----------
Gross profit.................. 463,649 490,607 478,647 525,710
Marketing, general and admin-
istrative.................... 419,085 407,677 338,223 464,860
Excess
capacity/restructuring....... 394,105 11,780 -- 91,798
Global Success Sharing Plan... -- -- -- (343,873)
---------- ---------- ---------- ----------
Operating income (loss)....... (349,541) 71,150 140,424 312,925
Interest expense.............. 43,157 43,819 45,742 50,260
Other (income) expense, net... (16,127) (20,931) 7,139 13,400
---------- ---------- ---------- ----------
Income (loss) before taxes.... (376,571) 48,262 87,543 249,265
Income tax expense (benefit).. (139,331) 17,857 32,391 92,227
---------- ---------- ---------- ----------
Net income (loss)............. $ (237,240) $ 30,405 $ 55,152 $ 157,038
========== ========== ========== ==========
Earnings (loss) per share-ba-
sic and diluted.............. $ (6.36) $ 0.82 $ 1.48 $ 4.21
========== ========== ========== ==========
1998
Net sales..................... $1,435,362 $1,356,318 $1,537,666 $1,629,289
Cost of goods sold............ 823,144 787,292 894,271 928,374
---------- ---------- ---------- ----------
Gross profit.................. 612,218 569,026 643,395 700,915
Marketing, general and admin-
istrative.................... 457,330 471,350 466,675 438,703
Excess
capacity/restructuring....... -- -- -- 250,658
Global Success Sharing Plan... 22,655 22,657 22,658 22,594
---------- ---------- ---------- ----------
Operating income (loss)....... 132,233 75,019 154,062 (11,040)
Interest expense.............. 44,499 43,673 45,338 44,525
Other (income) expense, net... (16,712) (3,977) (11,877) 42,105
---------- ---------- ---------- ----------
Income (loss) before taxes.... 104,446 35,323 120,601 (97,670)
Income tax expense (benefit).. 41,778 9,936 44,622 (36,138)
---------- ---------- ---------- ----------
Net income (loss)............. $ 62,668 $ 25,387 $ 75,979 $ (61,532)
========== ========== ========== ==========
Earnings (loss) per share-ba-
sic and diluted.............. $ 1.68 $ 0.68 $ 2.04 $ (1.65)
========== ========== ========== ==========
</TABLE>
F-33
<PAGE>
LEVI STRAUSS & CO.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
February November
27, 2000 28, 1999
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents...................... $ 105,959 $ 192,816
Trade receivables, net of allowance for
doubtful accounts of $29,264 in 2000 and
$30,017 in 1999............................... 633,531 759,273
Income taxes receivable........................ 76,371 70,000
Inventories:
Raw materials................................ 123,082 137,082
Work-in-process.............................. 88,997 100,523
Finished goods............................... 417,415 433,882
----------- -----------
Total inventories................................ 629,494 671,487
Deferred tax assets............................ 284,415 300,972
Other current assets........................... 145,400 172,195
----------- -----------
Total current assets....................... 1,875,170 2,166,743
Property, plant and equipment, net of accumulated
depreciation of $521,866 in 2000 and $548,437 in
1999............................................ 613,372 685,026
Goodwill and other intangibles, net of
accumulated amortization of $155,832 in 2000 and
$158,052 in 1999................................ 272,625 275,318
Non-current deferred tax assets.................. 464,687 478,235
Other assets..................................... 77,529 60,195
----------- -----------
Total Assets............................... $ 3,303,383 $ 3,665,517
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current maturities of borrowings and capital
lease obligations............................. $ 230,140 $ 233,992
Accounts payable............................... 185,918 262,389
Restructuring reserves......................... 174,396 258,784
Accrued liabilities............................ 435,057 415,273
Accrued salaries, wages and employee benefits.. 183,649 194,130
Accrued taxes.................................. -- 2,548
----------- -----------
Total current liabilities.................. 1,209,160 1,367,116
Long-term debt and capital lease obligations,
less current maturities......................... 2,173,337 2,430,617
Long-term employee related benefits.............. 312,027 325,518
Postretirement medical benefits.................. 545,270 541,815
Long-term tax liability.......................... 241,542 241,542
Other long-term liabilities...................... 18,938 20,696
Minority interest................................ 22,681 26,775
----------- -----------
Total liabilities.......................... 4,522,955 4,954,079
----------- -----------
Stockholders' Deficit:
Common stock--$.01 par value; authorized
270,000,000 shares; issued and outstanding:
37,278,238 shares............................. 373 373
Additional paid-in capital..................... 88,812 88,812
Accumulated deficit............................ (1,330,097) (1,395,256)
Accumulated other comprehensive income......... 21,340 17,509
----------- -----------
Total stockholders' deficit................ (1,219,572) (1,288,562)
----------- -----------
Total Liabilities and Stockholders'
Deficit................................... $ 3,303,383 $ 3,665,517
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE>
LEVI STRAUSS & CO.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
February February
27, 2000 28, 1999
----------- -----------
<S> <C> <C>
Net sales............................................ $ 1,082,437 $ 1,278,322
Cost of goods sold................................... 632,442 814,673
----------- -----------
Gross profit....................................... 449,995 463,649
Marketing, general and administrative expenses....... 322,111 419,085
Excess capacity/restructuring charge................. -- 394,105
----------- -----------
Operating income (loss)............................ 127,884 (349,541)
Interest expense..................................... 56,782 43,157
Other income, net.................................... (29,141) (16,127)
----------- -----------
Income (loss) before taxes......................... 100,243 (376,571)
Income tax expense (benefit)......................... 35,084 (139,331)
----------- -----------
Net income (loss).................................. $ 65,159 $ (237,240)
=========== ===========
Earnings per share--basic and diluted................ $ 1.75 $ (6.36)
=========== ===========
Weighted-average common shares outstanding........... 37,278,238 37,278,238
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE>
LEVI STRAUSS & CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
February 27, February 28,
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss).................................. $ 65,159 $(237,240)
Adjustments to reconcile net cash provided by
operating activities:
Depreciation and amortization.................... 20,620 33,647
Unrealized foreign exchange gains................ (5,444) (18,157)
Decrease in trade receivables.................... 116,579 147,934
Increase in income taxes receivables............. (6,371) --
(Increase) decrease in inventories............... 31,996 (18,067)
Decrease in other current assets................. 26,858 11,398
Decrease (increase) in net deferred tax assets... 27,864 (149,444)
Decrease in accounts payable and accrued
liabilities..................................... (52,534) (81,600)
(Decrease) increase in restructuring reserves.... (96,693) 331,163
Decrease in accrued salaries, wages and employee
benefits........................................ (9,078) (33,160)
Decrease in accrued taxes........................ (1,551) (17,738)
(Decrease) increase in long-term employee
benefits........................................ (10,161) 84,482
Other, net....................................... (46,942) (9,591)
--------- ---------
Net cash provided by operating activities...... 60,302 43,627
--------- ---------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment......... (4,252) (18,779)
Proceeds from sale of property, plant and
equipment......................................... 90,271 7,031
Decrease in net investment hedges.................. 18,878 1,575
Other, net......................................... 56 372
--------- ---------
Net cash provided by (used for) investing
activities.................................... 104,953 (9,801)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt........... 290,742 353
Repayments of long-term debt....................... (539,498) (58,505)
Net increase (decrease) in short-term borrowings... (2,420) 40,360
Other, net......................................... -- (36)
--------- ---------
Net cash used for financing activities......... (251,176) (17,828)
--------- ---------
Effect of exchange rate changes on cash.............. (936) (2,909)
--------- ---------
Net increase (decrease) in cash and cash
equivalents......................................... (86,857) 13,089
Beginning cash and cash equivalents.................. 192,816 84,565
--------- ---------
Ending cash and cash equivalents..................... $ 105,959 $ 97,654
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest......................................... $ 40,702 $ 34,599
Income taxes..................................... 13,898 31,707
Restructuring initiatives........................ 84,388 60,472
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Preparation of Financial Statements
The unaudited consolidated financial statements of Levi Strauss & Co. and
subsidiaries ("LS&CO." or "Company") are prepared in conformity with generally
accepted accounting principles for interim financial information. In the
opinion of management, all adjustments necessary for a fair presentation of the
financial position and operating results for the periods presented have been
included. All such adjustments are of a normal recurring nature. These
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements included in the annual financial
report of LS&CO. for the year ended November 28, 1999.
The consolidated financial statements include the accounts of LS&CO. and its
subsidiaries. All inter-company transactions have been eliminated. Management
believes that, along with the following information, the disclosures are
adequate to make the information presented herein not misleading. Certain prior
year amounts have been reclassified to conform to the current presentation. The
results of operations for the three months ended February 27, 2000 may not be
indicative of the results to be expected for the year ending November 26, 2000.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). In June 1999, the FASB
delayed the effective date of SFAS 133 to fiscal years beginning after June 15,
2000. The Company will adopt SFAS 133 the first day of fiscal year 2001. SFAS
133 establishes accounting and reporting standards for derivative instruments
including certain derivative instruments embedded in other contracts, and for
hedging activities. In summary, SFAS 133 requires all derivatives to be
recognized as assets or liabilities at fair value. Fair value adjustments are
made either through earnings or equity, depending upon the exposure being
hedged and the effectiveness of the hedge. The Company has not yet quantified
all effects of adopting SFAS 133 on its financial statements. However, the
adoption of SFAS 133 could increase volatility in earnings and other
comprehensive income or result in certain changes in the Company's business
practices. The Company currently has an implementation team in place that is
determining the method of implementation and evaluating all effects of adopting
SFAS 133.
Note 2: Comprehensive Income
The following is a summary of the components of total comprehensive income
(loss), net of related income taxes:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
February 27, February 28,
2000 1999
------------ ------------
(Dollars in Thousands)
<S> <C> <C>
Net income (loss).................................. $65,159 $(237,240)
Other comprehensive income:
Foreign currency translation adjustments........... 3,831 31,501
------- ---------
Total comprehensive income (loss)................ $68,990 $(205,739)
======= =========
</TABLE>
F-37
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(Unaudited)
Note 3: Excess Capacity/Restructuring Reserves
North America Plant Closures
In view of declining sales, the need to bring manufacturing capacity in line
with sales projections and the need to reduce costs, the Company decided to
close some of its owned and operated production facilities in North America
starting in 1997. The Company announced in 1997 the closure of ten
manufacturing facilities and a finishing center in the U.S. which were closed
during 1998 and displaced approximately 6,400 employees. The table below
displays the activity and liability balances of this reserve.
In 1998, the Company announced the closure of two more finishing centers in
the U.S. that were closed during 1999 and displaced approximately 990
employees. The table below displays the activity and liability balances of this
reserve.
The Company announced in February 1999 plans to close 11 manufacturing
facilities in North America and the displacement of approximately 5,900
employees that resulted in an initial charge of $394.1 million. The 11
manufacturing facilities were closed during 1999 and as of February 27, 2000,
approximately 5,880 employees have been displaced. The table below displays the
activity and liability balances of this reserve.
1997 North America Plant Closures
<TABLE>
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits................... $ 8,790 $ (3,903) $ 4,887
Asset write-offs.................................. 10,655 (1,826) 8,829
Other restructuring costs......................... 1,913 (105) 1,808
-------- -------- --------
Total........................................... $ 21,358 $ (5,834) $ 15,524
======== ======== ========
1998 North America Plant Closures
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits................... $ 2,683 $ (564) $ 2,119
Asset write-offs.................................. 9,713 (3,537) 6,176
Other restructuring costs......................... 1,193 (55) 1,138
-------- -------- --------
Total........................................... $ 13,589 $ (4,156) $ 9,433
======== ======== ========
1999 North America Plant Closures
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits................... $109,755 $(23,878) $ 85,877
Asset write-offs.................................. 37,563 (5,207) 32,356
Other restructuring costs......................... 28,526 (840) 27,686
-------- -------- --------
Total........................................... $175,844 $(29,925) $145,919
======== ======== ========
</TABLE>
F-38
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(Unaudited)
Corporate Reorganization Initiatives
Starting in 1998, the Company instituted various overhead reorganization
initiatives to reduce overhead costs and consolidate operations. The
reorganization initiative instituted in 1998 displaced approximately
770 employees as of February 27, 2000. The table below displays the activity
and liability balances of this reserve.
During the fourth quarter of 1999, the Company instituted an overhead
reorganization initiative that was estimated to displace approximately 930
employees. As of February 27, 2000, approximately 360 employees were displaced.
The table below displays the activity and liability balances of this reserve.
1998 Corporate Reorganization Initiatives
<TABLE>
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- -------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits.................... $ 3,204 $ (1,908) $ 1,296
Asset write-offs................................... 3,044 -- 3,044
Other restructuring costs.......................... 6,412 (173) 6,239
------- -------- -------
Total............................................ $12,660 $ (2,081) $10,579
======= ======== =======
1999 Corporate Reorganization Initiatives
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- -------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits.................... $43,550 $(23,505) $20,045
Other restructuring costs.......................... 1,680 (254) 1,426
------- -------- -------
Total............................................ $45,230 $(23,759) $21,471
======= ======== =======
</TABLE>
Europe Reorganization and Plant Closures
In 1998, the Company announced plans to close two manufacturing and two
finishing facilities, and reorganize operations throughout Europe, displacing
approximately 1,650 employees. These plans were prompted by decreased demand
for denim jeans products and a resulting over-capacity in the Company's
European owned and operated plants. The production facilities were closed by
the end of 1999 and as of February 27, 2000, approximately 1,630 employees were
displaced. The table below displays the activity and liability balances of this
reserve.
In conjunction with the above plans in Europe, the Company announced in
September 1999 plans to close a production facility, and reduce capacity at a
finishing facility in the United Kingdom with an estimated displacement of 960
employees. The production facility closed in December 1999 and as of February
27, 2000, approximately 810 employees have been displaced. The table below
displays the activity and liability balances of this reserve.
F-39
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(Unaudited)
1998 Europe Reorganization and Plant Closures
<TABLE>
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- -------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits.................... $10,653 $ (4,233) $ 6,420
Asset write-offs................................... 3,396 (1,706) 1,690
------- -------- -------
Total............................................ $14,049 $ (5,939) $ 8,110
======= ======== =======
1999 Europe Reorganization and Plant Closures
<CAPTION>
Balance Balance
11/28/99 Reductions 2/27/00
-------- ---------- -------
(Dollars in Thousands)
<S> <C> <C> <C>
Severance and employee benefits.................... $38,413 $(23,818) $14,595
Asset write-offs................................... 4,474 (29) 4,445
Other restructuring costs.......................... 2,012 (1,152) 860
------- -------- -------
Total............................................ $44,899 $(24,999) $19,900
======= ======== =======
</TABLE>
Note 4: Credit Facility Agreements, Equipment Financing, Receivables
Securitization Financing and Interest Rate Swaps
2000 Credit Facility Agreements
On January 31, 2000 the Company amended three of its credit facility
agreements and entered into one new agreement. The Company amended its credit
facility agreements and entered into one new agreement to reflect its current
financial position and extend maturity dates. The new financing package
consists of four separate agreements: (1) a new $450.0 million bridge loan to
fund working capital and support letters of credit, foreign exchange contracts
and derivatives, (2) an amended $300.0 million revolving credit facility,
extending the existing bridge facility, (3) an amended $545.0 million 364-day
credit facility, and (4) an amended $584.0 million 5-year credit facility.
Simultaneously with entering into these agreements, the Company terminated a
domestic receivables-backed securitization financing.
All four facilities are secured by domestic receivables, domestic
inventories, certain domestic equipment, trademarks, other intellectual
property, 100% of the stock in domestic subsidiaries, 65% of the stock of
certain foreign subsidiaries and other assets. The maturity date for all credit
facilities is January 31, 2002. Borrowings under the bank credit facilities
bear interest at LIBOR or the agent bank's base rate plus an incremental
borrowing spread. For the bridge facility, the spread is 3.00% over LIBOR or
1.75% over the base rate. For each of the three amended facilities, the spread
is 3.25% over LIBOR or 2.00% over the base rate.
In addition, if by February 1, 2001 we have not completed one or more
private or public capital-raising transactions yielding net proceeds to us of
at least $300.0 million which have been used to reduce commitments under our
bank credit facilities, we will be required to pay our lenders an additional
borrowing spread of 1.00% on outstanding borrowings under our bank credit
facilities, plus a one-time additional fee of 2.00% of total commitments as of
January 31, 2001. Our borrowing spread will be increased by 0.25% quarterly
until those capital-raising transactions are completed.
F-40
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(Unaudited)
The credit agreements contain customary covenants restricting the Company's
activities as well as those of its subsidiaries, including limitations on the
Company's and its subsidiaries' ability to sell assets; engage in mergers;
enter into operating leases or capital leases; enter into transactions
involving related parties, derivatives or letters of credit; enter into
intercompany transactions; incur indebtedness or grant liens or negative
pledges on the Company's assets; make loans or other investments; pay dividends
or repurchase stock or other securities; guaranty third party obligations; make
capital expenditures; and make changes in the Company's corporate structure.
The credit agreements also contain financial covenants that we must satisfy on
an ongoing basis, including a maximum leverage ratio, a minimum coverage ratio
and minimum consolidated EBITDA. The Company was in compliance with financial
covenants required by the credit facility agreements as of February 27, 2000.
Customer Service Center Equipment Financing
In December 1999 the Company entered into a secured financing transaction
consisting of a five-year credit facility secured by owned equipment at
Customer Service Centers located in Nevada, Mississippi and Kentucky. The
amount financed in December 1999 is $89.5 million, comprised of a $59.5 million
tranche ("Tranche 1") and a $30.0 million tranche ("Tranche 2"). Borrowings
under Tranche 1 have a fixed interest rate equal to the yield of a four-year
Treasury note plus an incremental borrowing spread. Borrowings under Tranche 2
have a floating quarterly interest rate equal to the 90 day LIBOR plus an
incremental borrowing spread based on the Company's leverage ratio at that
time. Proceeds from the borrowings were used to reduce the commitment amounts
of the credit facilities.
Receivables Securitization Agreements
In February 2000, several of the Company's European subsidiaries entered
into receivable securitization financing agreements with several lenders. As of
May 1, 2000, the subsidiaries were working with the lenders to operationalize
certain reporting and other systems functions and, as such, have not made any
borrowings under the facilities. Under these agreements, if operational matters
are resolved and the facilities utilized, those subsidiaries may borrow up to
$125.0 million. Borrowings would be collateralized by a security interest in
the receivables of these subsidiaries. The maximum amount of permitted
outstanding loans under the program would vary based upon the amount of
eligible receivables as defined under the agreement. The Company would provide
a limited guaranty to support borrowings under the agreements, consisting of a
guaranty of performance by the subsidiaries of their servicing obligations and
a guaranty of the collectibility of the receivables in an amount not to exceed
10% of the outstanding amount as of the termination date under the
securitization agreements. Net borrowings under this securitization facility,
if any, must be used to reduce the commitment levels under the Company's bank
credit facilities. We expect that other of the Company's European subsidiaries
may enter into the program during the next 12 months. The Company and its
Japanese subsidiary are currently negotiating a similar receivables-backed
securitization financing agreement which the Company expects to complete by
July 2000.
Interest Rate Swaps
At February 27, 2000, the Company had interest rate swap transactions
outstanding with a total notional principal amount of $425.0 million, to
convert floating rate liabilities to fixed rates and $375.0 million to convert
fixed rate liabilities to floating rates. These swap transactions effectively
change the Company's interest rates on part of its debt to fixed rates that
range from 6.25% to 7.0% and floating rates that range from 6.05% to 6.5%,
depending on their maturities, the latest of which is in 2006.
F-41
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(Unaudited)
The Company is exposed to credit loss in the event of nonperformance by the
counterparties to the interest swap transactions; however, the Company believes
these counterparties are creditworthy financial institutions and does not
anticipate nonperformance.
In addition, the Company is exposed to interest rate risk. It is the
Company's policy and practice to use derivative instruments, primarily interest
rate swaps, to manage and reduce interest rate exposures.
Note 5: Commitments and Contingencies
Foreign Exchange Contracts
At February 27, 2000, the Company had U.S. dollar forward currency contracts
to sell the aggregate equivalent of $753.5 million and to buy the aggregate
equivalent of $419.9 million of various foreign currencies. The Company also
had an Euro forward currency contract to buy the equivalent of $3.9 million
British Pounds. Additionally at February 27, 2000, the Company had option
contracts to sell the aggregate equivalent of $955.6 million and to buy the
aggregate equivalent of $590.5 million of various foreign currencies. These
contracts are at various exchange rates and expire at various dates through
August 2000.
The Company's market risk is generally related to fluctuations in the
currency exchange rates. The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the foreign exchange contracts; however
the Company believes these counterparties are creditworthy financial
institutions and does not anticipate nonperformance.
Note 6: Fair Value of Financial Instruments
The estimated fair value of certain financial instruments has been
determined by the Company using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.
The carrying amount and estimated fair value (in each case including accrued
interest) of the Company's financial instrument assets and (liabilities) at
February 27, 2000 and November 28, 1999 are as follows:
<TABLE>
<CAPTION>
February 27, 2000 November 28, 1999
------------------------ ------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----------- ----------- ----------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Debt instruments:
Credit facilities........ $(1,298,119) $(1,298,119) $(1,424,449) $(1,424,449)
Yen-denominated eurobond
placement............... (182,663) (72,072) (189,274) (148,113)
Notes offering........... (812,707) (509,000) (798,640) (626,307)
Receivables-backed
securitization.......... -- -- (215,836) (215,836)
Industrial development
revenue refunding bond.. (10,028) (10,028) (10,030) (10,030)
Customer service center
equipment financing..... (91,269) (91,269) -- --
Currency and interest rate
hedges:
Foreign exchange forward
contracts............... $ 23,622 $ 24,121 $ 16,972 $ 16,932
Foreign exchange option
contracts............... 9,476 8,806 7,806 2,288
Interest rate swap
contracts............... (990) (10,318) (2,224) (4,839)
</TABLE>
F-42
<PAGE>
LEVI STRAUSS & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(Unaudited)
Quoted market prices or dealer quotes are used to determine the estimated
fair value of foreign exchange contracts, option contracts and interest rate
swap contracts. Dealer quotes and other valuation methods, such as the
discounted value of future cash flows, replacement cost, and termination cost
have been used to determine the estimated fair value for long-term debt and the
remaining financial instruments. The carrying values of cash and cash
equivalents, trade receivables, current assets, current and non-current
maturities of long-term debt, short-term borrowings and taxes approximate fair
value.
The fair value estimates presented herein are based on information available
to the Company as of February 27, 2000 and November 28, 1999. Although the
Company is not aware of any factors that would substantially affect the
estimated fair value amounts, such amounts have not been updated since those
dates and, therefore, the current estimates of fair value at dates subsequent
to February 27, 2000 and November 28, 1999 may differ substantially from these
amounts. Additionally, the aggregation of the fair value calculations presented
herein do not represent and should not be construed to represent the underlying
value of the Company.
Note 7: Business Segment Information
<TABLE>
<CAPTION>
Asia All
Americas Europe Pacific Other Consolidated
-------- -------- ------- ------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Three Months Ended February 27,
2000:
Net sales..................... $690,528 $303,004 $88,905 $ -- $1,082,437
Earnings contribution......... 76,980 81,009 13,410 -- 171,399
Interest expense.............. -- -- -- 56,782 56,782
Corporate and other (income)
expense, net................. -- -- -- 14,374 14,374
Income before income taxes.... -- -- -- -- 100,243
Three Months Ended February 28,
1999:
Net sales..................... $819,823 $376,975 $81,524 $ -- $1,278,322
Earnings contribution......... 65,941 96,084 9,956 -- 171,981
Excess capacity/restructuring
charge....................... -- -- -- 394,105 394,105
Interest expense.............. -- -- -- 43,157 43,157
Corporate and other (income)
expense, net................. -- -- -- 111,290 111,290
Loss before income taxes...... -- -- -- -- (376,571)
</TABLE>
F-43
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Levi Strauss & Co.
$350,000,000
aggregate principal amount of
6.80% Notes due 2003
and
$450,000,000
aggregate principal amount of
7.00% Notes due 2006
--------
OFFER TO EXCHANGE
, 2000
--------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation has the power to indemnify its officers, directors, employees and
agents (or persons serving in such positions in another entity at the request
of the corporation) against expenses, including attorneys' fees, judgments,
fines or settlement amounts actually and reasonably incurred by them in
connection with the defense of any action by reason of being or having been
directors or officers, if such person shall have acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
corporation (and, with respect to any criminal action, had no reasonable cause
to believe the person's conduct was unlawful), except that if such action shall
be by or in the right of the corporation, no such indemnification shall be
provided as to any claim, issue or matter as to which such person shall have
been judged to have been liable to the corporation unless and to the extent
that the Court of Chancery of the State of Delaware, or another court in which
the suit was brought, shall determine upon application that, in view of all of
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity. The Registrant's Certificate of Incorporation provides that the
Registrant will indemnify its officers and directors to the fullest extent
permitted by Delaware law.
As permitted by Section 102 of the DGCL, the Registrant's Certificate of
Incorporation provides that no director shall be liable to the Registrant or
its stockholders for monetary damages for any breach of fiduciary duty as a
director other than (i) for breaches of the director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits.
<TABLE>
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
4.1 Indenture, dated of November 6, 1996 between the Registrant and
Citibank, N.A., relating to the 6.80% Notes due 2003 and the 7.0%
Notes due 2006.
4.2 Fiscal Agency Agreement, dated as of November 21, 1996, between the
Registrant and Citibank, N.A., relating to (Yen)20 billion 4.25%
bonds due 2016.
4.3 Lease Intended as Security, dated as of December 3, 1996, among the
Registrant, First Security Bank, National Association as Agent and
named lessors.
9 Voting Trust Agreement, dated as of April 15, 1996, among LSAI
Holding Corp. (predecessor of the Registrant), Robert D. Haas, Peter
E. Haas, Sr., Peter E. Haas, Jr., F. Warren Hellman, as voting
trustees, and the stockholders.
10.1 Stockholders Agreement, dated as of April 15, 1996, among LSAI
Holding Corp. (predecessor of the Registrant) and the stockholders.
10.2 Bridge Credit Agreement, dated as of January 31, 2000, among the
Registrant, the Financial Institutions party thereto and Bank of
America, N.A.
10.3 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.4 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.5 Limited Waiver, dated as of February 29, 2000, between the
Registrant and Bank of America, N.A.
10.6 Amended and Restated 1997 364-Day Credit Agreement among the
Registrant, the Lenders party thereto and Bank of America, N.A.
10.7 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.8 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
10.9 Amended and Restated 1999 180-Day Credit Agreement among the
Registrant, the Lenders parties thereto and Bank of America, N.A.
10.10 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.11 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
10.12 Limited Waiver, dated as of February 29, 2000, between the
Registrant and Bank of America, N.A.
10.13 1997 Second Amended and Restated Credit Agreement, dated as of
January 31, 2000, among the Registrant, the Lenders parties thereto
and Bank of America, N.A.
10.14 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.15 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
10.16 Form of European Receivables Agreement, dated February 2000, between
the Registrant and Tulip Asset Purchase Company B.V.
10.17 Form of European Servicing Agreement, dated January 2000, between
Registrant and Tulip Asset Purchase Company B.V.
10.18 Supply Agreement, dated as of March 30, 1992, and First Amendment to
Supply Agreement, between the Registrant and Cone Mills
Corporation.
10.19 Home Office Pension Plan.
10.20 Employee Investment Plan.
10.21 Capital Accumulation Plan.
10.22 Special Deferral Plan.
10.23 Key Employee Recognition and Commitment Plan.
10.24 Global Success Sharing Plan.
10.25 Deferred Compensation Plan for Executives.
10.26 Deferred Compensation Plan for Outside Directors.
10.27 Excess Benefit Restoration Plan.
10.28 Supplemental Benefit Restoration Plan.
10.29 Leadership Shares Plan.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.30 Annual Incentive Plan.
10.31 Long-Term Incentive Plan.
10.32 Long-Term Performance Plan.
10.33 Employment Agreement, dated as of September 30, 1999, between the
Registrant and Philip Marineau.
10.34 Supplemental Executive Retirement Agreement, dated as of January 1,
1998, between the Registrant and Gordon Shank.
10.35 Form of Indemnification Agreement, dated as of November 30, 1995,
for members of the Special Committee of Board of Directors created
by the Board of Directors on November 30, 1995.
12 Statements re: Computation of Ratios.
21 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
24 Power of Attorney (contained in the signature pages).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
</TABLE>
(b) Financial Statement Schedules.
Schedule II Reserves
All other schedules have been omitted because they are inapplicable,
not required or the information is included in the financial statements
or notes thereto.
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change in such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in the
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco, State of
California, on April 25, 2000.
Levi Strauss & Co.
/s/ William B. Chiasson
By: _________________________________
William B. Chiasson
Senior Vice President and Chief
Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William B. Chiasson, Joseph M. Maurer and Jay A.
Mitchell, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on April 25, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert D. Haas Chairman
______________________________________
Robert D. Haas
/s/ Philip A. Marineau Director, President and Chief Executive Officer
______________________________________
Philip A. Marineau
/s/ Peter E. Haas, Sr. Director
______________________________________
Peter E. Haas, Sr.
/s/ Angela Glover Blackwell Director
______________________________________
Angela Glover Blackwell
/s/ Robert E. Friedman Director
______________________________________
Robert E. Friedman
/s/ Tully M. Friedman Director
______________________________________
Tully M. Friedman
/s/ Gary W. Grellman Vice President and Controller (Principal Accounting Officer)
______________________________________
Gary W. Grellman
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ William B. Chiasson Senior Vice President and Chief Financial Officer
______________________________________
William B. Chiasson
/s/ Peter A. Georgescu Director
______________________________________
Peter A. Georgescu
/s/ Peter E. Haas, Jr. Director
______________________________________
Peter E. Haas, Jr.
/s/ Walter J. Haas Director
______________________________________
Walter J. Haas
/s/ F. Warren Hellman Director
______________________________________
F. Warren Hellman
Director
______________________________________
Patricia Salas Pineda
/s/ T. Gary Rogers Director
______________________________________
T. Gary Rogers
/s/ G. Craig Sullivan Director
______________________________________
G. Craig Sullivan
/s/ James C. Gaither Director
______________________________________
James C. Gaither
</TABLE>
II-6
<PAGE>
SCHEDULE II
LEVI STRAUSS & CO. AND SUBSIDIARIES
RESERVES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Balance at Additions
Allowance for Beginning Charged to Deductions Balance at
Doubtful Accounts of Period Expenses to Reserves End of Period
----------------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
November 28, 1999 $39,987 $5,396 $15,366 $30,017
======= ====== ======= =======
November 29, 1998 31,620 9,762 1,395 39,987
======= ====== ======= =======
November 30, 1997 32,761 9,428 10,569 31,620
======= ====== ======= =======
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits
--------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
4.1 Indenture, dated of November 6, 1996 between the Registrant and
Citibank, N.A., relating to the 6.80% Notes due 2003 and the 7.0%
Notes due 2006.
4.2 Fiscal Agency Agreement, dated as of November 21, 1996, between the
Registrant and Citibank, N.A., relating to (Yen)20 billion 4.25%
bonds due 2016.
4.3 Lease Intended as Security, dated as of December 3, 1996, among the
Registrant, First Security Bank, National Association as Agent and
named lessors.
9 Voting Trust Agreement, dated as of April 15, 1996, among LSAI
Holding Corp. (predecessor of the Registrant), Robert D. Haas, Peter
E. Haas, Sr., Peter E. Haas, Jr., F. Warren Hellman, as voting
trustees, and the stockholders.
10.1 Stockholders Agreement, dated as of April 15, 1996, among LSAI
Holding Corp. (predecessor of the Registrant) and the stockholders.
10.2 Bridge Credit Agreement, dated as of January 31, 2000, among the
Registrant, the Financial Institutions party thereto and Bank of
America, N.A.
10.3 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.4 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
10.5 Limited waiver, dated as of February 29, 2000, between the Registrant
and Bank of America, N.A.
10.6 Amended and Restated 1997 364-Day Credit Agreement among the
Registrant, the Lenders party thereto and Bank of America, N.A.
10.7 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.8 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
10.9 Amended and Restated 1999 180-Day Credit Agreement among the
Registrant, the Lenders parties thereto and Bank of America, N.A.
10.10 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.11 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
10.12 Limited Waiver, dated as of February 29, 2000, between the Registrant
and Bank of America, N.A.
10.13 1997 Second Amended and Restated Credit Agreement, dated as of
January 31, 2000, among the Registrant, the Lenders parties thereto
and Bank of America, N.A.
10.14 Pledge and Security Agreement, dated as of January 31, 2000, between
the Registrant and Bank of America, N.A.
10.15 Guaranty, dated as of January 31, 2000, between certain subsidiaries
of the Registrant and Bank of America, N.A.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibits
--------
<C> <S>
10.16 Form of European Receivables Agreement, dated February 2000, between
the Registrant and Tulip Asset Purchase Company B.V.
10.17 Form of European Servicing Agreement, dated January 2000, between the
Registrant and Tulip Asset Purchase Company B.V.
10.18 Supply Agreement, dated as of March 30, 1992, and First Amendment to
Supply Agreement, between the Registrant and Cone Mills Corporation.
10.19 Home Office Pension Plan.
10.20 Employee Investment Plan.
10.21 Capital Accumulation Plan.
10.22 Special Deferral Plan.
10.23 Key Employee Recognition and Commitment Plan.
10.24 Global Success Sharing Plan.
10.25 Deferred Compensation Plan for Executives.
10.26 Deferred Compensation Plan for Outside Directors.
10.27 Excess Benefit Restoration Plan.
10.28 Supplemental Benefit Restoration Plan.
10.29 Leadership Shares Plan.
10.30 Annual Incentive Plan.
10.31 Long-Term Incentive Plan.
10.32 Long-Term Performance Plan.
10.33 Employment Agreement, dated as of September 30, 1999 between the
Registrant and Philip Marineau.
10.34 Supplemental Executive Retirement Agreement, dated as of January 1,
1998 between the Registrant and Gordon Shank.
10.35 Form of Indemnification Agreement, dated as of November 30, 1995, for
members of the Special Committee of Board of Directors created by
the Board of Directors on November 30, 1995.
12 Statements re: Computation of Ratios.
21 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
24 Power of Attorney (contained in the signature pages).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
</TABLE>
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
LEVI STRAUSS & CO.
FIRST. The name of the Corporation is Levi Strauss & Co. (the
"Corporation").
SECOND. The address of the Corporation's registered office in the
State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle.
Its registered agent at that address is The Prentice-Hall Corporation System,
Inc.
THIRD. The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH.
A. Authorized Stock.
----------------
The Corporation shall be authorized to issue 280,000,000 shares of
capital stock, of which 270,000,000 shares shall be shares of common stock, par
value $0.01 per share ("Common Stock") and 10,000,000 shares shall be shares of
preferred stock, par value $1.00 per share ("Preferred Stock").
B. Preferred Stock.
---------------
Shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of the Corporation (the "Board") is
authorized, subject to any limitation prescribed by law, to provide for the
issuance of the shares of Preferred Stock in series, and, by filing a
Certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and any qualifications, limitation or restrictions thereof,
including, without limitation, the dividend, conversion and voting rights, the
redemption rights and terms, and the liquidation preferences, if any, and to
increase or decrease the number of shares of Preferred Stock of any such series
(but not below the number of shares of Preferred Stock thereof then
outstanding).
<PAGE>
C. Common Stock.
------------
Subject to the preferences of any shares of Preferred Stock issued
pursuant to Section B of this Article Fourth, the holders of shares of Common
Stock shall be entitled: (i) to receive such dividends as may be declared by the
Board; (ii) to receive, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, all of the remaining
assets of the Corporation available for distribution to the stockholders,
ratably in proportion to the number of shares of Common Stock held by them; and
(iii) to vote on all matters at all meetings of the stockholders of record of
the Corporation and shall be entitled to one vote for each share of Common Stock
held of record by such stockholder. Shares of Common Stock may be issued by the
Board for such consideration, having a value of not less than the par value
thereof, as is determined by the Board.
D. Transfers in Violation of Stockholders' Agreement.
-------------------------------------------------
From the time of execution of the Stockholders' Agreement dated as of
April 15, 1996 by and among LSAI Holding Corp. and its stockholders, (as such
agreement may be amended from time to time, the "Stockholders' Agreement"), and
for so long as such agreement remains in effect, any sale, assignment, gift,
pledge or encumbrance or other transfer (each, a "Transfer") of capital stock of
the Corporation made in violation of the Stockholders' Agreement shall be null
and void. The Corporation shall not register, recognize or give effect to any
such Transfer but rather shall continue to recognize the transferor on the books
and records of the Corporation as the holder of record of any such shares.
FIFTH. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Any amendment or repeal of this Article Fifth
shall not adversely affect any right or protection of a director of the
Corporation existing hereunder in respect of any act or omission occurring prior
to such amendment or repeal.
SIXTH. Each person who is or was or had agreed to become a director or
officer of the Corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board of Directors or an officer of the
Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executor, administrators or
estate of such person), shall be indemnified by the Corporation, in accordance
with the Bylaws of the Corporation, to the fullest extent permitted from time to
time by the General Corporation Law of the State of Delaware as
2
<PAGE>
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment) or any other applicable laws as presently or
hereafter in effect. Without limiting the generality or the effect of the
foregoing, the Corporation may enter into one or more agreements with any person
which provide for indemnification greater or different than that provided in
this Article Sixth. Any amendment or repeal of this Article Sixth shall not
adversely affect any right or protection existing hereunder in respect of any
act or omission occurring prior to such amendment or repeal.
SEVENTH. In exercising the powers granted to it by law, this
Certificate of Incorporation, and the Bylaws, the members of the Board of
Directors may consider, and act upon their beliefs concerning, the Corporation's
long-term financial and other interests, and may take into account, among other
factors, the social, economic and legal effects of the Corporation's actions
upon all constituencies having a relationship with the Corporation, including
without limitation, its stockholders, employees, customers, suppliers, consumers
and the community at large, so long as all actions and decisions reflecting such
considerations are reasonably calculated to be in the interests of the
stockholders of the Corporation.
EIGHTH. The Board is expressly authorized to make, alter, or repeal
the Bylaws of the Corporation, except for any Bylaw which specifically prohibits
such alteration or repeal without the approval of the stockholders of the
Corporation.
NINTH. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by statute. All rights conferred upon the Corporation's
stockholders are granted subject to this reservation.
* * *
Filed with the Secretary of State of Delaware: October 1, 1996
3
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
LEVI STRAUSS & CO.
-----------------
ARTICLE I - OFFICES
-------------------
Section 1. Registered Office.
--------- -----------------
The registered office of the Corporation shall be in the City of
Dover, State of Delaware.
Section 2. Other Offices.
--------- -------------
The Corporation may also have offices at such other places, both
within or without the State of Delaware, as the Board of Directors of the
Corporation (the "Board") may from time to time determine or the business of the
Corporation may require.
ARTICLE II - STOCKHOLDERS
-------------------------
Section 1. Annual Meeting.
--------- --------------
An annual meeting of the stockholders, for the election of directors
to succeed those whose terms expire and for the transaction of such other
business as may properly come before the meeting, shall be held at such place,
on such date, and at such time as the Board shall fix by resolution.
Section 2. Special Meetings.
--------- ----------------
Special meetings of the stockholders, may be called by the Board, the
Chairman of the Board or the President and shall be called by the President or
Secretary at the request in writing of the holders of a Majority of the shares
of capital stock of the Corporation then entitled to vote generally in an
election for directors and shall be held at such place, on such date, and at
such time as they or he or she shall fix. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 3. Notice of Meetings.
--------- ------------------
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten nor more than sixty days before
the date on which the meeting is to be held, to each stockholder entitled to
vote at such meeting, except as otherwise provided herein or required by law
(meaning, here and hereinafter, as required from time to time by the General
Corporation Law of the State of Delaware or the Certificate of Incorporation of
the Corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
days after the date for which the meeting was originally noticed, or if a new
record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might
<PAGE>
have been transacted at the original meeting. Notice of time, place and purpose
of any meeting of stockholders may be waived in writing either before or after
such meeting, and will be waived by any stockholder by his or her attendance
thereat in person or by proxy. Any stockholder so waiving notice of such meeting
shall be bound by the proceedings of any such meeting in all respects as if due
notice thereof had been given.
Section 4. Quorum.
--------- ------
At any meeting of the stockholders, the holders of a majority of all
of the shares of the stock issued and outstanding and entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote who
are present, in person or by proxy, may adjourn the meeting to another place,
date, or time.
If a notice of any adjournment of a special meeting of stockholders is
sent to all stockholders entitled to vote thereat, stating that the meeting will
be held with those present constituting a quorum, then except as otherwise
required by law, those present at such subsequent meeting shall constitute a
quorum, and all matters shall be determined by a majority of the votes cast at
such meeting.
Section 5. Organization.
--------- ------------
Such person as the Board may have designated or, in the absence of
such a person, the chief executive officer of the Corporation or, in the
designee's or the chief executive officer's absence, such person as may be
chosen by the holders of a majority of the shares issued and outstanding and
entitled to vote who are present, in person or by proxy, shall call to order any
meeting of the stockholders and act as chairman of the meeting. In the absence
of the Secretary of the Corporation, the secretary of the meeting shall be such
person as the chairman appoints.
Section 6. Conduct of Business.
--------- -------------------
The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
Section 7. Proxies and Voting.
--------- ------------------
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his or her name on the record date for the
meeting, except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefore by a
2
<PAGE>
stockholder entitled to vote or his or her proxy, a stock vote shall be taken,
and provided, further, that the chairman of the meeting may require that ballots
be cast for such vote. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law, all other matters shall be determined
by a majority of the votes cast.
Section 8. Stock List.
--------- ----------
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
--------- ------------------------------------------
Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Notice of the taking of corporate action by written consent
shall be given to those stockholders who have not consented in writing in
accordance with applicable law.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section 1. Number and Term of Office.
--------- -------------------------
The number of directors who shall constitute the Board shall be 12, or
such other number as may be designated by the Board from time to time in
accordance with these By-laws. Each director shall be elected for a term of one
year in accordance with these Bylaws and shall serve until his or her successor
is elected and qualified, except as otherwise provided herein or required by
law. Any person who is elected a director of the Corporation hall be deemed to
have resigned automatically as a director, and shall no longer be a director,
effective upon such person's seventy-second (72nd) birthday. Notwithstanding the
foregoing, the Board may, in its discretion, waive this requirement and
expressly authorize a director to remain a director beyond such person's
seventy-second (72nd) birthday.
3
<PAGE>
Vacancies created by such resignations shall be filled in the manner provided in
Section 2 of this Article III for the filling of vacancies caused by other
manner prove reasons.
Whenever the authorized number of directors is increased between
annual meetings of the stockholders, a majority of the directors then in office
shall have the power to elect such new directors for the balance of a term and
until their successors are elected and qualified. Any decrease in the
authorized number of directors shall not become effective until the expiration
of the term of the directors then in office unless, at the time of such
decrease, there shall be vacancies on the board which are being eliminated by
the decrease.
Notwithstanding the foregoing, whenever the holders of any series of
preferred stock issued by the Corporation shall have the right, voting
separately as a class, to elect directors at an annual or a special meeting of
stockholders, the then authorized number of directors shall be increased by the
number of the additional directors so to be elected, and at such meeting the
holders of such preferred stock shall be entitled to elect such additional
directors. Any director so elected shall hold office until his or her right to
hold such office terminates pursuant to the provisions of such preferred stock.
Section 2. Vacancies.
--------- ---------
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until his or her successor is elected and
qualified.
Section 3. Removal.
--------- -------
Subject to the rights of the holders of any series of Preferred Stock
with respect to such series of Preferred Stock, any director, or the entire
Board, may be removed from office at any time with or without cause, by the
affirmative vote of the holders of a majority of the shares of capital stock of
the Corporation then entitled to vote in an election for directors.
Section 4. Regular Meetings.
--------- ----------------
Regular meetings of the Board shall be held at such place or places,
on such date or dates, and at such time or times as shall have been established
by the Board and publicized among all directors. A notice of each regular
meeting shall not be required.
Section 5. Special Meetings.
--------- ----------------
Special meetings of the Board may be called by one-third of the
directors then in office (rounded up to the nearest whole number) or by the
chief executive officer and shall be held at such place, on such date, and at
such time as they or he or she shall fix. Notice of the place, date, and time
of each such special meeting shall be given each director by whom it is not
waived by mailing written notice not less than three days before the meeting or
by telegraphing the same not less than twenty-four hours before the meeting.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 6. Powers.
--------- ------
4
<PAGE>
The business and affairs of the Corporation shall be managed under the direction
of the Board. In addition to the powers and authorities expressly conferred
upon them by these By-laws, the Board may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these By-laws required to be exercised or
done by the stockholders. Directors may participate in task forces and other
activities with stockholders, employees and other stakeholders.
Section 7. Participation in Meetings By Conference Telephone.
--------- -------------------------------------------------
Members of the Board, or of any committee thereof, may participate in
a meeting of such Board or committee by means of conference telephone, video
conference or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 8. Quorum.
--------- ------
At any meeting of the Board, a majority of the total number of the
entire Board shall constitute a quorum for all purposes. If a quorum shall fail
to attend any meeting, a majority of those present may adjourn the meeting to
another place, date, or time, without further notice or waiver thereof
Section 9. Conduct of Business.
--------- -------------------
At any meeting of the Board, business shall be transacted in such
order and manner as the Board may from time to time determine, and all matters
shall be determined by the vote of a majority of the directors present at any
meeting at which a quorum is present, except as otherwise provided herein or
required by law. Stockholders, members of management or other employees or
other persons may attend all or any part of a meeting, at the Board's invitation
and discretion. The following actions shall not be taken by the Corporation or
the Board without the approval of at least two-thirds of those directors present
at a meeting at which a quorum is present:
(a) the declaration of dividends or distributions with respect to
capital stock of the Corporation;
(b) the purchase of the Corporation's Common Stock (other than as may
be provided in any policy of the type contemplated by Section 9(c) of this
Article 111);
(c) the adoption, termination or material modification of any estate
tax repurchase policy of the Corporation, as such may be in place from time
to time, which policy may contemplate, among other things, the repurchase
by the Corporation of its securities from the estates of deceased
stockholders to provide funds for payment of estate or similar taxes;
(d) the acquisition or disposition of assets with a fair market value
in excess of One Hundred Fifty Million Dollars ($150,000,000.00) in one
transaction or a series of related transactions;
(e) the employment or termination of the chief executive officer of
the Corporation;
5
<PAGE>
(f) the execution of a registration statement under the Securities
Act of 1933 (or comparable law of any other jurisdiction) for a public
offering of securities of the Corporation or any subsidiary;
(g) the dissolution or liquidation of the Corporation;
(h) the execution or performance of any merger agreement pursuant to
which securities of the Corporation are issued, extinguished, or modified;
(i) the adoption of a resolution by the Board changing the size of
the Board;
(j) the changing of the independent accountants of the Corporation;
(k) the calling by the Board of a special meeting of the stockholders
of the Corporation;
(l) the waiver of any rights of the Corporation as successor to LSAI
Holding Corp. under the Stockholders' Agreement dated as of April 15, 1996
by and among LSAI Holding Corp. and its stockholders (as such agreement
may be amended from time to time, the "Stockholders' Agreement") or the
approval of certain transfers of shares of common stock pursuant to the
Stockholders' Agreement;
(m) the amendment or repeal of this Section 9 of Article III or of
Article XI, or the addition to these By-laws of any provision inconsistent
with this Section 9 of Article III or with Article XI.
Action may be taken by the Board without a meeting if all members thereof
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board.
Section 10. Compensation of Directors.
---------- -------------------------
Directors, as such, may receive, pursuant to resolution of the Board,
fixed fees and other compensation for their services as directors, including,
without limitation, their services as members of committees of the Board.
ARTICLE IV - COMMITTEES
-----------------------
Section 1. Committees of the Board of Directors.
--------- ------------------------------------
The Board, by a vote of a majority of the whole Board, may from time
to time designate committees of the Board, with such lawfully delegable powers
and duties as it thereby confers, to serve at the pleasure of the Board and
shall, for those committees and any others provided for herein, elect a director
or directors to serve as the member or members, designating, if it desires,
other directors as alternate members who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
any member of any committee and any alternate member in his or her place, the
member or members of the committee present at the meeting and not disqualified
from voting, whether or not he or she or they constitute a quorum, may by
6
<PAGE>
unanimous vote appoint another member of the Board to act at the meeting in the
place of the absent or disqualified member.
Section 2. Conduct of Business.
--------- -------------------
Each committee may determine the procedural rules for meeting and
conducting its business, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings; one-
third of the members shall constitute a quorum unless the committee shall
consist of one or two members, in which event one member shall constitute a
quorum; and all matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of such committee.
ARTICLE V - OFFICERS
--------------------
Section 1. Number.
--------- ------
The officers of the Corporation shall be chosen by the Board and shall
include a President, a Secretary, and a Treasurer. The Board may also appoint
one or more Vice Presidents, Assistant Secretaries or Assistant Treasurers and
such other officers and agents with such powers and duties as it shall deem
necessary. Any Vice President may be given such specific designation as may be
determined from time to time by the Board. Any number of offices may be held by
the same person, unless the Certificate of Incorporation or these By-laws
otherwise provide.
Section 2. Election and Term of Office.
--------- ---------------------------
The officers shall be elected annually by the Board at its
organizational meeting following the annual meeting of the stockholders, and
each officer shall hold office until the next annual election of officers and
until his or her successor is elected and qualified, or until his or her death,
resignation, or removal. Any officer may be removed at any time, with or
without cause, by a vote of the majority of the whole Board, and any officer
shall be deemed removed upon termination of such officer's employment with the
Corporation or by any subsidiary for any reason. Any vacancy occurring in any
office may be filled by the Board.
Section 3. Salaries.
--------- --------
The Board from time to time shall fix the salaries of the following
officers: the Chairman of the Board, the President, all Executive Vice
Presidents and all Senior Vice Presidents.
Section 4. Chairman of the Board.
--------- ---------------------
The Chairman of the Board shall be the chief executive officer of the
Corporation unless the President is designated the chief executive officer. The
Chairman of the Board shall supervise generally the affairs of the Corporation,
and shall exercise such other powers and perform such other duties as may be
assigned to him or her by these Bylaws or by the Board. The Chairman of the
Board shall preside at meetings of the stockholders and the Board. He or she
shall be an ex-officio member of all standing committees of the Board.
7
<PAGE>
Section 5. President.
--------- ---------
The President shall be the chief operating officer of the Corporation
unless otherwise designated by the Board. The President shall exercise such
other powers and duties as may be assigned to him or her by these By-laws or by
the Board.
Section 6. Vice Presidents.
--------- ---------------
Except where the signature of the President is required by law, each
of the Vice Presidents shall have the same power as the President to sign
certificates, contracts and other instruments of the Corporation. Any Vice
President shall perform such other duties and may exercise such other powers as
may from time to time be assigned to him or her by these By-laws, the Board or
the President.
Section 7. Secretary and Assistant Secretaries.
--------- -----------------------------------
The Secretary shall: record, or cause to be recorded, in books
provided for the purpose, minutes of the meetings of the stockholders, the
Board, and all committees of the Board; see that all notices are duly given in
accordance with the provisions of these Bylaws as required by law; be custodian
of all corporate records (other than financial) and of the seal of the
Corporation, and have authority to affix the seal to all documents requiring it
and attest to the same; give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board; and, in general, shall
perform all duties incident to the office of Secretary and such other duties as
may, from time to time, be assigned to him or her by the Board or by the
President. At the request of the Secretary, or in his or her absence or
disability, any Assistant Secretary shall perform any of the duties of the
Secretary and, when so acting, shall have all the powers and be subject to all
the restrictions upon, the Secretary.
Section 8. Treasurer and Assistant Treasurers.
--------- ----------------------------------
The Treasurer shall exercise general supervision over the receipt,
custody and disbursement of corporate funds. The Treasurer shall cause the
funds of the Corporation to be deposited in such banks as may be authorized by
the Board, or in such banks as may be designated as depositories in the manner
provided by resolution of the Board. He or she shall have such further powers
and duties and shall be subject to such directions as may be granted or imposed
upon him or her from time to time by the Board, the Chair-man of the Board or
the President. At the request of the Treasurer, or in his or her absence or
disability, the Assistant Treasurer may perform any of the duties of the
Treasurer and, when so acting shall have all the powers of, and be subject to
all the restrictions upon, the Treasurer. Except where the signature of the
Treasurer is required by law, each of the Assistant Treasurers shall possess the
same power as the Treasurer to sign all certificates, contracts, obligations,
and other instruments of the Corporation.
ARTICLE VI - EXECUTION OF CORPORATE INSTRUMENTS,
RATIFICATION OF CONTRACTS, AND
VOTING OF SHARES OWNED BY THE CORPORATION
-----------------------------------------
Section 1. Execution of Corporate Instruments.
--------- ----------------------------------
8
<PAGE>
The Board may, in its discretion, determine the method and designate
the signatory officer or officers, or other person or persons, to execute any
corporate instrument or document, or to sign the corporate name without
limitation, except where otherwise provided by law, and such execution or
signature shall be binding upon the Corporation. Unless otherwise specifically
determined by the Board:
(a) formal contracts of the Corporation, promissory notes, indentures,
deeds of trust, mortgages, real property leases and purchase and sale
agreements, powers of attorney relating to trademark and any other matters,
and other evidences of indebtedness of the Corporation, and corporate
instruments or documents requiring the corporate seal (except for share
certificates issued by the Corporation), and share certificates owned by
the Corporation, shall be executed, signed, or endorsed by any of the
Chairman of the Board, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer or any Assistant Treasurer;
(b) checks drawn on banks or other depositories on funds to the credit
of the Corporation, or in special accounts of the Corporation, shall be
signed in such manner (which may be a facsimile signature) and by such
person or persons as shall be authorized by the Board; and
(c) share certificates issued by the Corporation shall be signed
(which may be a facsimile signature) jointly by (i) the chief executive
officer and (ii) the Secretary or an Assistant Secretary.
Section 2. Ratification by Stockholders.
--------- ----------------------------
The Board may, in its discretion, submit any contract or act for
approval or ratification by the stockholders at any annual meeting of
stockholders or at any special meeting of stockholders called for that purpose.
Any contract or act which shall be approved or ratified by the holders of a
majority of the voting power of the Corporation represented at such meeting
shall be as valid and binding upon the Corporation as though approved or
ratified by each and every stockholder of the Corporation, unless a greater vote
is required by law for such purpose.
Section 3. Voting of Stock Owned by the Corporation.
--------- ----------------------------------------
All stock of other corporations owned or held by the Corporation for
itself or for other par ties in any capacity shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized to do so by
resolution of the Board or, in the absence of such authorization, by the
President, any of the Vice Presidents, the Secretary or any Assistant Secretary.
ARTICLE VII - STOCK
-------------------
Section 1. Certificates of Stock, Transfers.
--------- --------------------------------
The interest of each stockholder of the Corporation shall be evidenced
by certificates for shares of stock in such form as the appropriate officers of
the Corporation may from time to time prescribe. The shares of the stock of the
Corporation shall be transferred on the books of the
9
<PAGE>
Corporation by the holder thereof in person or by his or her attorney, upon
surrender for cancellation of certificates for at least the same number of
shares, with an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, with such proof of the authenticity of the signature as
the Corporation or its agents may reasonably require.
The certificates of stock shall be signed, countersigned and
registered in such manner as the Board may by resolution prescribe, which
resolution may permit all or any of the signatures on such certificates to be in
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.
Section 2. Lost, Stolen or Destroyed Certificates.
--------- --------------------------------------
No certificate for shares of stock in the Corporation shall be issued
in place of any certificate alleged to have been lost, destroyed or stolen,
except on production of such evidence of such loss, destruction or theft and on
delivery to the Corporation of a bond of indemnity in such amount, upon such
terms and secured by such surety, as the Board or the Secretary may in its or
such officer's discretion require.
Section 3. Certain Transfers of Stock.
--------- --------------------------
For as long as that voting trust agreement among Robert D. Haas, Peter
E. Haas, Sr., Peter E. Haas, Jr., and F. Warren Hellman (the "Trustees") and
certain holders of capital stock of the Corporation (the "Voting Trust
Agreement") is in effect, shares of the Corporation's capital stock subject
thereto and the voting trust certificates so representing (the "Voting Trust
Certificates") are necessarily linked and cannot be transferred separately. Any
transfer of Voting Trust Certificates shall be deemed to effect a transfer of
the underlying shares of capital stock represented thereby, and any transfer of
shares of capital stock with respect to which Voting Trust Certificates have
been issued shall be deemed to effect a transfer of such Voting Trust
Certificates.
Section 4. Record Date.
----------------------
The Board may fix a record date, which shall not be more than sixty
nor less than ten days before the date of any meeting of stockholders, nor more
than sixty days prior to the time for the other action hereinafter described, as
of which there shall be determined the stockholders who are entitled: to notice
of or to vote at any meeting of stockholders or any adjournment thereof; to
express consent to corporate action in writing without a meeting; to receive
payment of any dividend or other distribution or allotment of any rights; or to
exercise any rights with respect to any change, conversion or exchange of stock
of with respect to any other lawful action.
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof, and accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by the laws of Delaware.
Section 5. Lost, Stolen or Destroyed Certificates.
--------- --------------------------------------
10
<PAGE>
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations and
practices as the Corporation may establish concerning proof of such loss, theft
or destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 6. Regulations.
--------- -----------
The issue, transfer, conversion and registration of certificates of
stock shall be governed by such other regulations as the Corporation may
establish.
ARTICLE VIII - NOTICES
----------------------
Section 1. Notices.
--------- -------
Except as otherwise specifically provided herein or required by law,
all notices required to be given under these By-laws to any stockholder,
director, officer, employee or agent shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, by sending such notice by
prepaid telegram or mailgram, or by telecopier (provided that receipt is
confirmed by telephone). Any such notice shall be addressed to such
stockholder, director, officer, employee or agent at his or her last known
address as the same appears on the books of the Corporation. The time when such
notice is received, if hand delivered, or dispatched, if delivered through the
mails or by telegram or mailgram, shall be the time of the giving of the notice.
Section 2. Waivers.
--------- -------
A written waiver of any notice, signed by a stockholder, director,
officer, employee or agent, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, director, officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE IX - INDEMNIFICATION
----------------------------
Section 1. Indemnification and Insurance.
--------- -----------------------------
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation (including, without limitation, any subsidiary) or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans maintained or sponsored by the
Corporation, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment),
11
<PAGE>
against all expense, liability and loss (including attorneys' fees, judgments,
fines, Employee Retirement Income Security Act of 1974 (as amended) excise taxes
or penalties and amounts paid or to be paid in settlement) reasonably incurred
or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however. that except as provided in Section 3 of this
--------
Article, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Article shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition, such advances
to be paid by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time; provided, however, that if the General
--------
Corporation Law of the State of Delaware requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking by or on behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Article or otherwise.
Section 2. Request for Indemnification.
--------- ---------------------------
To obtain indemnification under this Article, a claimant shall submit
to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this Section 2, a
determination, if required by applicable law, with respect to the claimant's
entitlement thereto shall be made as follows: (1) if requested by the claimant,
by Independent Counsel (as hereinafter defined), or (2) if no request is made by
the claimant for a determination by Independent Counsel, (1) by the Board by a
majority vote of the directors who are not parties to such proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to the claimant, or (iii) if such Directors so
direct, by the stockholders of the Corporation. In the event the determination
of entitlement to indemnification is to be made by Independent Counsel at the
request of the claimant, the Independent Counsel shall be selected by the Board
unless there shall have occurred within two years prior to the date of the
commencement of the proceeding for which indemnification is claimed a change in
control of the Corporation, in which case the Independent Counsel shall be
selected by the claimant unless the claimant shall request that such selection
be made by the Board. If it is so determined that the claimant is entitled to
indemnification, payment to the claimant shall be made within 10 days after such
determination.
Section 3. Right of Claimant to Bring Suit.
--------- -------------------------------
If a claim under Section I of this Article is not paid in full by the
Corporation within thirty days after a written claim pursuant to Section 2 of
this Article has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its
12
<PAGE>
final disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, Independent Counsel
or stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the Corporation (including its Board, Independent Counsel- or stockholders) that
the claimant has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 4. Corporation Bound.
--------- -----------------
If a determination shall have been made pursuant to Section 2 of this
Article that the claimant is entitled to indemnification, the Corporation shall
be bound by such determination in any Judicial proceeding commenced pursuant to
Section 3 of this Article.
Section 5. Corporation Precluded.
--------- ---------------------
The Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to Section 3 of this Article that the procedures
and presumptions of this Article are not valid, binding and enforceable and
shall stipulate in such proceeding that the Corporation is bound by all the
provisions of this Article.
Section 6. Non-Exclusivity of Rights.
--------- -------------------------
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-laws, agreement, vote of stockholders or Disinterested
Directors or otherwise. No repeal or modification of this Article shall in any
way diminish or adversely affect the rights of any director, officer, employee
or agent of the Corporation hereunder in respect of any occurrence or matter
arising prior to any such repeal or modification.
Section 7. Insurance.
--------- ---------
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware. To the extent that
the Corporation maintains any policy or policies providing such insurance, each
such director or officer, and each such agent or employee to which rights to
indemnification have been granted as provided in Section 8 of this Article,
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage thereunder for any such director,
officer, employee or agent.
Section 8. Granting of Rights.
--------- ------------------
13
<PAGE>
The Corporation may, to the extent authorized from time to time by the
Board, grant rights to indemnification, and rights to be paid by the Corporation
the expenses incurred in defending any proceeding in advance of its final
disposition, to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
Section 9. Severability.
--------- ------------
If any provision or provisions of this Article shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,
legality and enforceability of the remaining provisions of this Article
(including, without limitation, each portion of any paragraph of this Article
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself held to be invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (2) to the fullest extent possible, the
provisions of this Article (including, without limitation, each such portion of
any paragraph of this Article containing any such provision held to be invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
Section 10. Definitions.
---------- -----------
For purposes of this Article, "Independent Counsel" means a law firm,
a member of a law firm, or an independent practitioner, that is experienced in
matters of corporation law and shall include any person who, under the
applicable standards of professional conduct then prevailing, would not have a
conflict of interest in representing either the Corporation or the claimant in
an action to determine the claimant's rights under this Article.
Section 11. Notices.
---------- -------
Any notice, request or other communication required or permitted to be
given to the Corporation under this Article shall be in writing and either
delivered in person or sent by telecopy, telex, telegram, overnight mail or
courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
ARTICLE X - MISCELLANEOUS
-------------------------
Section 1. Facsimile Signatures.
--------- --------------------
In addition to the provisions for use of facsimile signatures
elsewhere specifically authorized in these By-laws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by
the Board or a committee thereof.
Section 2. Corporate Seal.
--------- --------------
The Board may provide a suitable seal, containing the name of the
Corporation, which seal shall be in the charge of the Secretary. Duplicates of
the seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
--------- ----------------------------------------
14
<PAGE>
Each director, each member of any committee designated by the Board,
and each officer of the Corporation shall, in the performance of his or her
duties, be fully protected in relying in good faith upon the books of account or
other records of the Corporation, including reports made to the Corporation by
any of its officers, by an independent certified public accountant, by an
appraiser or by any other professional person or expert selected with reasonable
care.
Section 4. Fiscal Year.
--------- -----------
Each fiscal year of the Corporation shall end on the last Sunday of
November, and the subsequent fiscal year shall begin on the Monday thereafter,
unless the Board, the Chairman of the Board or the President of the Corporation
shall designate a different period.
Section 5. Time Periods.
--------- ------------
In applying any provision of these By-laws which require that an act
be done or not done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE XI - AMENDMENTS
-----------------------
These By-laws may be amended or repealed, or new By-laws may be
adopted, by the holders of a majority of the shares of capital stock then
entitled to vote in an election for directors or by the Board at any regular or
special meeting of the stockholders or the Board, or by written consent in lieu
thereof.
* * * *
This is to certify that the foregoing is a true and correct copy of
the By-laws of Levi Strauss & Co. as of October 1, 1996.
_______________________________________
Nita Sobejana
Secretary
15
<PAGE>
EXHIBIT 4.1
LEVI STRAUSS & CO.
ISSUER
AND
CITIBANK, N.A.
TRUSTEE
_____________________
INDENTURE
Dated as of November 6, 1996
_____________________
U.S. $350,000,000
6.80% NOTES
DUE NOVEMBER 1, 2003
and
U.S. $450,000,000
7.00% NOTES
DUE NOVEMBER 1, 2006
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
<S> <C>
Section 1.1 Definitions.......................................................................... 1
Section 1.2 Compliance Certificates and Opinions; Form of Documents Delivered to Trustee......... 9
Section 1.3 Acts of Holders of Securities........................................................ 10
Section 1.4 Notices, Etc......................................................................... 12
Section 1.5 Notice to Holders of Securities; Waiver.............................................. 13
Section 1.6 Effect of Headings and Table of Contents............................................. 13
Section 1.7 Successors and Assigns............................................................... 13
Section 1.8 Separability Clause.................................................................. 13
Section 1.9 Benefits of Indenture................................................................ 13
Section 1.10 Governing Law........................................................................ 14
Section 1.11 Legal Holidays....................................................................... 14
Section 1.12 Conflict with Trust Indenture Act.................................................... 14
ARTICLE II
SECURITY FORMS
Section 2.1 Forms of Securities Generally........................................................ 14
Section 2.2 Form of Face of 6.80% Notes.......................................................... 16
Section 2.3 Form of Reverse of 6.80% Notes....................................................... 20
Section 2.4 Form of Trustee's Certificate of Authentication of 6.80% Notes....................... 22
Section 2.5 Form of Face of 7.00% Notes.......................................................... 22
Section 2.6 Form of Reverse of 7.00% Notes....................................................... 26
Section 2.7 Form of Trustee's Certificate of Authentication of 7.00% Notes....................... 28
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms...................................................................... 29
Section 3.2 Denominations........................................................................ 30
Section 3.3 Execution, Authentication, Delivery and Dating....................................... 30
Section 3.4 Temporary Securities................................................................. 31
Section 3.5 Registration, Registration of Transfer and Exchange: Restrictions on Transfer........ 31
Section 3.6 Mutilated, Destroyed, Lost or Stolen Securities...................................... 37
Section 3.7 Payment of Principal and Interest, Interest Rights Preserved......................... 38
Section 3.8 Persons Deemed Owners................................................................ 39
</TABLE>
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<TABLE>
<CAPTION>
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Number
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<S> <C>
Section 3.9 Cancellation......................................................................... 39
Section 3.10 Computation of Interest.............................................................. 40
Section 3.11 CUSIP Numbers........................................................................ 40
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.............................................. 40
Section 4.2 Application of Trust Money........................................................... 41
ARTICLE V
REMEDIES
Section 5.1 Events of Default.................................................................... 41
Section 5.2 Acceleration of Maturity, Rescission and Annulment................................... 43
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee...................... 44
Section 5.4 Trustee May File Proofs of Claim..................................................... 44
Section 5.5 Trustee May Enforce Claims Without Possession of Securities.......................... 45
Section 5.6 Application of Money Collected....................................................... 45
Section 5.7 Limitation on Suits.................................................................. 46
Section 5.8 Unconditional Right of Holders to Receive Principal and Interest..................... 46
Section 5.9 Restoration of Rights and Remedies................................................... 47
Section 5.10 Rights and Remedies Cumulative....................................................... 47
Section 5.11 Delay or Omission Not Waiver......................................................... 47
Section 5.12 Control by Holders of Securities..................................................... 47
Section 5.13 Waiver of Past Defaults.............................................................. 48
Section 5.14 Undertaking for Costs................................................................ 48
Section 5.15 Waiver of Stay or Extension Laws..................................................... 48
ARTICLE VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.................................................. 49
Section 6.2 Notice of Defaults................................................................... 50
Section 6.3 Certain Rights of Trustee............................................................ 50
Section 6.4 Not Responsible for Recitals or Issuance of Securities............................... 51
Section 6.5 May Hold Securities, Act as Trustee Under Other Indentures........................... 51
Section 6.6 Money Held in Trust.................................................................. 51
Section 6.7 Compensation and Indemnification of Trustee and Its Prior Claims..................... 51
Section 6.8 Corporate Trustee Required; Eligibility.............................................. 52
</TABLE>
-ii-
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<TABLE>
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Number
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<S> <C>
Section 6.9 Resignation and Removal; Appointment of Successor.................................... 53
Section 6.10 Acceptance of Appointment by Successor............................................... 54
Section 6.11 Appointment of Co-Trustee or Separate Trustee........................................ 54
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.......................... 55
Section 6.13 Authenticating Agent................................................................. 56
Section 6.14 Disqualification; Conflicting Interests.............................................. 57
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders............................ 57
Section 7.2 Preservation of Information; Communications to Holders............................... 57
Section 7.3 Reports by the Company............................................................... 58
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms................................. 58
Section 8.2 Successor Substituted................................................................ 59
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Holders of Securities..................... 59
Section 9.2 Supplemental Indentures With Consent of Holders of Securities........................ 60
Section 9.3 Trustee Protected.................................................................... 61
Section 9.4 Execution of Supplemental Indentures................................................. 61
Section 9.5 Effect of Supplemental Indentures.................................................... 61
Section 9.6 Reference in Securities to Supplemental Indentures................................... 61
Section 9.7 Notice of Supplemental Indentures.................................................... 62
ARTICLE X
MEETINGS OF HOLDERS OF SECURITIES
Section 10.1 Purposes for Which Meetings May Be Called............................................ 62
Section 10.2 Call, Notice and Place of Meetings................................................... 62
Section 10.3 Persons Entitled to Vote at Meetings................................................. 63
Section 10.4 Quorum; Action....................................................................... 63
Section 10.5 Determination of Voting Rights; Conduct and Adjournment of Meetings.................. 63
Section 10.6 Counting Votes and Recording Action of Meetings...................................... 64
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
Number
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ARTICLE XI
COVENANTS
<S> <C>
Section 11.1 Payment of Principal and Interest.................................................... 65
Section 11.2 Maintenance of Offices or Agencies................................................... 65
Section 11.3 Money for Security Payments To Be Held in Trust...................................... 65
Section 11.4 Corporate Existence.................................................................. 67
Section 11.5 Maintenance of Properties............................................................ 67
Section 11.6 Maintenance of Insurance............................................................. 67
Section 11.7 Compliance with Laws................................................................. 67
Section 11.8 Payment of Taxes and Claims.......................................................... 67
Section 11.9 Delivery of Certain Information...................................................... 68
Section 11.10 Limitation on Liens.................................................................. 68
Section 11.11 Limitation on Sale and Leaseback Transactions........................................ 69
Section 11.12 Statement by Officers as to Default.................................................. 70
Section 11.13 Resale of Certain Securities......................................................... 70
Section 11.14 Waiver of Certain Covenants.......................................................... 71
Section 11.15 Book-Entry System.................................................................... 71
ANNEX A-1 FORM OF TRANSFER CERTIFICATE -- RESTRICTED GLOBAL SECURITY TO TEMPORARY REGULATION S
GLOBAL SECURITY...................................................................... A-1-1
ANNEX A-2 FORM OF TRANSFER CERTIFICATE -- RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL
SECURITY............................................................................. A-2-1
ANNEX B FORM OF TRANSFER CERTIFICATE -- TEMPORARY REGULATION S GLOBAL SECURITY OR REGULATION S
GLOBAL SECURITY RESTRICTED GLOBAL SECURITY........................................... B-1
ANNEX C-1 FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF BENEFICIAL INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY TO EUROCLEAR OR CEDEL................................... C-1-1
ANNEX C-2 FORM OF CERTIFICATION TO BE GIVEN BY THE EUROCLEAR OPERATOR OR CEDEL BANK, SOCIETE
ANONYME.............................................................................. C-2-1
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
ANNEX C-3 FORM OF CERTIFICATION TO BE GIVEN BY TRANSFEREE OF BENEFICIAL INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY AFTER THE RESTRICTED PERIOD............................. C-3-1
ANNEX D-1 FORM OF TRANSFER CERTIFICATE -- NON-GLOBAL RESTRICTED SECURITY TO RESTRICTED GLOBAL
SECURITY............................................................................. D-1-1
ANNEX D-2 FORM OF CERTIFICATE -- NON-GLOBAL RESTRICTED SECURITY TO REGULATION S GLOBAL SECURITY
OR TEMPORARY REGULATION S GLOBAL SECURITY............................................. D-2-1
</TABLE>
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<PAGE>
INDENTURE, dated as of November 6, 1996, between LEVI STRAUSS &
CO., a Delaware corporation (herein called the "Company"), and CITIBANK, N.A., a
national banking association, as Trustee hereunder (herein called the
"Trustee").
RECITALS
The Company has duly authorized the creation of an issue of its
6.80% Notes due November 1, 2003 (herein called the "6.80% Notes") and an issue
of its 7.00% Notes due November 1, 2006 (herein called the "7.00% Notes" and,
together with the 6.80% Notes, the "Securities") of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company in accordance with their and its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) Unless the context otherwise requires, any reference to an
"Article" or a "Section," or to an "Annex," refers to an Article or
Section of, or an Annex attached to, this Indenture, as the case may
be;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States prevailing at the time of
any relevant computation hereunder; and
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not
to any particular Article, Section or other subdivision; provided,
--------
however that where such words are used in any form of Security, form
-------
of notice or form of certificate, such words shall refer only to the
<PAGE>
particular form of Security, form of notice or form of certificate, as
the case may be, in which such words are contained.
"Act," when used with respect to any Holder of a Security, has
the meaning specified in Section 1.3.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Members" has the meaning specified in Section 3.5.
"Applicable Procedures" has the meaning specified in Section 3.5.
"Attributable Indebtedness," in respect of any sale and leaseback
transaction, means, as of the time of determination, the total obligation
(discounted to present value at the rate per annum equal to the discount rate
which would be applicable to a capital lease obligation with like term in
accordance with generally accepted accounting principles) of the lessee for
rental payments (other than amounts required to be paid on account of property
taxes, maintenance, repairs, insurance, water rates and other items which do not
constitute payments for property rights) during the remaining portion of the
initial term of the lease included in such sale and leaseback transaction.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.13 to act on behalf of the Trustee to authenticate
Securities.
"Authorized Newspaper" means a newspaper, in an official language
of the country of publication or in the English language, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in the place in connection with which the
term is used or in the financial community of such place. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same city
meeting the foregoing requirements and in each case on any Business Day.
"Board of Directors," when used with reference to the Company,
means the board of directors of the Company, or any committee of the board of
directors of the Company, empowered to act for the Company, as the case may be,
with respect to this Indenture.
"Board Resolution" means a resolution duly adopted by the Board
of Directors, a copy of which, certified by the Secretary or an Assistant
Secretary of the Company, as the case may be, to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification, shall have been delivered to the Trustee.
"Business Day" means, with respect to any particular place of
payment or any other place, as the case may be, each Monday, Tuesday, Wednesday,
Thursday and Friday, other
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<PAGE>
than any such day on which banking institutions in The City of New York, New
York or in such particular place are authorized or obligated by law or executive
order to close. If any day on which any delivery, request, surrender, payment or
other action is required or permitted hereunder to be taken by or on behalf of a
Holder is not a Business Day in any place where such action is permitted
hereunder to be taken, then such actions may be taken at such or any other
permitted place on the next succeeding Business Day at such place with the same
force and effect as if taken at the same time on such day that is not a business
day at such place.
"CEDEL" means Cedel Bank Societe Anonyme.
"Code" has the meaning specified in Section 2.1.
"Commission" means the U.S. Securities and Exchange Commission,
as from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under applicable
law, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the Board,
its Chief Executive Officer, its President, or any Vice President, and by any
one of its Chief Financial Officer, Treasurer, any Assistant Treasurer, its
Secretary or any Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting therefrom (i) all current liabilities (excluding any indebtedness for
money borrowed having a maturity of less than 12 months from the date of the
most recent consolidated balance sheet of the Company but which by its terms is
renewable or extendable beyond 12 months from such date at the option of the
borrower) and (ii) all goodwill, trade names, patents, unamortized debt discount
and expense and any other like intangibles, all as set forth on the most recent
consolidated balance sheet of the Company and computed in accordance with
generally accepted accounting principles.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 120 Wall Street,
13th Floor, New York, New York 10043), Attention: Corporate Trust
Administration.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depository" means, with respect to the Securities issued in
whole or in part in the form of one or more Global Securities, the clearing
agency registered under the Exchange Act, specified for that purpose as
contemplated by Section 2.1 or any successor clearing agency registered under
the Exchange Act as contemplated by Section 2.1.
-3-
<PAGE>
"Depository Securities Certification" has the meaning specified
in Section 2.1.
"Dollar" or "U.S.$" means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debts.
"DTC" means The Depository Trust Company.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, including any successor or amendatory statutes.
"Euroclear" means the Euroclear System.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the U.S. Securities Exchange Act of 1934
(including any successor act thereto), as it may be amended from time to time,
and (unless the context otherwise requires) includes the rules and regulations
of the Commission promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.3(g).
"Funded Indebtedness" means (i) all Indebtedness having a
maturity of more than 12 months from the date as of which the determination is
made or having a maturity of 12 months or less but by its terms being renewable
or extendible beyond 12 months from such date at the option of the borrower and
(ii) rental obligations payable more than 12 months from such date under leases
which are capitalized in accordance with generally accepted accounting
principles (such rental obligations to be included as Funded Indebtedness at the
amount so capitalized as of such date of determination).
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such other entity as may
be in general use by significant segments of the U.S. accounting profession,
which are applicable to the circumstances as of the date of determination.
"Global Security" means any of the Restricted Global Security of
either series, the Temporary Regulation S Global Security of either series and
the Regulation S Global Security of either series.
"Governmental Authority" means any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
-4-
<PAGE>
"Holder" means, with respect to any Security, a Person in whose
name such Security is registered in the Security Register.
"Indebtedness" means obligations (other than nonrecourse
obligations) of, or guaranteed or assumed by, the Company for borrowed money,
including obligations evidenced by bonds, debentures, notes or other similar
instruments and reimbursement and cash collateralization of letters of credit,
bankers' acceptances, interest rate hedge and currency hedge agreements.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument and any such supplemental
indenture, the Annexes attached to this instrument.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Institutional Accredited Investor" means an institutional
accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act.
"Material Adverse Effect" means (i) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole; (ii) a material impairment of the ability of the Company to perform
under any Loan Document and to avoid any Event of Default, or (iii) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Company of any Loan Document.
"Maturity," when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration or otherwise.
"6.80% Notes" has the meaning ascribed to it in the first
paragraph under the caption "Recitals."
"7.00% Notes" has the meaning ascribed to it in the first
paragraph under the caption "Recitals."
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, security interest,
lien, encumbrance, or other security arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Loan Documents" means any of this Indenture or the Securities.
"Officer," when used with reference to the Company, means the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer, the Treasurer, the
-5-
<PAGE>
Controller, an Assistant Treasurer, an Assistant Controller, the Secretary, an
Assistant Secretary or any Vice President of the Company.
"Officers' Certificate," when used with reference to the Company,
means a written certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial Officer or any Vice
President of the Company and by any one of the Treasurer, the Controller, an
Assistant Treasurer, an Assistant Controller, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee; provided, however, that,
--------
for purposes of Section 11.12, an "Officers" Certificate" means a written
certificate signed by the principal executive, financial or accounting officer
of the Company and any one of the other Officers referred to above and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel selected by
the Company, which counsel shall be reasonably acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture or, if the context requires, all Securities of a particular
series therefore authenticated and delivered under this Indenture, except:
------
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for the payment of which money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; and
(iii) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of Outstanding Securities of either series are present at a
meeting of Holders of Securities for quorum purposes or have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall be
protected in conclusively relying upon any such determination as to the presence
of a quorum or upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor.
-6-
<PAGE>
"Owner Securities Certification" has the meaning specified in Section
2.1.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, company, partnership,
joint venture, association, joint-stock company, trust, estate, unincorporated
organization or other legal entity or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means any contiguous or proximate parcel of real
property owned by, or leased to, the Company or any of its Restricted
Subsidiaries, and any equipment located at or comprising a part of any such
property, having a gross book value (without deduction of any depreciation
reserves), as of the date of determination, in excess of 1.0% of Consolidated
Net Tangible Assets.
"Qualified Institutional Buyer" has the meaning specified in Rule
144A.
"Record Date" means any Regular Record Date or Special Record Date.
"Regular Record Date" for interest payable in respect of any Security
on any Interest Payment Date means the April 15 or October 15 (whether or not a
Business Day) next preceding the relevant Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (including
any successor regulation thereto), as it may be amended from time to time.
"Regulation S Global Security" has the meaning specified in Section
2.1.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer," when used with respect to the Trustee, shall
mean any officer of the Trustee within the Corporate Trust Office including any
Vice President, Managing Director, Assistant Vice President, Secretary,
Assistant Secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge and familiarity with the
particular subject.
"Restricted Global Security" has the meaning specified in Section 2.1.
-7-
<PAGE>
"Restricted Period" has the meaning specified in Section 2.1.
"Restricted Securities" has the meaning specified in Section 2.1.
"Restricted Subsidiary" means any Subsidiary of the Company which owns
or leases a Principal Property.
"Rule 144" means Rule 144 under the Securities Act (including any
successor rule thereto), as the same may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (including any
successor rule thereto), as the same may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 11.9.
"Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals."
"Securities Act" means the Securities Act of 1933 (including any
successor act thereto), as it may be amended from time to time, and (unless the
context otherwise requires) includes the rules and regulations of the Commission
promulgated thereunder.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"series" has the meaning specified in Section 3.1.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by the Company, or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries.
"Temporary Regulation S Global Security" has the meaning specified in
Section 2.1.
"Transferee Securities Certification" has the meaning specified in
Section 3.5.
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<PAGE>
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the United States Trust Indenture Act of
1939 (including any successor act thereto), as it may be amended from time to
time, and (unless the context otherwise requires) includes the rules and
regulations of the Commission thereunder.
"U.S. Depository" means DTC until a successor U.S. Depository shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter "U.S. Depository" shall mean such successor U.S. Depository.
"Unrestricted Securities" has the meaning specified in Section 2.1.
"Vice President," when used with respect to the Company, means any
Vice President, whether or not designated by a number or a word or words added
before or after the title "Vice President."
Section 1.2 Compliance Certificates and Opinions; Form of Documents Delivered
-----------------------------------------------------------------
to Trustee.
- ----------
(a) Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
(b) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be
-9-
<PAGE>
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Officer or Officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.3 Acts of Holders of Securities.
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities of either series may be embodied in and evidenced
by (1) one or more instruments of substantially similar tenor signed by such
Holders in person or by agent or proxy duly appointed in writing, (2) the record
of Holders of Securities of such series voting in favor thereof, either in
person or by proxies duly appointed in writing, at any meeting of Holders of
Securities of such series duly called and held in accordance with the provisions
of Article X or (3) a combination of such instruments and any such record.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
of Securities signing such instrument or instruments and so voting at such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 10.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifies that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
-10-
<PAGE>
(c) The principal amount, serial number and ownership of
Securities shall be proven by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of either series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities, provided that the Company may not
--------
set a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities of the applicable
series on such record date, and no other Holders, shall be entitled to take the
relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
--------
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of the applicable series on such record date.
Nothing in this paragraph shall be construed to prevent the Company from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the applicable series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the applicable series in the manner set forth in
Section 1.5.
(f) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of either series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any declaration
of acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities of the applicable series on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
- --------
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of the applicable series on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be canceled and of no
effect), nor shall anything in this paragraph be construed to render ineffective
any action taken by Holders of the requisite principal amount of Outstanding
Securities of the applicable series on the date such action is taken. Promptly
after any record
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<PAGE>
date is set pursuant to this paragraph, the Trustee, at the Company's expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities of the applicable series in the manner set forth in Section
1.5.
(g) With respect to any record date set pursuant to this Section,
the party hereto that sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day, provided that no such change shall be effective unless
--------
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities of the applicable series in the manner
set forth in Section 1.5, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the party hereto that set such record date shall be deemed to
have initially designated the 180th day after such record date as the Expiration
Date with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.4 Notices, Etc.
------------
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders of Securities or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(1) the Trustee by any Holder of Securities or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee and received at its Corporate Trust
Office, Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder of Securities shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing, mailed, first-class postage prepaid, or
telexed or telecopied and confirmed by mail, first-class postage prepaid,
or delivered by hand or overnight courier, addressed to the Company at
Levi's Plaza, 1155 Battery Street, IH1/5, San Francisco, California 94111,
telephone no.: (415) 544-6955; telecopy no.: (415) 544-1342, Attention:
Treasurer, or at any other address previously furnished in writing to the
Trustee by the Company.
Except for a notice to the Trustee, which is deemed given only when
received, if a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
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<PAGE>
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
Section 1.5 Notice to Holders of Securities; Waiver.
---------------------------------------
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his registered address as recorded in the Security
Register. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Holder entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 1.6 Effect of Headines and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.7 Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall
bind its respective successors and assigns, whether so expressed or not.
Section 1.8 Separability Clause.
-------------------
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.9 Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors and
assigns hereunder and the Holders of Securities, any benefit or legal or
equitable right, remedy or claim under this Indenture.
-13-
<PAGE>
Section 1.10 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED
STATES OF AMERICA.
Section 1.11 Legal Holidays.
--------------
In any case where any Interest Payment Date or Stated Maturity of
any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of interest or
principal need not be made on or by such day, but may be made on or by the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or at the Stated Maturity, as the case may be; provided,
--------
however, that in the case that payment is made on such succeeding Business Day,
- -------
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date or Stated Maturity, as the case may be.
Section 1.12 Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture (or would be required to be a part of and
govern this Indenture if this Indenture were required to be qualified under the
Trust Indenture Act), the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
ARTICLE II
SECURITY FORMS
Section 2.1 Forms of Securities Generally.
-----------------------------
The Securities shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depository thereof, the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations thereunder, or as may, consistently
herewith, be determined by the Officers executing such Securities, as evidenced
by their execution thereof. The Company shall approve the form of the Securities
and any notation, legend or endorsement on the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the Officers executing such Securities as evidenced by their execution thereof.
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<PAGE>
In certain cases described elsewhere herein, the legends set forth in
the first four paragraphs of Section 2.2 may be omitted from Securities issued
hereunder.
Securities offered and sold in their initial distribution in reliance
on Regulation S shall be initially issued in the form of temporary Global
Securities, one or more for each series, in fully registered form without
interest coupons, substantially in the form of Security set forth in Sections
2.2 and 2.3 or Sections 2.5 and 2.6, as the case may be, with such applicable
legends as are provided for in Section 2.2 or Section 2.5, as the case may be.
Such Global Securities shall be registered in the name of the U.S. Depository or
its nominee and deposited with the Trustee, at its New York office, as custodian
for the U.S. Depository, duly executed by the Company and authenticated by the
Trustee as hereinafter provided, for credit to the respective accounts at the
U.S. Depository of the depositories for Morgan Guaranty Trust Company of New
York, Brussels office, as operator of Euroclear, or CEDEL. Until such time as
the Restricted Period (as defined below) shall have terminated, such temporary
Global Securities shall be referred to herein as "Temporary Regulation S Global
Securities." Until such time as the Restricted Period shall have terminated,
investors may hold beneficial interests in such Global Securities only through
Euroclear and CEDEL, unless delivery of such beneficial interest shall be made
through a Restricted Global Security in accordance with the certification
requirements discussed below in Section 3.5(b)(5). After such time as the
Restricted Period shall have terminated, such certification requirements shall
no longer be required for such transfers. After such time as the Restricted
Period shall have terminated and the certifications referred to below in the
next succeeding paragraph shall have been provided, such temporary Global
Securities shall be exchanged for interests in like Global Securities, referred
to herein collectively as the "Regulation S Global Securities," substantially in
the form of Security set forth in Section 2.2 and 2.3 or Sections 2.5 and 2.6,
as the case may be, with such applicable legends as are provided for in Section
2.2 or Section 2.5, as the case may be. As used herein, the term "Restricted
Period" means the period up to (but not including) the 40th day following the
later of (i) the day that Goldman, Sachs & Co., as representative of the several
initial purchasers of the Securities, advises the Company and the Trustee of the
day on which the Securities are first offered to persons other than distributors
(as defined in Regulation S) in reliance on Regulation S and (ii) November 6,
1996. The Temporary Regulation S Global Securities, Regulation S Global
Securities following the Restricted Period and all other Securities that are not
Restricted Securities shall collectively be referred to herein as the
"Unrestricted Securities."
Interests in a Temporary Regulation S Global Security may be exchanged
for interests in a Regulation S Global Security of the same series only on or
after the termination of the Restricted Period after delivery by a beneficial
owner of an interest therein to Euroclear or CEDEL of a written certification
(an "Owner Securities Certification") substantially in the form of Annex C-1
hereto, and upon delivery by Euroclear or CEDEL to the Trustee of a written
certification (a "Depository Securities Certification") substantially in the
form attached hereto as Annex C-2. Upon receipt of such certification, the
Trustee will exchange the portion of the Temporary Regulation S Global Security
covered by such certification for interests in a Regulation S Global Security of
the same series.
Securities offered and sold in their initial distribution in reliance
on Rule 144A shall be issued in the form of Global Securities, one or more for
each series (collectively, as to each series, the "Restricted Global Security"),
in fully registered form without interest coupons,
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<PAGE>
substantially in the form of Security set forth in Sections 2.2 and 2.3 or
Sections 2.5 and 2.6, as the case may be, with such applicable legends as are
provided for in Section 2.2 or Section 2.5, as the case may be, except as
otherwise permitted herein. Such Global Securities shall be registered in the
name of the U.S. Depository or its nominee and deposited with the Trustee, at
its New York office, as custodian for the U.S. Depository, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of a Restricted Global Security may be increased or decreased
from time to time by adjustments made on the records of the Trustee, as
custodian for the U.S. Depository, in connection with a corresponding decrease
or increase in the aggregate principal amount of the Temporary Regulation S
Global Security or Regulation S Global Security each of the same series, as the
case may be, as hereinafter provided. The Restricted Global Securities and all
other Securities evidencing the debt, or any portion of the debt, initially
evidenced by such Global Securities, other than Securities transferred or
exchanged upon certification as provided in Section 3.5(b)(3), (4) or (7), shall
collectively be referred to herein as the "Restricted Securities."
The Securities will be issued only in registered form. The
Securities will be issued in minimum denominations of $1,000, as provided in
Section 3.2, except that Securities offered other than in reliance on Regulation
S or to Qualified Institutional Buyers will be issued only in definitive
certificated form and will be issued initially in minimum denominations of
$100,000 and integral multiples of $1,000 in excess thereof. Such Securities
(i.e., Securities sold to Institutional Accredited Investors) will also be
considered to be Restricted Securities hereunder.
Section 2.2 Form of Face of 6.80% Notes.
---------------------------
[INCLUDE IF SECURITY IS A TEMPORARY REGULATION S GLOBAL
SECURITY - THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. EXCEPT IN THE CIRCUMSTANCES
DESCRIBED IN SECTION 3.5(b) OF THE INDENTURE, NO TRANSFER OR EXCHANGE OF AN
INTEREST IN THIS TEMPORARY GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN THE
RESTRICTED GLOBAL SECURITY. NO EXCHANGE OF AN INTEREST IN THIS TEMPORARY GLOBAL
SECURITY MAY BE MADE FOR AN INTEREST IN THE REGULATION S GLOBAL SECURITY EXCEPT
ON OR AFTER THE TERMINATION OF THE RESTRICTED PERIOD AND UPON DELIVERY OF THE
OWNER SECURITIES CERTIFICATION AND THE DEPOSITORY SECURITIES CERTIFICATION
RELATING TO SUCH INTEREST IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.]
[INCLUDE IF SECURITY IS A RESTRICTED SECURITY - THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (I) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF
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<PAGE>
REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE AND, IN
ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY - THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITORY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY AND THE DEPOSITORY TRUST
COMPANY IS THE U.S. DEPOSITORY - UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), A NEW YORK
CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CEDE &
CO. (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
-17-
<PAGE>
LEVI STRAUSS & CO.
6.80% NOTES
DUE NOVEMBER 1, 2003
No. U.S.$
CUSIP No.:
LEVI STRAUSS & CO., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture referred
to on the reverse hereof), for value received, hereby promises to pay to
_______, or registered assigns, the principal sum of _______ U.S. Dollars, [or
such other amount (not to exceed three hundred fifty million dollars
($350,000,000) when taken together with all of the Company's 6.80% Notes due
November 1, 2003 issued and outstanding in definitive certificated form or in
the form of another Global Security) as may from time to time represent the
principal amount of the Company's 6.80% Notes due November 1, 2003 in respect of
which beneficial interests are held through the U.S. Depository in the form of a
[Restricted] [Temporary Regulation S Global Security or a Regulation S] Global
Security,] -[omit from Non-Global Securities] on November 1, 2003, and to pay
interest thereon from November 1, 1996 or from the most recent Interest Payment
Date (as defined below) to which interest has been paid or duly provided for,
semi-annually in arrears on May 1 and November 1 in each year, commencing on May
1, 1997, and at Maturity at the rate of 6.80% per annum, until the principal
hereof is paid or made available for payment, provided that any amount of such
--------
principal or interest that is overdue shall bear interest at the rate of 6.80%
per annum (to the extent that payment of such interest shall be legally
enforceable), from the date such amount is due until it is paid or made
available for payment, and such interest on any overdue amount shall be payable
on demand. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice thereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of and interest on this Security will be
made in immediately available funds, and in the case of payment of principal
against presentation and surrender of this Security by the Holder thereof, and
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, at the office
or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, which the Company has initially designated as
the office of the Trustee, 111 Wall Street, 5th Floor, New York, New York 10043,
or, at the option of the Holder and subject to any fiscal or other laws and
regulations, at any other office or agency maintained by
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<PAGE>
the Company for such purpose; provided, however, that upon written application
-------- -------
(including wire payment instructions) by the Holder to the Security Registrar
not later than the 10th day immediately preceding the relevant Regular Record
Date, such Holder may receive payment by wire transfer to a U.S. Dollar account
(such transfers to be made only to Holders of an aggregate principal amount in
excess of U.S.$1,000,000) maintained by the payee with a bank in The City of New
York; and, provided, further, that, subject to the preceding proviso, payment of
-------- -------
interest may, at the option of the Company, be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register. Unless such designation is revoked, any such designation made
by the Holder with respect to this Security will remain in effect with respect
to future payments with respect to this Security payable to the Holder. The
Company will pay any administrative costs imposed by banks in connection with
making any such payments upon application of such Holder for reimbursement. If
this Security is a Global Security, then, notwithstanding the second sentence of
this paragraph, each such payment will be made in accordance with the procedures
of the U.S. Depository as then in effect.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by the manual signature of one of
its authorized signatories, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
LEVI STRAUSS & CO.
[Corporate Seal] By_______________________________
Title:
By_______________________________
Title:
Attest:
____________________________
Title:
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: CITIBANK, N.A., as Trustee
By:___________________________
Authorized Signatory
Section 2.3 Form of Reverse of 6.80% Notes.
------------------------------
This Security is one of a duly authorized issue of securities of
the Company designated as its "6.80% Notes due November 1, 2003" (herein called
the "6.80% Notes"), limited in aggregate principal amount to U.S.$350,000,000,
issued and to be issued under an Indenture, dated as of November 6, 1996 (herein
called the "Indenture") between the Company and Citibank, N.A., as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the 6.80% Notes and of the terms upon which the 6.80% Notes are, and
are to be, authenticated and delivered.
No sinking fund is provided for in the 6.80% Notes. The 6.80% Notes
may not be redeemed at the option of the Company.
In any case where the due date for the payment of the principal of,
or interest on, any 6.80% Note shall be, at any place of payment, a day on which
banking institutions at such place of payment are authorized or obligated by law
or executive order to close, then payment of principal or interest need not be
made on or by such date at such place but may be made on or by the next
succeeding day at such place which is not a day on which banking institutions
are authorized or obligated by law or executive order to close, with the same
force and effect as if made on the date for such payment or the date fixed for
redemption or repurchase, or at the Stated Maturity, and no interest shall
accrue for the period after such date.
Subject to certain limitations in the Indenture, at any time when
the Company is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, as amended, upon the request of a Holder of a
Restricted Security, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder of Restricted
Securities, or to a prospective purchaser of any such security designated by any
such Holder or holder, as the case may be, to the extent required to permit
compliance by any such holder with Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"). "Rule 144A Information" shall be such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto).
If an Event of Default shall occur and be continuing, the principal
of all the 6.80% Notes may be declared due and payable to the extent, in the
manner and with the effect provided in the Indenture. Upon payment (i) of the
amount of principal so declared due and payable and
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<PAGE>
(ii) of interest on any overdue principal and overdue interest, all of the
Company's obligations in respect of the payment of the principal of and interest
on the 6.80% Notes shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the 6.80% Notes under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of a majority in principal amount of the 6.80% Notes at the time
Outstanding, or (b) by the adoption of a resolution, at a meeting of Holders of
the Outstanding 6.80% Notes at which a quorum is present, by the Holders of 66-
2/3% in aggregate principal amount of the Outstanding 6.80% Notes represented at
such meeting. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the 6.80% Notes at the time
Outstanding, on behalf of the Holders of all the 6.80% Notes, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this 6.80% Note shall be conclusive and binding upon
such Holder and upon all future Holders of this 6.80% Note and of any 6.80% Note
issued in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this 6.80% Note or such other 6.80% Note.
As provided in and subject to the provisions of the Indenture, the
Holder of this 6.80% Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in aggregate principal amount of the Outstanding 6.80% Notes shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default and offered the Trustee indemnity satisfactory to it and
the Trustee shall not have received from the Holders of a majority in principal
amount of the 6.80% Notes Outstanding a direction inconsistent with such request
and shall have failed to institute any such proceedings for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this 6.80% Note for the
enforcement of any payment of principal hereof or interest hereon on or after
the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this 6.80%
Note or of the Indenture shall alter or impair the obligations of the Company,
which are absolute and unconditional, to pay the principal of and interest on
this 6.80% Note at the times, places and rate, and in the coin or currency,
herein prescribed.
The 6.80% Notes are issuable only in fully registered form, without
exception, and, except as provided in Section 2.1 of the Indenture, in
denominations of $1,000 and any integral multiples of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations and satisfaction
of certain requirements therein set forth, 6.80% Notes are exchangeable for a
like aggregate principal amount of securities of the same or a different
authorized denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations and
satisfaction of certain requirements therein set forth, the transfer of this
6.80% Note is registrable on the Security Register upon surrender of this 6.80%
Note for registration of transfer at the office or
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<PAGE>
agency of the Company as may be designated by it for such purpose in the Borough
of Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new 6.80% Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
recover any tax or other governmental charge payable in connection therewith.
Prior to due presentation of this 6.80% Note for registration of
transfer the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such 6.80% Note is registered, as the owner
thereof for all purposes, whether or not such 6.80% Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THE INDENTURE AND THE 6.80% NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED
STATES OF AMERICA.
All terms used in this 6.80% Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
Section 2.4 Form of Trustee's Certificate of Authentication of 6.80% Notes.
--------------------------------------------------------------
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: CITIBANK, N.A., as Trustee
By:______________________________
Authorized Signatory
Section 2.5 Form of Face of 7.00% Notes.
---------------------------
[INCLUDE IF SECURITY IS A TEMPORARY REGULATION S GLOBAL
SECURITY - THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. EXCEPT IN THE CIRCUMSTANCES
DESCRIBED IN SECTION 3.5(b) OF THE INDENTURE, NO TRANSFER OR EXCHANGE OF AN
INTEREST IN THIS TEMPORARY GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN THE
RESTRICTED GLOBAL SECURITY. NO EXCHANGE OF AN INTEREST IN THIS TEMPORARY GLOBAL
SECURITY MAY BE MADE FOR AN INTEREST IN THE REGULATION S GLOBAL SECURITY EXCEPT
ON OR AFTER THE TERMINATION OF THE RESTRICTED PERIOD AND UPON DELIVERY OF THE
OWNER SECURITIES CERTIFICATION AND THE DEPOSITORY SECURITIES CERTIFICATION
RELATING TO SUCH INTEREST IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.
-22-
<PAGE>
[INCLUDE IF SECURITY IS A RESTRICTED SECURITY - THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (I) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A)
ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES.
[INCLUDE IF SECURITY IS A GLOBAL SECURITY - THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITORY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY AND THE DEPOSITORY TRUST
COMEPANY IS THE U.S. DEPOSITORY - UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), A NEW YORK
CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CEDE &
CO. (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
-23-
<PAGE>
LEVI STRAUSS & CO.
7.00% NOTES
DUE NOVEMBER 1, 2006
No. U.S.$
CUSIP No.:
LEVI STRAUSS & CO., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture referred
to on the reverse hereof), for value received, hereby promises to pay to
________, or registered assigns, the principal sum of ________ U.S. Dollars, [or
such other amount (not to exceed four hundred fifty million dollars
($450,000,000) when taken together with all of the Company's 7.00% Notes due
November 1, 2006 issued and outstanding in definitive certificated form or in
the form of another Global Security) as may from time to time represent the
principal amount of the Company's 7.00% Notes due November 1, 2006 in respect of
which beneficial interests are held through the U.S. Depository in the form of a
[Restricted] [Temporary Regulation S Global Security or a Regulation S] Global
Security,] -[omit from Non-Global Securities] on November 1, 2006, and to pay
interest thereon from November 1, 1996 or from the most recent Interest Payment
Date (as defined below) to which interest has been paid or duly provided for,
semi-annually in arrears on May 1 and November 1 in each year, commencing on May
1, 1997, and at Maturity at the rate of 7.00% per annum, until the principal
hereof is paid or made available for payment, provided that any amount of such
--------
principal or interest that is overdue shall bear interest at the rate of 7.00%
per annum (to the extent that payment of such interest shall be legally
enforceable), from the date such amount is due until it is paid or made
available for payment, and such interest on any overdue amount shall be payable
on demand. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice thereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of and interest on this Security will be
made in immediately available funds, and in the case of payment of principal
against presentation and surrender of this Security by the Holder thereof, and
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, at the office
or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, which the Company has initially designated as
the office of the Trustee, 111 Wall Street, 5th Floor, New York, New York 10043,
or, at the option of the Holder and subject to any fiscal or other laws and
regulations, at any other office or agency maintained by
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<PAGE>
the Company for such purpose; provided, however, that upon written application
-------- -------
(including wire payment instructions) by the Holder to the Security Registrar
not later than the 10th day immediately preceding the relevant Regular Record
Date, such Holder may receive payment by wire transfer to a U.S. Dollar account
(such transfers to be made only to Holders of an aggregate principal amount in
excess of U.S.$1,000,000) maintained by the payee with a bank in The City of New
York; and, provided, further, that, subject to the preceding proviso, payment of
-------- -------
interest may, at the option of the Company, be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register. Unless such designation is revoked, any such designation made
by the Holder with respect to this Security will remain in effect with respect
to future payments with respect to this Security payable to the Holder. The
Company will pay any administrative costs imposed by banks in connection with
making any such payments upon application of such Holder for reimbursement. If
this Security is a Global Security, then, notwithstanding the second sentence of
this paragraph, each such payment will be made in accordance with the procedures
of the U.S. Depository as then in effect.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by the manual signature of one of
its authorized signatories, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
LEVI STRAUSS & CO.
[Corporate Seal] By___________________________
Title:
By___________________________
Title:
Attest:
____________________________
Title:
-25-
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: CITIBANK, N.A., as Trustee
By:____________________________
Authorized Signatory
Section 2.6 Form of Reverse of 7.00% Notes.
------------------------------
This Security is one of a duly authorized issue of securities of
the Company designated as its "7.00% Notes due November 1, 2006" (herein called
the "7.00% Notes"), limited in aggregate principal amount to U.S.$450,000,000,
issued and to be issued under an Indenture, dated as of November 6, 1996 (herein
called the "Indenture") between the Company and Citibank, N.A., as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the 7.00% Notes and of the terms upon which the 7.00% Notes are, and
are to be, authenticated and delivered.
No sinking fund is provided for in the 7.00% Notes. The 7.00%
Notes may not be redeemed at the option of the Company.
In any case where the due date for the payment of the principal
of, or interest on, any 7.00% Note shall be, at any place of payment, a day on
which banking institutions at such place of payment are authorized or obligated
by law or executive order to close, then payment of principal or interest need
not be made on or by such date at such place but may be made on or by the next
succeeding day at such place which is not a day on which banking institutions
are authorized or obligated by law or executive order to close, with the same
force and effect as if made on the date for such payment or the date fixed for
redemption or repurchase, or at the Stated Maturity, and no interest shall
accrue for the period after such date.
Subject to certain limitations in the Indenture, at any time when
the Company is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, as amended, upon the request of a Holder of a
Restricted Security, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder of Restricted
Securities, or to a prospective purchaser of any such security designated by any
such Holder or holder, as the case may be, to the extent required to permit
compliance by any such holder with Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"). "Rule 144A Information" shall be such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto).
If an Event of Default shall occur and be continuing, the
principal of all the 7.00% Notes may be declared due and payable to the extent,
in the manner and with the effect provided in the Indenture. Upon payment (i) of
the amount of principal so declared due and payable and
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<PAGE>
(ii) of interest on any overdue principal and overdue interest, all of the
Company's obligations in respect of the payment of the principal of and interest
on the 7.00% Notes shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the 7.00% Notes
under the Indenture at any time by the Company and the Trustee with either (a)
the written consent of the Holders of a majority in principal amount of the
7.00% Notes at the time Outstanding, or (b) by the adoption of a resolution, at
a meeting of Holders of the Outstanding 7.00% Notes at which a quorum is
present, by the Holders of 66-2/3% in aggregate principal amount of the
Outstanding 7.00% Notes represented at such meeting. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the 7.00% Notes at the time Outstanding, on behalf of the Holders of all the
7.00% Notes, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this 7.00% Note shall be conclusive
and binding upon such Holder and upon all future Holders of this 7.00% Note and
of any 7.00% Note issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this 7.00% Note or such other
7.00% Note.
As provided in and subject to the provisions of the Indenture,
the Holder of this 7.00% Note shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default,
the Holders of not less than 25% in aggregate principal amount of the
Outstanding 7.00% Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default and offered the
Trustee indemnity satisfactory to it and the Trustee shall not have received
from the Holders of a majority in principal amount of the 7.00% Notes
Outstanding a direction inconsistent with such request and shall have failed to
institute any such proceedings for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this 7.00% Note for the enforcement of any payment of principal
hereof or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
7.00% Note or of the Indenture shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this 7.00% Note at the times, places and rate, and in the coin or
currency, herein prescribed.
The 7.00% Notes are issuable only in fully registered form,
without exception, and, except as provided in Section 2.1 of the Indenture, in
denominations of $1,000 and any integral multiples of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations and satisfaction
of certain requirements therein set forth, 7.00% Notes are exchangeable for a
like aggregate principal amount of securities of the same or a different
authorized denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
and satisfaction of certain requirements therein set forth, the transfer of this
7.00% Note is registrable on the Security Register upon surrender of this 7.00%
Note for registration of transfer at the office or
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<PAGE>
agency of the Company as may be designated by it for such purpose in the Borough
of Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new 7.00% Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
recover any tax or other governmental charge payable in connection therewith.
Prior to due presentation of this 7.00% Note for registration of
transfer the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such 7.00% Note is registered, as the owner
thereof for all purposes, whether or not such 7.00% Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THE INDENTURE AND THE 7.00% NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED
STATES OF AMERICA.
All terms used in this 7.00% Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
Section 2.7 Form of Trustee's Certificate of Authentication of 7.00% Notes.
--------------------------------------------------------------
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: CITIBANK, N.A., as Trustee
By:_______________________________
Authorized Signatory
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<PAGE>
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms.
---------------
The Securities shall be issued in two series and shall be known
and designated as the "6.80% Notes due November 1, 2003" and the "7.00% Notes
due November 1, 2006" of the Company. The aggregate principal amount of 6.80%
Notes which may be authenticated and delivered under this Indenture is limited
to U.S.$350,000,000 and the aggregate principal amount of 7.00% Notes which may
be authenticated and delivered under the Indenture is limited to
U.S.$450,000,000, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Sections 3.4, 3.5, 3.6 or 9.6. Each of the two series (each, a
"series") of the Securities issued hereunder shall be treated separately for
purposes of the acts of Holders permitted or required hereunder, the giving of
waivers or consents by Holders, Events of Default and accelerations of the
respective series, registrations of transfer and exchange of Securities,
replacement of Securities, and all other events and actions hereunder as to
which the interests of the Holders of the separate series of the Securities may
differ or it is otherwise appropriate to treat such series separately, whether
or not express mention is made of such separate treatment in a particular
context.
The Stated Maturity of the 6.80% Notes shall be November 1, 2003
and they shall bear interest at the rate of 6.80% per annum from November 1,
1996 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable semiannually in arrears
on May 1 and November 1 of each year, commencing May 1, 1997, and at Maturity,
until the principal thereof is paid or made available for payment, provided
--------
that any amount of such principal or interest that is overdue shall bear
interest at the rate of 6.80% per annum (to the extent that payment of such
interest shall be legally enforceable), from the date such amount is due until
it is paid or made available for payment, and such interest on any overdue
amount shall be payable on demand. The Stated Maturity of the 7.00% Notes shall
be November 1, 2006 and they shall bear interest at the rate of 7.00% per annum
from November 1 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, as the case may be, payable semi-annually in
--------
arrears on May 1 and November 1 of each year, commencing May 1, 1997, and at
Maturity, until the principal thereof is paid or made available for payment,
provided that any amount of such principal or interest that is overdue shall
bear interest at the rate of 7.00% per annum (to the extent that payment of such
interest shall be legally enforceable), from the date such amount is due until
it is paid or made available for payment, and such interest on any overdue
amount shall be payable on demand.
The principal of and interest on the Securities shall be payable
in immediately available funds and in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts, at the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York or, at the option of the Holder and subject to
any fiscal or other laws and regulations applicable thereto, at any other office
of the Trustee or any Paying Agent outside The City of New York; provided,
--------
however, that upon application (including wire payment instructions) by the
- -------
Holder to the Trustee not later than the
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<PAGE>
relevant Regular Record Date, such Holder may receive payment by wire transfer
to a U.S. Dollar account (such transfers to be made only to Holders of an
aggregate principal amount in excess of U.S.$1,000,000) maintained by the payee
with a bank in The City of New York, New York; and provided, further, that,
-------- -------
subject to the preceding proviso, payment of interest may, at the option of the
Company, be made by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register. Unless such designation
is revoked, any such designation made by such Holder with respect to such
Security will remain in effect with respect to any future payments with respect
to such Security payable to such Holder. The Company will pay any administrative
costs imposed by banks in connection with making such payments, upon application
by the relevant Holder. Notwithstanding the second sentence of this paragraph,
each payment of principal and interest in respect of a Global Security will be
made in accordance with the procedures of the U.S. Depository as then in effect.
Section 3.2 Denominations.
-------------
The Securities shall be issuable only in registered form without
coupons and, except as provided in Section 2.1, only in denominations of $1,000
and any integral multiple of $1,000 in excess thereof.
Section 3.3 Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by any
two of the following persons: its Chairman of the Board, its Chief Executive
Officer, its President, or any of its Vice Presidents, under a facsimile of its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of
individuals who were at any time the proper Officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with such Company Order shall authenticate and make available for delivery such
Securities as in this Indenture provided and not otherwise. In connection with
any Company Order for authentication, a compliance certificate and Opinion of
Counsel pursuant to Section 1.2 shall not be required.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee or the Authenticating Agent by manual signature of an
authorized signatory, and such certificate upon such Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder.
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<PAGE>
Section 3.4 Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the Officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
11.2, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of the same series of those
surrendered of authorized denominations. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
Section 3.5 Registration, Registration of Transfer and Exchange; Restrictions
-----------------------------------------------------------------
on Transfer.
-----------
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency designated pursuant to Section 11.2 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided. Upon surrender for
registration of transfer of any Security at an office or agency of the Company
designated pursuant to Section 11.2 for such purpose, and subject to the other
provisions of this Section 3.5, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in the name of the designated
transferee or transferees, one or more new Securities of the same series of
those surrendered of any authorized denominations and of a like aggregate
principal amount.
At the option of the Holder, and subject to the other provisions
of this Section 3.5, Securities may be exchanged for other Securities of the
same series of those surrendered of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
and subject to the other provisions of this Section 3.5, the Company shall
execute, and the Trustee shall authenticate and make available for delivery, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and subject to the other
-31-
<PAGE>
provisions of this Section 3.5, entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.4.
(b) Notwithstanding any other provisions of this Indenture or the
Securities (but subject to Section 2.1), transfers of a Global Security, in
whole or in part, transfers and exchanges of interests therein of the kinds
described in clauses (3), (4), (5), (6), (7) and (8) below and exchanges of
interests in Global Securities shall be made only in accordance with this
Section 3.5(b). Transfers and exchanges subject to this Section 3.5 shall also
be subject to the other provisions of this Indenture that are not inconsistent
with this Section 3.5.
(1) Limitation on Transfers of a Global Security. A Global
--------------------------------------------
Security may not be transferred, in whole or in part, to any Person
other than the U.S. Depository or a nominee thereof, and no such
transfer to any such other Person may be registered; provided that this
--------
clause (1) shall not prohibit any transfer of a Security that is issued
in exchange for a Global Security but is not itself a Global Security.
No transfer of a Security to any Person shall be effective under this
Indenture or the Securities unless and until such Security has been
registered in the name of such Person. Nothing in this Section
3.5(b)(1) shall prohibit or render ineffective any transfer of a
beneficial interest in a Global Security effected in accordance with
the other provisions of this Section 3.5(b).
(2) Temporary Regulation S Global Security. After the Restricted
--------------------------------------
Period, if the holder of a beneficial interest in a Temporary
Regulation S Global Security wishes to transfer such interest to a
Person who wishes to take delivery thereof in the form of a beneficial
interest in such Temporary Regulation S Global Security, such transfer
may be effected, subject to the rules and procedures of the Depository,
Euroclear and CEDEL, in each case to the extent applicable and as in
effect from time to time (the "Applicable Procedures"), only in
accordance with this Section 3.5(b)(2). Upon delivery (a) by a
beneficial owner of an interest in a Temporary Regulation S Global
Security to Euroclear or CEDEL, as the case may be, of an Owner
Securities Certification, (b) by the transferee of such beneficial
interest in the Temporary Regulation S Global Security to Euroclear or
CEDEL, as the case may be, of a written certification (a `Transferee
Securities Certification") substantially in the form of Annex C-3
hereto and (c) by Euroclear or CEDEL, as the case may be, to the
Trustee, as Security Registrar, of a Depository Securities
Certification, the Trustee may direct either Euroclear or CEDEL, as the
case may be, to reflect on its records the transfer of a beneficial
interest in the Temporary
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<PAGE>
Regulation S Global Security from the beneficial owner providing the
Owner Securities Certification to the Person providing the Transferee
Securities Certification.
(3) Restricted Global Security to Temporary Regulation S Global
-----------------------------------------------------------
Security. If the holder of a beneficial interest in the Restricted
--------
Global Security wishes at any time to transfer such interest to a
Person who wishes to take delivery thereof in the form of a beneficial
interest in the Temporary Regulation S Global Security of the same
series, such transfer may be effected, subject to the Applicable
Procedures, only in accordance with the provisions of this Section
3.5(b)(3). Upon receipt by the Trustee, as Security Registrar, at its
office in The City of New York of (A) written instructions given in
accordance with the Applicable Procedures from a member of, or
participant in, the U.S. Depository ("Agent Members") directing the
Trustee to credit or cause to be credited to a specified Agent Member's
account a beneficial interest in the Temporary Regulation S Global
Security in a principal amount equal to that of the beneficial interest
in the Restricted Global Security of the Same series to be so
transferred, (B) a written order given in accordance with the
Applicable Procedures containing information regarding the account of
the Agent Member (and the Euroclear or CEDEL account, as the case may
be) to be credited with, and the account of the Agent Member to be
debited for, such beneficial interest and (C) a certificate in
substantially the form set forth in Annex A-1 given by the holder of
such beneficial interest, the Trustee, as Security Registrar, shall
instruct the U.S. Depository to reduce the principal amount of the
applicable Restricted Global Security, and to increase the principal
amount of the Temporary Regulation S Global Security of the same
series, by the principal amount of the beneficial interest in the
Restricted Global Security to be so transferred, and to credit or cause
to be credited to the account of the Person specified in such
instructions (which shall be the Agent Member for Euroclear or CEDEL or
both, as the case may be) a beneficial interest in the Temporary
Regulation S Global Security of the same series having a principal
amount equal to the amount by which the principal amount of the
Restricted Global Security was reduced upon such transfer.
(4) Restricted Global Security to Regulation S Global Security.
----------------------------------------------------------
If the holder of a beneficial interest in a Restricted Global Security
wishes at any time to transfer such interest to a Person who wishes to
take delivery thereof in the form of a beneficial interest in the
Regulation S Global Security of the same series, such transfer may be
effected, subject to the Applicable Procedures, only in accordance with
this Section 3.5(b)(4). Upon receipt by the Trustee, as Security
Registrar, at its office in The City of New York of (A) written
instructions given in accordance with the Applicable Procedures from an
Agent Member directing the Trustee to credit or cause to be credited to
a specified Agent Member's account a beneficial interest in a
Regulation S Global Security in a principal amount equal to that of the
beneficial interest in the Restricted Global Security of the same
series to be so transferred, (B) a written order given in accordance
with the Applicable Procedures containing information regarding the
account of the Agent Member (and, if applicable, the Euroclear or CEDEL
account, as the case may be) to be credited with, and the account of
the Agent Member to be debited for, such beneficial interest and (C) a
certificate in substantially the form set forth in Annex A-2 given by
the holder of such beneficial interest, the Trustee, as Security
Registrar, shall instruct the U.S. Depository to reduce the principal
amount of the applicable Restricted Global
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Security, and to increase the principal amount of the Regulation S
Global Security of the same series, by the principal amount of the
beneficial interest in the Restricted Global Security to be so
transferred, and to credit or cause to be credited to the account of
the Person specified in such instructions (which during the Restricted
Period shall be the Agent Member for Euroclear or CEDEL or both, as the
case may be) a beneficial interest in the Regulation S Global Security
of the same series having a principal amount equal to the amount by
which the principal amount of the Restricted Global Security was
reduced upon such transfer.
(5) Temporary Regulation S Global Security or Regulation S
------------------------------------------------------
Global Security to Restricted Global Security. If the holder of a
---------------------------------------------
beneficial interest in a Temporary Regulation S Global Security or a
Regulation S Global Security wishes at any time to transfer such
interest to a Person who wishes to take delivery thereof in the form of
a beneficial interest in the Restricted Global Security of the same
series, such transfer may be effected, subject to the Applicable
Procedures, only in accordance with this Section 3.5(b)(5). Upon
receipt by the Trustee, as Security Registrar, at its office in The
City of New York of (A) written instructions given in accordance with
the Applicable Procedures from an Agent Member directing the Trustee to
credit or cause to be credited to a specified Agent Member's account a
beneficial interest in a Restricted Global Security in a principal
amount equal to that of the beneficial interest in the Temporary
Regulation S Global Security or the Regulation S Global Security of the
same series to be so transferred, (B) a written order given in
accordance with the Applicable Procedures containing information
regarding the account of the Agent Member to be credited with, and the
account of the Agent Member (and, if applicable, the Euroclear or CEDEL
account, as the case may be) to be debited for, such beneficial
interest and (C) a certificate in substantially the form set forth in
Annex B given by the holder of such beneficial interest, the Trustee,
as Security Registrar, shall instruct the U.S. Depository to reduce the
principal amount of the applicable Temporary Regulation S Global
Security or the Regulation S Global Security, as the case may be, and
to increase the principal amount of the Restricted Global Security of
the same series, by the principal amount of the beneficial interest in
the Temporary Regulation S Global Security or the Regulation S Global
Security to be so transferred, and to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial
interest in the Restricted Global Security of the same series having a
principal amount equal to the amount by which the principal amount of
the Temporary Regulation S Global Security or the Regulation S Global
Security, as the case may be, was reduced upon such transfer.
(6) Non-Global Restricted Security to Global Security. If the
-------------------------------------------------
holder of a Restricted Security (other than a Global Security) wishes
at any time to transfer all or a portion of such Security to a Person
who wishes to take delivery thereof in the form of a beneficial
interest in the Restricted Global Security, the Temporary Regulation S
Global Security or the Regulation S Global Security, in each case of
the same series, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this Section 3.5(b)(6).
Upon receipt by the Trustee, as Security Registrar, at its office in
The City of New York of (A) such Security and written instructions
given in accordance with the Applicable Procedures from an Agent Member
directing the Trustee to credit or cause to be credited to a specified
Agent Member's account a beneficial interest in the
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Restricted Global Security, the Temporary Regulation S Global Security
or the Regulation S Global Security, as the case may be, in a specified
principal amount equal to the principal amount of the Restricted
Security (or portion thereof) of the same series to be so transferred,
and (B) an appropriately completed certificate substantially in the
form set forth in Annex D-1 hereto, if the specified account is to be
credited with a beneficial interest in a Restricted Global Security, or
Annex D-2 hereto, if the specified account is to be credited with a
beneficial interest in the Temporary Regulation S Global Security or
the Regulation S Global Security, given by the holder of such
beneficial interest, the Trustee, as Security Registrar, shall cancel
such Restricted Security (and issue a new Security in respect of any
untransferred portion thereof) as provided in Section 3.5(a) and
increase the principal amount of the Restricted Global Security,
Temporary Regulation S Global Security or Regulation S Global Security,
as the case may be, in each case of the same series, by the specified
principal amount as provided in Section 3.5(d)(3).
(7) Exchanges. In the event that a Restricted Global Security or
---------
any portion thereof is exchanged for a Regulation S Global Security or
Securities of the same series other than Global Securities, such other
Securities may in turn be exchanged (on transfer or otherwise) for
Securities of the same series that are not Global Securities or for
beneficial interests in a Global Security of the same series (if any is
then outstanding) only in accordance with such procedures, which shall
be substantially consistent with the provisions of clauses (1) through
(6) above and (8) below (including the certification requirements
intended to insure that transfers and exchanges of beneficial interests
in a Global Security comply with Rule 144A, Rule 144 or Regulation S,
as the case may be) and any Applicable Procedures, as may be from time
to time adopted by the Company and the Trustee.
(8) Interests in Temporary Regulation S Global Through Euroclear
------------------------------------------------------------
or CEDEL. Until the termination of the Restricted Period, interests in
--------
the Temporary Regulation S Global Securities may be held only through
Agent Members acting for and on behalf of Euroclear and CEDEL, provided
--------
that this Clause (8) shall not prohibit any transfer in accordance with
Section 3.5(b)(5) hereof.
(9) Certain Initial Transfers of Non-Global Securities. In the
--------------------------------------------------
case of Securities initially issued other than in global form, an
initial transfer or exchange of such Securities that does not involve
any change in beneficial ownership may be made to an Institutional
Accredited Investor or Investors as if such transfer or exchange were
not an initial transfer or exchange.
(c) Each Restricted Security and Global Security issued
hereunder shall, upon issuance, bear the legends required by Section 2.2 or
Section 2.5, as the case may be, to be applied to such a Security and such
required legends shall not be removed from such Security except as provided in
the next sentence or paragraph (d) of this Section 3.5. The legend required for
a Restricted Security may be removed from a Security if there is delivered to
the Company such satisfactory evidence, which may include an opinion of
independent counsel licensed to practice law in the State of New York, as may be
reasonably required by the Company that neither such legend nor the restrictions
on transfer set forth therein are required to ensure that
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<PAGE>
transfers of such Security will not violate the registration requirements of the
Securities Act. Upon provision of such satisfactory evidence, the Trustee, at
the written direction of the Company, shall authenticate and deliver in exchange
for such Security another Security or Securities of the same series having an
equal aggregate principal amount that does not bear such legend. If such a
legend required for a Restricted Security has been removed from a Security as
provided above, no other Security issued in exchange for all or any part of such
Security shall bear such legend, unless the Company has reasonable cause to
believe that such other Security is a "restricted security" within the meaning
of Rule 144 and instructs the Trustee in writing to cause a legend to appear
thereon.
(d) The provisions of clauses (1), (2), (3) and (4) below shall
apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the U.S. Depository or a nominee
thereof and delivered to such U.S. Depository or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a
single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture or the
Securities, no Global Security may be exchanged in whole or in part for
Securities registered, and no transfer of a Global Security in whole or
in part may be registered, in the name of any Person other than the
U.S. Depository or a nominee thereof unless (A) the U.S. Depository (i)
has notified the Company that it is unwilling or unable to continue as
U.S. Depository for such Global Security or (ii) has ceased to be a
clearing agency registered under the Exchange Act, (B) in the case of a
Global Security held for an account of Euroclear or CEDEL, Euroclear or
CEDEL, as the case may be, (i) is closed for business for a continuous
period of 14 days (other than by reason of statutory or other holidays)
or (ii) announces an intention permanently to cease business or does in
fact do so, (C) there shall have occurred and be continuing an Event of
Default with respect to such Global Security or (D) a request for
certificates has been made upon 60 days' prior written notice given to
the Trustee in accordance with the U.S. Depository's customary
procedures and a copy of such notice has been received by the Company
from the Trustee. Any Global Security exchanged pursuant to clause (A)
or (B) above shall be so exchanged in whole and not in part and any
Global Security exchanged pursuant to clause (C) or (D) above may be
exchanged in whole or from time to time in part as directed by the U.S.
Depository. Any Security issued in exchange for a Global Security or
any portion thereof shall be a Global Security, provided that any such
--------
Security so issued that is registered in the name of a Person other
than the U.S. Depository or a nominee thereof shall not be a Global
Security.
(3) Securities issued in exchange for a Global Security or any
portion thereof pursuant to clause (2) above shall be of the same
series as the Global Security to be exchanged, shall be issued in
definitive, fully registered form, without interest coupons, shall have
an aggregate principal amount equal to that of such Global Security or
portion thereof to be so exchanged, shall be registered in such names
and be in such authorized denominations as the U.S. Depository shall
designate and shall bear any legends required hereunder. Any Global
Security to be exchanged in whole shall be surrendered by the
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<PAGE>
U.S. Depository to the Trustee, as Security Registrar. With regard to
any Global Security to be exchanged in part, either such Global
Security shall be so surrendered for exchange or, if the Trustee is
acting as custodian for the U.S. Depository or its nominee with respect
to such Global Security, the principal amount thereof shall be reduced,
by an amount equal to the portion thereof to be so exchanged, by means
of an appropriate adjustment made on the records of the Trustee. Upon
any such surrender or adjustment, the Trustee shall authenticate and
make available for delivery the Security issuable on such exchange to
or upon the written order of the U.S. Depository or an authorized
representative thereof.
(4) In the event of the occurrence of any of the events
specified in clause (2) above, the Company will promptly make available
to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form, without interest coupons.
(5) No Agent Members nor any other Persons on whose behalf Agent
Members may act (including Euroclear and CEDEL and account holders and
participants therein) shall have any rights under this Indenture with
respect to any Global Security, or under any Global Security, and the
U.S. Depository or such nominee, as the case may be, may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as
the absolute owner and holder of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Conmpany, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the U.S. Depository or such nominee, as the
case may be, or impair, as between the U.S. Depository, its Agent
Members and any other person on whose behalf an Agent Member may act,
the operation of customary practices of such Persons governing the
exercise of the rights of a holder of any Security.
Section 3.6 Mutilated, Destroyed, Lost or Stolen Securities.
-----------------------------------------------
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and make available for
delivery in exchange therefor a new Security of the same series of like tenor
and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and make
available for delivery, in lieu of any such destroyed, lost or stolen Security,
a new Security of the same series as the Security destroyed, lost or stolen, of
like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
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<PAGE>
A Holder shall bear the cost to the Company of replacing a
mutilated, destroyed, stolen or lost Security. Upon the issuance of any new
Security under this Section, the Company also may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies. with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Principal and Interest, Interest Rights Preserved.
------------------------------------------------------------
Payment of the principal of the Securities will be made in
immediately available funds, against presentation and surrender of the
Securities by the Holders thereof, and in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York, which the
Company has initially designated as the office of the Trustee, 111 Wall Street,
5th Floor, New York, New York 10043, or, at the option of the Holder and subject
to any fiscal or other laws and regulations, at any other office or agency
maintained by the Company for such purpose.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment,
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<PAGE>
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities at such Holder's address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section
3.5, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 3.8 Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
shall treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Sections 3.5 and 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9 Cancellation.
------------
All Securities surrendered for payment or registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee. All Securities so delivered shall be canceled
promptly by the Trustee. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 3.9 except as expressly permitted by this Indenture. All
canceled Securities and any certificates in connection
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<PAGE>
therewith shall be held by the Trustee in accordance with its customary
practices until destroyed by the Trustee; provided, however, that the Trustee
-------- -------
shall not be required to destroy such Securities. The Company may not issue new
Securities to replace Securities it has paid in full or delivered to the Trustee
for cancellation.
Section 3.10 Computation of Interest.
-----------------------
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
Section 3.11 CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP" and "CINS"
numbers (if then generally in use), and the Trustee shall use CUSIP numbers or
CINS numbers, as the case may be, in notices of exchange as a convenience to the
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of exchange and that reliance may be placed only on the
other identification numbers printed on the Securities.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of replacement of Securities herein
expressly provided for and any right to receive the payment of principal of, or
interest on, such Securities), and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 11.3) have been delivered to the Trustee
for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation (other than Securities referred to in clauses (i) and
(ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at their Stated
Maturity within one year,
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<PAGE>
and the Company, in the case of clause (i) or (ii) above, has deposited or
caused to be deposited with the Trustee as trust funds (immediately available to
the Holders in the case of clause (i)) in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.7 and, if money
shall have been deposited with the Trustee pursuant to clause (1)(B) of this
Section 4.1, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 11.3 shall survive.
Section 4.2 Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 11.3,
all money deposited with the Trustee pursuant to Section 4.1 shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee.
ARTICLE V
REMEDIES
Section 5.1 Events of Default.
-----------------
"Event of Default," whenever used herein with respect to
Securities of either series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security of
that series when it becomes due and payable and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of any Security of
that series at its Maturity; or
(3) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or
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<PAGE>
whose breach is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(4) Indebtedness of the Company for borrowed money in an
outstanding principal amount in excess of $25,000,000 in the aggregate, whether
such Indebtedness now exists or shall hereafter be created, is not paid at
maturity (either upon its stated maturity or upon acceleration thereof) and such
default in payment or acceleration has not been cured or rescinded within a
period of 30 days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities of
that series a written notice specifying such default and requiring the Company
to cause such indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of Default"
hereunder; provided, however, that the Trustee shall have no obligation, either
-------- -------
express or implied, to give any notice, make any demand, make any collection,
initiate any judicial proceeding, file any proofs of claim or take any action as
a result of an Event of Default described in this clause (4), unless and until
the Trustee has received written notice of such Event of Default from the
Company, a Holder of a Security or a holder of Indebtedness of the Company;
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under the Bankruptcy Code or any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree or
order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under the Bankruptcy Code or any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other singular official of the
Company or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due.
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Section 5.2 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default with respect to Securities of either
series at any time Outstanding (other than an Event of Default specified in
Sections 5.1(5) or (6)) occurs and is continuing, then and in every such case
the Trustee shall, at the written request of the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities of that series, or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities of that series shall directly, by notice in writing to the Company,
declare the principal of all the Securities of such series to be due and payable
immediately, and upon any such declaration such principal and any accrued
interest shall become immediately due and payable. If an Event of Default
specified in Sections 5.1(5) or (6) occurs and is continuing, the principal and
any accrued interest on all of the Securities then Outstanding shall ipso facto
---- ------
become due and payable immediately without any declaration or other Act on the
part of the Trustee or any Holder.
At any time after such declaration of acceleration with respect
to Securities of either series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article V provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest thereon on all Securities of that
series,
(B) the principal of any Securities of that series which
have become due otherwise than by such declaration of acceleration and any
interest thereon at the rate borne by the Securities of that series,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at a rate of 6.80% per annum on the 6.80% Notes
and 7.00% on the 7.00% Notes, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that
series, other than the nonpayment of the principal of, and any interest on,
Securities of that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission or annulment shall affect any subsequent default or impair
any right consequent thereon.
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Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days,
or
(2) default is made in the payment of the principal of any
Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest and, to the extent the payment of such
interest shall be legally enforceable, interest on any overdue principal and on
any overdue interest, at a rate of 6.80% per annum on the 6.80% Notes and at a
rate of 7.00% per annum on the 7.00% Notes, and in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders of Securities by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or either of
their creditors, the Trustee (irrespective of whether the principal of, and any
interest on, the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
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(1) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee and each predecessor
Trustee, its agents and counsel) and of the Holders of Securities allowed in
such judicial proceeding, and
(2) to collect and receive any moneys or other property payable
or deliverable on any such claim and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities by his acceptance thereof to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders of Securities, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, and each predecessor Trustee, its agents and counsel and any
other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder of a
Security any plan of reorganization, arrangement, adjustment, or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder of a Security in any such
proceeding; provided, however, that the Trustee may, on behalf of such Holders,
-------- -------
vote for the election of a trustee in bankruptcy or similar official and be a
member of a creditors' or other similar committee.
Section 5.5 Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, and each predecessor Trustee, its
agents and counsel, and other amounts due to the Trustee or such predecessor,
agent or counsel under Section 6.7, be for the ratable benefit of the Holders of
the Securities in respect of which judgment has been recovered.
Section 5.6 Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article V
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.7;
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SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which
or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to
the amounts due and payable on such Securities for principal and
interest, respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
Section 5.7 Limitation on Suits.
-------------------
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of the Holders, each
representing less than a majority in aggregate principal amount of the
Outstanding Securities of either series, the Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture, and shall have no liability to any person for such
action or inaction.
Section 5.8 Unconditional Right of Holders to Receive Principal and Interest.
----------------------------------------------------------------
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 3.7) interest on
such Security on the respective Stated Maturities
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expressed in such Security and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
Section 5.9 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such Holders shall continue as though no such proceeding had been
instituted.
Section 5.10 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.6, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 5.11 Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or any acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee or to the Holders of Securities may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Securities, as the case my be.
Section 5.12 Control by Holders of Securities.
--------------------------------
The Holders of a majority in principal amount of the Outstanding
Securities of either series shall, subject to Section 6.3(e), have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to such series, provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(2) the Trustee shall not be obligated to follow any direction
which may involve it in personal liability or which may be unduly prejudicial to
Holders not joining therein, and
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(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction or this Indenture.
Section 5.13 Waiver of Past Defaults.
-----------------------
The Holders, either (a) through the written consent of not less
than a majority in principal amount of the Outstanding Securities of either
series, or (b) by the adoption of a resolution, at a meeting of Holders of the
Outstanding Securities of either series at which a quorum is present, by the
Holders of at least 66-2/3% in aggregate principal amount of the Outstanding
Securities of such series represented at such meeting, may on behalf of the
Holders of all the Securities of such series waive any past default hereunder
and its consequences with respect to such series, except a default (1) in the
payment of the principal of or interest on any Security, or (2) in respect of a
covenant or provision hereof which under Article IX cannot be modified or
amended without the consent of the Holders of each Outstanding Security
affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture with respect to such series; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
Section 5.14 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.14 shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of the Outstanding Securities of
either series, or to any suit instituted by any Holder of any Security for the
enforcement of the payment of the principal of or interest on any Security on or
after the respective Stated Maturity or Maturities expressed in such Security.
Section 5.15 Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.
-----------------------------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the
effect of paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding
Securities of either series relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, with respect to such series under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it.
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(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
Section 6.2 Notice of Defaults.
------------------
Within 90 days of the occurrence of any default hereunder, the
Trustee shall give to all Holders of Securities, in the manner provided in
Section 1.5, notice of such default hereunder actually known to a Responsible
Officer of the Trustee, unless such default shall have been cured or waived;
provided, however, that in the case of any default of the character specified in
- -------- -------
Section 5.1(3), no such notice to Holders of Securities shall be given until at
least 30 days after the occurrence of such default. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
Section 6.3 Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6. 1:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, Officers' Certificate,
other certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors of the Company shall be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate or an Opinion of Counsel;
(d) the Trustee may consult with counsel (at the expense of the
Company) and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities pursuant to this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice,
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request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys, custodians or nominees and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent, attorney,
custodian or nominee appointed with due care by it hereunder;
(h) the Trustee shall not be deemed to have notice of any Event
of Default under Section 5.1 unless a Responsible Officer of the Trustee shall
have actual knowledge thereof, and
(i) in the event that the Trustee is also acting as
authenticating agent, payment agent or securities registrar hereunder, the
rights and protections afforded to the Trustee pursuant to this Article VI shall
also be afforded to the Trustee in such capacities.
Section 6.4 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
Section 6.5 May Hold Securities, Act as Trustee Under Other Indentures.
----------------------------------------------------------
The Trustee, any Authenticating Agent, any Paying Agent or any
other agent of the Company or the Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent or such other agent.
The Trustee may become and act as trustee under other indentures
under which other securities, or certificates of interest or participation in
other Securities, of the Company are outstanding in the same manner as if it
were not Trustee hereunder.
Section 6.6 Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company in writing.
Section 6.7 Compensation and Indemnification of Trustee and Its Prior Claims.
----------------------------------------------------------------
The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable condensation (which
shall not be limited by any
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provision of law in regard to the compensation of a trustee of an express trust)
and the Company covenants and agrees to pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by or on behalf of it in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all agents and other Persons not regularly in its employ), except
to the extent that any such expense, disbursement or advance is due to its
negligence or bad faith. The Company also covenants to indemnify the Trustee and
its directors, officers, employees and agents for, and to hold the Trustee and
its directors, officers, employees and agents harmless against, any loss,
liability or expense incurred by the Trustee or its directors, officers,
employees and agents, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder or the performance of
the Trustee's duties hereunder, including the costs and expenses of defending
the Trustee or its directors, officers, employees and agents against or
investigating any claim or liability in the premises, except to the extent that
any such loss, liability or expense was due to the Trustee's negligence or bad
faith. The obligations of the Company under this Section 6.7 to compensate and
indemnify the Trustee and its directors, officers, employees and agents and to
pay or reimburse the Trustee and its directors, officers, employees and agents
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture or the earlier resignation and removal of the Trustee. The Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee including, without limitation, all money or property
held or collected by the Trustee in trust to pay the principal of, or interest
on, or any other amounts on any Securities, and such lien shall survive the
satisfaction and discharge of the Indenture and any other termination of the
Indenture including any termination under any bankruptcy law. When the Trustee
incurs expenses or renders services in connection with an Event of Default
specified in Sections 5.1(5) or (6), the Holders by their acceptance of the
Securities hereby agree that such expenses and the compensation for such
services are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable Federal or state bankruptcy,
insolvency or similar law. "Trustee" for purposes of this Section 6.7 shall
include any predecessor Trustee, but the negligence or bad faith of any Trustee
shall not affect the indemnification of any other Trustee.
Section 6.8 Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof, or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least U.S.$100,000,000, subject to supervision or examination by Federal
or State authority, in good standing and having an established place of business
in The City of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
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Section 6.9 Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by this Section 6.9 shall not have been delivered to the Trustee within
30 days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and the Company.
(d) If at any time:
1. the Trustee shall cease to be eligible under Section
6.8 and shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security for at
least six months, or
2. the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee
and shall comply with the applicable requirements of this Section 6.9. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of this Section 6.9, become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders of
Securities and accepted appointment in the manner required by this Section 6.9,
any Holder of a Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders of Securities in the manner provided in Section 1.5. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
Notwithstanding the replacement of the Trustee pursuant to this
Section 6.9, the Company's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
The retiring Trustee shall not be liable for the acts or
omissions of any successor Trustee hereunder.
Section 6.10 Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the Successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be eligible under this
Article.
Upon the acceptance of appointment by any successor Trustee, all
fees, charges and expenses of the retiring Trustee shall become immediately due
and payable upon the rendering of a statement thereof.
Section 6.11 Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
(a) Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the trust may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons reasonably acceptable to the Company to act as a co-trustee or co-
trustees, or separate trustee or separate trustees, and to vest in such Person
or Persons, in such capacity and for the benefit of the Security Holders, such
title to the Securities, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.9 and no notice to Security Holders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.9 hereof. All fees, charges and expenses of any co-trustee or separate
trustee appointed pursuant to this Section 6.11 shall be paid by the Company.
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(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations, (including the
holding of title to the trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trust or co-trustee, but solely at the direction of the
Trustee;
(ii) the Trustee shall not be personally liable by reason
of any act or omission of any separate trustee or co-trustee
(subject to the provisions of Section 6.1 hereof);
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
- --------
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
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Section 6.13 Authenticating Agent.
--------------------
The Trustee may appoint an Authenticating Agent or Agents
acceptable to the Company with respect to the Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities issued
upon exchange or substitution pursuant to this Indenture. Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder, and every reference in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States of America or any State thereof and
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than U.S.$100,000,000 or its equivalent in
another currency or composite currencies and subject to supervision or
examination by government authority. If such Authenticating Agent publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section 6.13, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section
6.13, such Authenticating Agent shall resign immediately in the manner and with
the effect specified in this Section 6.13.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
--------
under this Section 6.13, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.13, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 6.13.
If an Authenticating Agent is appointed with respect to the
Securities pursuant to this Section 6.13, the Securities may have endorsed
thereon, in addition to or in lieu of the Trustee's certification of
authentication, an alternative certificate of authentication in the following
form:
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This is one of the Securities (as the case may be) referred to in
the within-mentioned Indenture.
Dated: Citibank, N.A., as Trustee
By [Authenticating Agent or authorized
representative], as Authenticating Agent
By:_____________________________________
Authorized Signatory
Section 6.14 Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after the Regular
Record Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities as of such Regular Record Date,
and
(b) at such other times as the Trustee may reasonably
request in writing, within 30 days after the receipt by the Company of any such
request, a list of singular form and content as of a date not more than 15 days
prior to the time such list is furnished;
except that for so long as the Trustee is the Security Registrar, the Company
shall not be required to furnish to the Trustee the information required by this
Section 7. 1.
Section 7.2 Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it pursuant to Section
7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties
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of the Trustee, shall be as provided by the Trust Indenture Act for holders of
securities issued under an indenture qualified pursuant to the Trust Indenture
Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act or the Code.
Section 7.3 Reports by the Company.
----------------------
(a) The Company shall file with the Trustee, within 15 days
after the Company is required to file the same with the Commission, copies of
any annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may by rules
and regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. In the event the
Company is not subject to Section 13 or 15(d) of the Exchange Act, it shall file
with the Trustee upon request the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
(b) The Company shall file with the Trustee such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants provided for in this Indenture as may be
reasonably requested from time to time by the Trustee.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease all or substantially all of the Company's
properties and assets to any Person, and the Company shall not permit any Person
to consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease all or substantially all of
the Company's properties and assets to any Person, the Person formed by
such consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer, or which leases, all or
substantially all of the Company's properties and assets shall be a
corporation, partnership, trust or other entity, shall be organized and
validly existing under the laws of the United States of America, any
State thereof or the District of Columbia and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of and any premium and interest on all the
Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed;
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(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or
any Subsidiary as a result of such transaction as having been incurred
by the Company or such Subsidiary at the time of such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company
would become subject to a Lien which would not be permitted by this
Indenture, the Company or such successor Person, as the case may be,
shall take such steps as shall be necessary effectively to secure the
Securities equally and ratably with (or prior to) all indebtedness
secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
Section 8.2 Successor Substituted.
---------------------
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer, sale or lease of all
or substantially all the properties and assets of the Company in accordance with
Section 8.1, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter the predecessor
Person shall be relieved of all obligations and covenants under this Indenture
and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Holders of Securities.
----------------------------------------------------------------
Without the consent of any Holders of Securities, the Company,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, for any
of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities as permitted by this Indenture; or
(2) to add to the covenants of the Company for the benefit of
the Holders of Securities, or to surrender any right or power herein conferred
upon the Company; or
(3) to secure the Securities; or
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(4) to modify the restrictions on, and procedures for, resale
and other transfers of the Securities to the extent required by any change in
applicable law or regulation (or the interpretation thereof) or in practice
relating to the resale or transfer of restricted securities generally; or
(5) to accommodate the issuance, if any, of Securities in book-
entry or definitive form and matters related thereto which do not adversely
affect the interest of the Holders of Securities; or
(6) to comply with any requirements of the Commission in order
to effect and maintain, to the extent required, the qualification of this
Indenture under the Trust Indenture Act; or
(7) to cure any ambiguity, to correct or supplement any
provision herein, which may be inconsistent with any other provision herein or
which is otherwise defective, or to make any other provisions with respect to
matters or questions arising under this Indenture as the Company and the Trustee
may deem necessary or desirable, provided, such action pursuant to this clause
--------
(7) shall not adversely affect the interests of the Holders of Securities in any
material respect.
Upon Company Request, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and subject to and
upon receipt by the Trustee of the documents described in Section 9.4 hereof,
the Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the term of this Indenture and any further
appropriate agreements and stipulations which may be therein contained.
Section 9.2 Supplemental Indentures With Consent of Holders of Securities.
-------------------------------------------------------------
With either (a) the written consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities of
each series affected by such supplemental indenture, by the Act of said Holders
delivered to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of 66-2/3% in aggregate principal amount of
the Outstanding Securities of each series affected by such supplemental
indenture represented at such meeting (subject to Section 9.4), the Company,
when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
-------- -------
indenture shall, without the consent or affirmative vote of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the rate of interest payable thereon, or change the coin or currency in which
any Security or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof, or
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(2) reduce the requirements of Section 10.4 for quorum or
voting, or reduce the percentage in aggregate principal amount of the
Outstanding Securities of either series the consent of whose Holders is required
for any such supplemental indenture or the consent of whose Holders is required
for any waiver provided for in this Indenture, or
(3) modify the obligation of the Company to maintain an office
or agency in The City of New York pursuant to Section 11.2, or
(4) modify any of the provisions of this Section, Section 5.13
or Section 11.14, except to increase any percentage contained herein or therein
or to provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security
affected thereby, or
(5) modify any of the provisions of Section 11.9 or 11.13.
It shall not be necessary for any Act of Holders of Securities
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 9.3 Trustee Protected.
-----------------
If, in the opinion of the Trustee hereunder, any document
required to be executed pursuant to the term of Section 9.2 hereof adversely
affects any right, duty, immunity or indemnity with respect to it under this
Indenture, the Trustee in its discretion may decline to execute such document.
Section 9.4 Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and an Officers' Certificate to the
effect that all conditions precedent have been satisfied. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 9.5 Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.6 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in
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form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
Section 9.7 Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of Section 9.2, the
Company shall give notice to all Holders of Securities, in the manner provided
in Section 1.5, of such fact, setting forth in general terms the substance of
such supplemental indenture. Any failure of the Company to give such notice, or
any defect therein, shall not in any way impair or affect the validity of any
such supplemental indenture.
ARTICLE X
MEETINGS OF HOLDERS OF SECURITIES
Section 10.1 Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Holders of Securities of either or both series may
be called at any time and from time to time pursuant to this Article to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be made, given or taken by
Holders of Securities of such series.
Section 10.2 Call, Notice and Place of Meetings.
----------------------------------
(a) The Trustee may at any time call a meeting of Holders of
Securities of either series for any purpose specified in Section 10.1, to be
held at such time and at such place in The City of New York as the Trustee shall
determine. Notice of every meeting of Holders of Securities, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given, in the manner provided in Section 1.5,
not less than 21 nor more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of either series shall have requested the Trustee to call
a meeting of the Holders of Securities of such series for any purpose specified
in Section 10.1, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have made
the first publication of the notice of such meeting within 21 days after receipt
of such request or shall not thereafter proceed to cause the meeting to be held
as provided herein, then the Company or the Holders of Securities of such series
in the amount specified, as the case may be, may determine the time and the
place in The City of New York for such meeting and may call such meeting for
such purposes by giving notice thereof as provided in paragraph (a) of this
Section.
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Section 10.3 Persons Entitled to Vote at Meetings.
------------------------------------
To be entitled to vote at any meeting of Holders of Securities of
either series, a Person shall be (a) a Holder of one or more Outstanding
Securities of the applicable series, or (b) a Person appointed by an instrument
in writing as proxy for a Holder or Holders of one or more Outstanding
Securities of the applicable series by such Holder or Holders. The only Persons
who shall be entitled to be present or to speak at any meeting of Holders shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
Section 10.4 Quorum; Action.
--------------
The Persons entitled to vote a majority in principal amount of
the Outstanding Securities of the series as to which a meeting has been called
shall constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities, be dissolved. In any other case, the meeting
may be adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the absence
of a quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such adjourned meeting (subject to
repeated applications of this sentence). Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 10.2(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the principal amount
of the Outstanding Securities which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the persons entitled to vote 25% in aggregate
principal amount of the Outstanding Securities of the applicable series (or of
both series, as the case may be) at the time shall constitute a quorum for the
taking of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid, any resolution and all matters (except
as limited by the proviso to Section 9.2) shall be effectively passed and
decided if passed or decided by the Persons entitled to vote not less than 66
2/3% in aggregate principal amount of Outstanding Securities of the applicable
series represented and voting at such meeting.
Any resolution passed or decisions taken at any meeting of
Holders of Securities of either series duly held in accordance with this Section
shall be binding on all the Holders of Securities of the applicable series,
whether or not present or represented at the meeting.
Section 10.5 Determination of Voting Rights; Conduct and Adjournment of
----------------------------------------------------------
Meetings.
- --------
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of
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proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in Section 1.3 and the
appointment of any proxy shall be proved in the manner specified in Section 1.3.
Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 10.3 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman (which may be the Trustee) of the meeting, unless the meeting
shall have been called by the Company or by Holders of Securities as provided in
Section 10.2(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding Securities of the applicable series represented at the
meeting.
(c) At any meeting, each Holder of a Security of the applicable
series or proxy shall be entitled to one vote for each U.S. $1,000 principal
amount of Securities of such series held or represented by him; provided,
--------
however, that no vote shall be cast or counted at any meeting in respect of any
- -------
Security challenged as not Outstanding and ruled by the chairman of the meeting
to be not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant
to Section 10.2 at which a quorum is present may be adjourned from time to time
by Persons entitled to vote a majority in principal amount of the Outstanding
Securities of the applicable series represented at the meeting, and the meeting
may be held as so adjourned without further notice.
Section 10.6 Counting Votes and Recording Action of Meetings.
-----------------------------------------------
The vote upon any resolution submitted to any meeting of Holders
of Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts and serial numbers of the Outstanding Securities held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of Holders of
Securities shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more Persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 10.2 and, if
applicable, Section 10.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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<PAGE>
ARTICLE XI
COVENANTS
Section 11.1 Payment of Principal and Interest.
---------------------------------
The Company will duly and punctually pay the principal of and
interest on the Securities in accordance with the term of the Securities and
this Indenture.
Section 11.2 Maintenance of Offices or Agencies.
----------------------------------
The Company hereby appoints the Corporate Trust Office of the
Trustee as its agent in The City of New York where Securities may be presented
or surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served.
The Company hereby appoints the principal corporate trust office
of the Trustee as Paying Agent for the payment of principal of and interest on
the Securities, and appoints the office of the Trustee as transfer agent where
Securities may be surrendered for registration of transfer or exchange.
The Company may at any time and from time to time vary or
terminate the appointment of any such agent or appoint any additional agents
with or without cause for any or all of such purposes; provided, however, that
-------- -------
until all of the Securities have been delivered to the Trustee for cancellation,
or moneys sufficient to pay the principal of and interest on the Securities have
been made available for payment and either paid or returned to the Company
pursuant to the provisions of Section 11.3, the Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency where Securities
may be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company, in respect of the Securities and this Indenture, may be
served. The Company will give prompt written notice to the Trustee, and will
give notice to Holders of Securities in the manner specified in Section 1.5, of
the appointment or termination of any such agents and of the location and any
change in the location of any such office or agency.
If at any time the Company shall fail to maintain any such
required office or agency, or shall fail to furnish the Trustee with the address
thereof, presentations and surrenders may be made and notices and demands may be
served on the Corporate Trust Office of the Trustee, and the Company hereby
appoints the same as its agent to receive such respective presentations, notices
and demands.
Section 11.3 Money for Security Payments To Be Held in Trust.
-----------------------------------------------
If the Company at any time shall act as its own Paying Agent,
it will, on or before each due date of the principal of or interest on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal or interest so
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<PAGE>
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and the Company will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to or on each due date of the principal of or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay the principal or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal or interest, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of any failure so to
act.
The Company will cause each Paying Agent other than the Trustee
or affiliate of the Trustee to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of or interest on Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such persons or
otherwise disposed of as herein provided;
(2) give the Trustee written notice of any default by the
Company (or any other obligor upon the securities) in the making of any
payment of principal or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest on
any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as a general unsecured
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
-------- -------
that the Trustee or such Paying Agent, before making any such repayment, may at
the expense of the Company cause to be published once, in an Authorized
Newspaper in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company, and
provided, further, that any such publication shall not relieve
- -------- -------
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<PAGE>
the Trustee or any Paying Agent of their obligation to pay any amounts to the
Company in the manner provided in this Section 11.3.
Section 11.4 Corporate Existence.
-------------------
Subject to Article VIII, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
-------- -------
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 11.5 Maintenance of Properties.
-------------------------
The Company shall maintain or cause to be maintained in good
repair, working order and condition all properties used or useful in the
business of the Company and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof, if
the failure to perform such actions would in the aggregate have a Material
Adverse Effect.
Section 11.6 Maintenance of Insurance.
------------------------
The Company shall maintain or cause to be maintained, through
self-insurance or with financially sound and reputable insurers, insurance with
respect to their properties and business and the properties and business of
their Subsidiaries against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations, if
the failure to do so would (as to all such failures in the aggregate) have a
Material Adverse Effect.
Section 11.7 Compliance with Laws.
--------------------
The Company shall comply with the requirements of each applicable
Requirement of Law, except where the failure to do so would not in the aggregate
have a Material Adverse Effect.
Section 11.8 Payment of Taxes and Claims.
---------------------------
The Company shall pay, and cause each of its Subsidiaries to pay,
all taxes, assessments and other charges (other than taxes, assessments and
other governmental charges not exceeding $5,000,000 in the aggregate) imposed
upon them or any of their properties or assets or in respect of any of their
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums (other than claims not exceeding
$5,000,000 in the aggregate) which have become due and payable and which by law
have or may become a Lien upon any of their properties or assets, prior to the
time when any penalty or fine shall be incurred with respect thereto; provided
that no such governmental charge or claim need be paid if it is being contested
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<PAGE>
in good faith by appropriate proceedings and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
Section 11.9 Delivery of Certain Information.
-------------------------------
At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act or is exempt therefrom, upon the request of a Holder
of a Restricted Security, the Company will as promptly as reasonably practicable
furnish or cause to be furnished Rule 144A Information (as defined below) to
such Holder of Restricted Securities, or to a prospective purchaser of such
security designated by any such Holder or holder, as the case may be, to the
extent required to permit compliance by such holder with Rule 144A under the
Securities Act (or any successor provision thereto) in connection with the
resale of such Security by such Holder; provided, however, that the Company
-------- -------
shall not be required to furnish such information in connection with any request
made on or after the date which is three years from the later of (i) the date
such a security (or any predecessor security) was acquired from the Company and
(ii) the date such a security (or any predecessor security) was last acquired
from the Company or an "affiliate" of the Company within the meaning of Rule 144
under the Securities Act (or any successor provision thereto); and provided,
--------
further, that the Company shall not be required to furnish such information at
- -------
any time to a prospective purchaser located outside the United States who is not
a "U.S. Person" within the meaning of Regulation S under the Securities Act if
such Security may then be sold to such prospective purchaser in accordance with
Rule 904 under the Securities Act (or any successor provision thereto). "Rule
144A Information" shall be such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto).
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act and therefore is not a reporting company pursuant thereto, the
Company will make available to each Holder of any Security (in reasonable
quantities for redistribution to beneficial owners), annual audited consolidated
financial statements of the Company, with the notes thereto and with a report
thereon by independent accountants of established national reputation (to be
available within 90 days after the end of each fiscal year), and unaudited
quarterly consolidated financial statements of the Company, without notes or
with abbreviated notes and without any such report thereon (to be available
within 60 days after the end of each of the first three quarters of each fiscal
year). Such financial statements shall be prepared in accordance with generally
accepted accounting principles (except for such omitted or abbreviated notes in
the case of the quarterly financial statements). Such financial statements shall
be mailed or otherwise distributed to Holders by such method as the Company may
reasonably determine.
Section 11.10 Limitation on Liens.
-------------------
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, issue, assume or guarantee any Indebtedness
secured by a Lien upon any Principal Property, or upon shares of capital stock
or Indebtedness issued by any Restricted Subsidiary and owned by the Company or
any Restricted Subsidiary, now or hereafter acquired, without effectively
providing concurrently that the Securities of each series then outstanding are
secured equally and ratably with or, at the option of the Company, prior to such
Indebtedness so long as such Indebtedness shall be so secured.
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<PAGE>
The foregoing restriction shall not apply to, and there shall be
excluded from Indebtedness in any computation under such restriction,
Indebtedness secured by (i) Liens on any property existing at the time of the
acquisition thereof; (ii) Liens on property of a corporation existing at the
time such corporation is merged into or consolidated with the Company or a
Restricted Subsidiary or at the time of a sale, lease or other disposition all
or substantially all of the properties of such corporation (or a division
thereof) to the Company or a Restricted Subsidiary, provided that any such Lien
--------
does not extend to any property owned by the Company or any Restricted
Subsidiary immediately prior to such merger, consolidation, sale, lease or
disposition; (iii) Liens on property of a corporation existing at the time such
corporation becomes a Restricted Subsidiary; (iv) Liens in favor of the Company
or a Restricted Subsidiary; (v) Liens to secure all or part of the cost of
acquisition, construction, development or improvement of the underlying
property, or to secure Indebtedness incurred to provide funds for any such
purpose, provided that the commitment of the creditor to extend the credit
--------
secured by any such Lien shall have been obtained not later than 180 days after
the later of (A) the completion of the acquisition, construction, development or
improvement of such property and (B) the placing in operation of such property
or of such property as so constructed, developed or improved; (vi) Liens in
favor of the United States of America or any State thereof, or any department,
agency or instrumentality or political subdivision thereof, to secure partial,
progress, advance or other payments; (vii) Liens securing industrial revenue or
pollution control bonds; and (viii) Liens existing on the date of the Indenture
or any extension, renewal or replacement or refunding of any Indebtedness
secured by a Lien existing on the date of the Indenture or referred to in clause
(i), (ii), (iii) or (v); provided, however, that the principal amount of
-------- -------
Indebtedness secured thereby and not otherwise authorized by clauses (i) through
(vii) shall not exceed the principal amount of Indebtedness, plus any premium or
fee payable in connection with any such extension, renewal, replacement, or
refunding, so secured at the time of such extension, renewal, replacement or
refunding.
Notwithstanding the restrictions described above, the Company and
its Restricted Subsidiaries may create, incur, issue, assume or guarantee
Indebtedness secured by Liens without equally and ratably securing the
Securities of each series then outstanding if, at the time of such creation,
incurrence, issuance, assumption or guarantee, after giving effect thereto and
to the retirement of any Indebtedness which is concurrently being retired, the
aggregate amount of all outstanding Indebtedness secured by Liens which would
otherwise be subject to such restrictions (other than any Indebtedness secured
by Liens permitted as described in clauses (i) through (viii) of the immediately
preceding paragraph) plus all Attributable Indebtedness in respect of sale and
leaseback transactions with respect to Principal Properties (with the exception
of such transactions which are permitted under clauses (i) through (v) of the
first sentence of the first paragraph of Section l1.11) does not exceed 10% of
Consolidated Net Tangible Assets.
Section 11.11 Limitation on Sale and Leaseback Transactions.
---------------------------------------------
The Company will not, and will not permit any Restricted
Subsidiary to, enter into any sale and leaseback transaction with respect to any
Principal Property unless: (i) the sale and leaseback transaction is solely with
the Company or another Restricted Subsidiary; (ii) the lease is for a period not
in excess of three years, including renewal rights; (iii) the lease secures or
relates to industrial revenue or pollution control bonds; (iv) the Company or
such Restricted Subsidiary would (at the time of entering into such arrangement)
be entitled as described in
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<PAGE>
clauses (i) through (viii) of the second paragraph of Section 11.10, without
equally and ratably securing the Securities of each series then outstanding, to
create, incur, issue, assume or guarantee Indebtedness secured by a Lien on such
Principal Property in the amount of the Attributable Indebtedness arising from
such sale and leaseback transaction; (v) the Company or such Restricted
Subsidiary, within 180 days after the sale of such Principal Property in
connection with such sale and leaseback transaction is completed, applies an
amount equal to the greater of (A) the net proceeds of the sale of the Principal
Property leased and (B) the fair market value of the Principal Property leased
to (1) the retirement of Securities, other Funded Indebtedness of the Company
ranking on a parity with the Securities, or Funded Indebtedness of a Restricted
Subsidiary or (2) the purchase of other property which will constitute a
Principal Property having a value at least equal to the value of the Principal
Property leased; or (vi) the Attributable Indebtedness of the Company and its
Restricted Subsidiaries in respect of such sale and leaseback transaction and
all other sale and leaseback transactions entered into after the date of this
Indenture (other than any such sale and leaseback transactions as would be
permitted as described in clauses (i) through (v) of this sentence), plus the
aggregate principal amount of Indebtedness secured by Liens on Principal
Properties then outstanding (not including any such Indebtedness secured by
Liens described in clauses (i) through (viii) of the second paragraph of Section
11.10) which do not equally and ratably secure such outstanding Securities (or
secure such outstanding Securities on a basis that is prior to other
Indebtedness secured thereby), would not exceed 10% of Consolidated Net Tangible
Assets.
Section 11.12 Statement by Officers as to Default.
-----------------------------------
The Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company an Officers' Certificate stating that
a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the Officers
signing such certificate, with a view to determining whether any default exists
in the performance and observance of any of the terms, provisions and conditions
of this Indenture and whether the Company has observed, performed and fulfilled
its obligations under this Indenture. If the Officers signing the Certificate
know of such a default, the Officers' Certificate shall describe such default
and its status with particularity. The Company shall also promptly notify the
Trustee if the Company's fiscal year is changed so that the end thereof is on
any date other than the then current fiscal year end date.
The Company will also deliver to the Trustee, forthwith upon any
Officer becoming aware of any Event of Default, an Officers' Certificate
specifying with particularity such default or Event of Default and further
stating what action the Company has taken, is taking or proposes to take with
respect thereto.
Section 11.13 Resale of Certain Securities.
----------------------------
During the period beginning on November 6, 1996 and ending on
November 6, 1999, the Company will not, and will not permit any of its
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) to, resell any Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of them.
The Trustee shall have no responsibility in respect of the Company's performance
of its agreement in the preceding sentence.
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<PAGE>
Section 11.14 Waiver of Certain Covenants.
---------------------------
The Company may, with respect to the Securities of either series,
omit in any particular instance to comply with any covenant or condition set
forth in any covenant provided pursuant to Sections 11.5 to 11.11, inclusive,
for the benefit of Holders of such series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series (or such lesser amount as shall have acted at a
meeting pursuant to the provisions of this Indenture) shall either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
Section 11.15 Book-Entry System.
-----------------
If the Securities cease to trade in the U.S. Depository's book-
entry settlement system, the Company covenants and agrees that it shall use
reasonable efforts to make such other book-entry arrangements that it determines
are reasonable for the Securities.
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<PAGE>
__________________
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
LEVI STRAUSS & CO.
By /s/ Joseph M. Maurer
------------------------------------------
Name: Joseph M. Maurer
Title: Vice President & Treasurer
By /s/ Maeve L.J. Richard
------------------------------------------
Name: Maeve L.J. Richard
Title: Assistant Treasurer
[SEAL]
Attest:
/s/ Nenita T. Sobejana
- ------------------------------
Name: Nenita T. Sobejana
Title: Secretary
CITIBANK, N.A., not in its individual capacity
but solely as Trustee
By___________________________________________
Name:
Title:
[SEAL]
-72-
<PAGE>
Attest:
__________________________
Name:_____________________
Title:____________________
_______________
-73-
<PAGE>
State of California
----------------------------
County of San Francisco
---------------------------
On November 5, 1996 before me, ANITA L. DRENNAN, NOTARY PUBLIC,
--------------------------------- -------------------------------
DATE NAME, TITLE OF OFFICER - E.G., "JANE DOE,
NOTARY PUBLIC"
personally appeared JOSEPH M. MAURER, VICE-PRESIDENT & TREASURER,
------------------------------------------------------------
NAME(S) OF SIGNER(S)
[X] personally known to me - OR - [_] proved to me on the basis of satisfactory
evidence to be the person(s) whose
name(s) is/are subscribed to the within
instrument and acknowledged to me that
[SEAL] he/she/they executed the same in
his/her/their authorized capacity(ies),
and that by his/her/their signature(s)
on the instrument the person(s), or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Anita L. Drennan
--------------------------------------
SIGNATURE OF NOTARY
================================== OPTIONAL ====================================
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[_] INDIVIDUAL
[X] CORPORATE OFFICER
___________________________________
TITLE OR TYPE OF DOCUMENT
__________________________________
TITLE(S)
[_] PARTNER(S) [_] LIMITED
[_] GENERAL ___________________________________
[_] ATTORNEY-IN-FACT NUMBER OF PAGES
[_] TRUSTEE(S)
[_] GUARDIAN/CONSERVATOR
[_] OTHER:________________________ ___________________________________
______________________________ DATE OF DOCUMENT
______________________________
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES) ___________________________________
__________________________________ SIGNER(S) OTHER THAN NAMED ABOVE
__________________________________
<PAGE>
State of California
----------------------------
County of San Francisco
---------------------------
On November 5, 1996 before me, ANITA L. DRENNAN, NOTARY PUBLIC,
--------------------------------- -------------------------------
DATE NAME, TITLE OF OFFICER - E.G., "JANE DOE,
NOTARY PUBLIC"
personally appeared MAEVE L. J. RICHARD, ASSISTANT TREASURER,
-----------------------------------------------------------
NAME(S) OF SIGNER(S)
[X] personally known to me - OR - [_] proved to me on the basis of satisfactory
evidence to be the person(s) whose
name(s) is/are subscribed to the
within instrument and acknowledged to
[SEAL] me that he/she/they executed the same
in his/her/their authorized
capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s), or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Anita L. Drennan
------------------------------------
SIGNATURE OF NOTARY
================================== OPTIONAL ====================================
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[_] INDIVIDUAL
[X] CORPORATE OFFICER
_________________________________
_____________________________________ TITLE OR TYPE OF DOCUMENT
TITLE(S)
[_] PARTNER(S) [_] LIMITED
[_] GENERAL _________________________________
[_] ATTORNEY-IN-FACT NUMBER OF PAGES
[_] TRUSTEE(S)
[_] GUARDIAN/CONSERVATOR _________________________________
[_] OTHER:___________________________ DATE OF DOCUMENT
_________________________________
_________________________________
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES) _________________________________
_____________________________________ SIGNER(S) OTHER THAN NAMED ABOVE
_____________________________________
<PAGE>
____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
LEVI STRAUSS & CO.
By________________________
Name:
Title:
By________________________
Name:
Title:
[SEAL]
Attest:
________________________
Name:___________________
Title:__________________
__________
CITIBANK, N.A., not in its
individual capacity but
solely as Trustee
By /s/ Robert T. Kirchner
------------------------
Name: Robert T. Kirchner
Title: Vice President
[SEAL]
Attest:
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<PAGE>
__________________________________
Name: /s/ Wafaa Orfy
-----------------------------
Title: Senior Trust Officer
----------------------------
_________________
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<PAGE>
STATE OF CALIFORNIA )
:ss.:
COUNTY OF SAN FRANCISCO )
On the 6th day of November 1996, before me personally
came_______________ , to me known, who, being by me duly sworn, did depose and
say that he is ______________ of Levi Strauss & Co., one of the corporations
described in and which executed the foregoing installment; that he/she knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that he/she signed his name thereto by like authority.
_______________________________
Notary Public
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On the 6th day of November 1996, before me personally came
Robert Kirchner, to me known, who, being by me duly sworn, did depose and say
that he is Vice President of Citibank, N.A., one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
/s/ Jeffry Borgen
-------------------------------
Notary Public
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<PAGE>
ANNEX A-1
FORM OF TRANSFER CERTIFICATE--
RESTRICTED GLOBAL SECURITY TO
TEMPORARY REGULATION S GLOBAL SECURITY
REGULATION S GLOBAL NOTE CERTIFICATE
(for transfers pursuant to Section 3.5(b)(3)
of the Indenture)
Citibank, N.A., as Trustee
111 Wall Street, 5th Floor
New York, New York 10043
Re: Levi Strauss & Co.
[6.80%] [or] [7.00%] Notes
due November 1, 200[3] [or] [6] (the "Notes")
---------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This certificate relates to U.S.$____ aggregate principal
amount of Notes which are evidenced by the Restricted Global Security (CUSIP
No.____) and held with the U.S. Depository in the name of [insert name of
transferor] (the "Transferor"). The Transferor has requested a transfer of such
beneficial interest in the Notes to a Person who will take delivery thereof in
the form of an equal aggregate principal amount of Securities evidenced by the
Temporary Regulation S Global Security (CUSIP No.____), which amount,
immediately after such transfer, is to be held with the U.S. Depository through
Euroclear or CEDEL or both.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that such transfer has been
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
United States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor does hereby further certify that:
(1) the offer of the Securities was not made to a person in
the United States;
(2) either:
(A) at the time the buy order was originated, the
transferee was outside the United States or the
Transferor and any person acting on its behalf
reasonably believed that the transferee was
outside the United States, or
(B) the transaction was executed in, on or through the
facilities of a designated offshore securities
market and neither the Transferor nor any person
acting on its behalf knows that the transaction
was prearranged with a buyer in the United States;
A-1-1
<PAGE>
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities
Act; and
(5) upon completion of the transaction, the beneficial
interest being transferred as described above was
held with the U.S. Depository through Euroclear or
CEDEL or both.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc., J.P.
Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities, Inc.
and Dillon, Read & Co. Inc. as initial purchasers of the Notes. Term used in
this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:________________________________
Name:
Title:
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the
Person signing on behalf of such
registered owner must be
stated.)
A-1-2
<PAGE>
ANNEX A-2
FORM OF TRANSFER CERTIFICATE--
RESTRICTED GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
REGULATION S GLOBAL NOTE CERTIFICATE
(for transfers pursuant to Section 3.5(b)(4)
of the Indenture)
Citibank, N.A., as Trustee
111 Wall Street, 5th Floor
New York, New York 10043
Re: Levi Strauss & Co.
[6.80%] [or] [7.00%] Notes
due November 1, 200[3] [or] [6] (the "Notes")
---------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This certificate relates to U.S.$____ aggregate principal
amount of Notes which are evidenced by the Restricted Global Security (CUSIP
No.____) and held with the U.S. Depository in the name of [insert name of
transferor] (the "Transferor"). The Transferor has requested a transfer of such
beneficial interest in the Notes to a Person who will take delivery thereof in
the form of an equal aggregate principal amount of Notes evidenced by the
Regulation S Global Security (CUSIP No.____).
In connection with such request and in respect of such Notes,
the Transferor does hereby certify that:
(1) with respect to transfers made in reliance on Regulation
S under the Securities Act of 1933, as amended (the
"Securities Act"):
(A) the offer of the Notes was not made to a person in
the United States;
(B) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or
the Transferor and any person acting on its
behalf reasonably believed that the
transferee was outside the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated
offshore securities market and neither the
Transferor nor any person acting on its
behalf knows that
A-2-1
<PAGE>
the transaction was prearranged with a
buyer in the United States;
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b)
or 904(b) of Regulation S, as applicable; and
(D) the transaction is not part of a plan or scheme to
evade the registration requirements of the
Securities Act; or
(2) with respect to transfers made in reliance on Rule 144
under the Securities Act, the Notes are being
transferred in a transaction permitted by Rule 144 under
the Securities Act.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc., J.P.
Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities, Inc.
and Dillon, Read & Co. Inc. as initial purchasers of the Notes. Terms used in
this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:_______________________________
Name:
Title:
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the
Person signing on behalf of
such registered owner must be
stated.)
A-2-2
<PAGE>
ANNEX B
FORM OF TRANSFER CERTIFICATE--
TEMPORARY REGULATION S GLOBAL SECURITY OR
REGULATION S GLOBAL SECURITY RESTRICTED
GLOBAL SECURITY
RESTRICTED GLOBAL NOTE CERTIFICATE
(for transfers pursuant to Section 3.5(b)(5)
of the Indenture)
Citibank, N.A., as Trustee
111 Wall Street, 5th Floor
New York, New York 10043
Re: Levi Strauss & Co.
[6.80%] [or] [7.00%] Notes
due November 1, 200[3] [or] [6] (the "Notes")
---------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This certificate relates to U.S.$ _____________ aggregate
principal amount of Notes which are evidenced by the Temporary Regulation S
Global Security or the Regulation S Global Security (CUSIP No._______) and held
with the U.S. Depository through Euroclear or CEDEL or both in the name of
[insert name of transferor] (the "Transferor") during the Restricted Period. The
Transferor has requested a transfer of such beneficial interest in the Notes to
a Person that will take delivery thereof in the form of an equal principal
amount of Notes evidenced by the Restricted Global Security (CUSIP
No.___________).
In connection with such request and in respect of such Notes,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Notes are being transferred to a person that the Transferor reasonably
believes is purchasing the Notes for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A and the Notes have been transferred in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc., J.P.
Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities, Inc.
and Dillon, Read & Co. Inc. as initial purchasers of the Notes.
B-1
<PAGE>
Dated: [Insert Name of Transferor]
By:___________________________
Name:
Title:
(If the registered owner is
a corporation, partnership
or fiduciary, the title of
the Person signing on
behalf of such registered
owner must be stated.)
B-2
<PAGE>
ANNEX C-1
FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF
BENEFICIAL INTEREST IN A TEMPORARY REGULATION S
GLOBAL SECURITY TO EUROCLEAR OR CEDEL
OWNER SECURITIES CERTIFICATION
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE,
as Operator of the Euroclear
Clearance System] [or] [CEDEL BANK,
SOCIETE ANONYME]
Re: Levi Strauss & Co.
[6.80%] [or] [7.00%] Notes
due November 1, 200[3] [or] [6] (the "Notes")
----------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This certificate relates to U.S.$______ aggregate principal
amount of Notes which are evidenced by the Temporary Regulation S Global
Security (CUSIP No.___) and held with the U.S. Depository through Euroclear or
CEDEL or both in the name of [insert name of holder] (the "Holder").
In respect of such Notes, the Holder does hereby certify that
as of the date hereof, the above-captioned Notes are beneficially owned by
non-U.S. Persons and are not held for purposes of resale directly or indirectly
to a U.S. Person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of
America, its territories and possessions, any state of the United States, and
the District of Columbia. As used herein, U.S. Person has the meaning assigned
to it in Rule 902 under the Securities Act of 1933, as amended.
We undertake to advise you immediately by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Notes held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
We understand that this certification is required in
connection with certain securities laws in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings.
C-1-1
<PAGE>
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc.,
J.P. Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities,
Inc. and Dillon, Read & Co. Inc. as the initial purchasers of the Notes.
Date: __________________, 199_*
_______________________________________
[Name of Person Making Certification]
___________________
* To be dated no earlier than 15 days prior to the transfer or exchange date
to which the certification relates.
C-1-2
<PAGE>
ANNEX C-2
FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR CEDEL BANK,
SOCIETE ANONYME
DEPOSITORY SECURITIES CERTIFICATION
Citibank, N.A., as Trustee
111 Wall Street, 5th Floor
New York, New York 10043
Re: Levi Strauss & Co.
[6.80%] [or] [7.00%] Notes
due November 1, 200[3] [or] [6] (the "Notes")
---------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This is to certify that, based solely on certifications we
have received in writing, by tested telex or by electronic transmission from
member organizations appearing in our records as persons being entitled to a
portion of the principal amount set forth below (our "Member Organizations")
substantially to the effect set forth in the Indenture, as of the date hereof,
$__________ aggregate principal amount of the above-captioned Notes is
beneficially owned by non-U.S. Persons and are not held for purposes of resale
directly or indirectly to a U.S. Person or to a person within the United States
or its possessions.
As used herein, "United States" means the United States of
America, its territories and possessions, any state of the United States, and
the District of Columbia. As used herein, U.S. Person has the meaning assigned
to it in Rule 902 under the Securities Act of 1933, as amended.
We further certify (i) that we are not making available
herewith for exchange any portion of the Temporary Regulation S Global Security
excepted in such certifications and (ii) that as of the date hereof we have not
received any notification from any of our Member Organizations to the effect
that the statements made by such Member Organizations with respect to any
portion of the part submitted herewith for exchange are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in
connection with certain securities laws of the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings. This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Goldman, Sachs & Co., Lehman
Brothers Inc., J.P. Morgan Securities Inc., Morgan, Stanley & Co. Incorporated,
BA Securities, Inc. and Dillon, Read & Co. Inc. as the initial purchasers of the
Notes.
C-2-1
<PAGE>
Date: _____________, 199_
By:___________________________________
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, BRUSSELS OFFICE, as
Operator of the Euroclear Clearance
System] [or] [CEDEL BANK, SOCIETE
ANONYME]
C-2-2
<PAGE>
ANNEX C-3
FORM OF CERTIFICATION TO BE GIVEN BY
TRANSFEREE OF BENEFICIAL INTEREST IN A
TEMPORARY REGULATION S GLOBAL SECURITY
AFTER THE RESTRICTED PERIOD
TRANSFEREE SECURITIES CERTIFICATION
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE,
as Operator of the Euroclear
Clearance system] [or] [CEDEL BANK,
SOCIETE ANONYME]
Re: Levi Strauss & Co.
[6.80%] [or] [7.00%] Notes
due November 1, 200[3] [or] [6] (the "Notes")
---------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
For purposes of acquiring a beneficial interest in the
Temporary Regulation S Global Security, the undersigned certifies that it is not
a U.S. Person as defined by Regulation S under the Securities Act of 1933, as
amended.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Notes held by you in which we intend to acquire a beneficial interest in
accordance with your operating procedures if any applicable statement herein is
not correct on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc., J.P.
Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities, Inc.
and Dillon, Read & Co. Inc. as initial purchasers of the Notes.
Dated: __________, ____
By:_______________________________
As, or as agent for, the
beneficial acquiror of the Notes
to which this certificate
relates.
C-3-1
<PAGE>
ANNEX D-1
FORM OF TRANSFER CERTIFICATE--
NON-GLOBAL RESTRICTED SECURITY TO
RESTRICTED GLOBAL SECURITY
RESTRICTED GLOBAL NOTE CERTIFICATE
(for transfers pursuant to Section 3.5(b)(6)
of the Indenture)
Citibank, N.A., as Trustee
111 Wall Street, 5th Floor
New York, New York 10043
Re: Levi Strauss& Co.
[6.80%] [or] [7.00%] Notes
due November 1. 200[3] [or] 200[6] (the "Notes")
------------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This certificate relates to $__________ aggregate principal
amount of Notes held in definitive form (CUSIP No._____) by [insert name of
transferor] (the "Transferor"). The Transferor has requested a transfer of such
Notes to a Person that will take delivery in the form of an equal principal
amount of Notes evidenced by the Restricted Global Security (CUSIP No. _______).
In connection with such request and in respect of such Notes,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Notes are being transferred to a Person that the Transferor reasonably
believes is purchasing the Notes for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A and the Notes have been transferred in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc.,
J.P. Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities,
Inc. and Dillon, Read & Co. Inc. as the initial purchasers of the Notes.
D-1-1
<PAGE>
Dated: [Insert Name of Transferor]
By:_______________________________
Name:
Title:
D-2-2
<PAGE>
ANNEX D-2
FORM OF CERTIFICATE -- NON-GLOBAL
RESTRICTED SECURITY TO REGULATION S GLOBAL
SECURITY OR TEMPORARY REGULATION S
GLOBAL SECURITY
REGULATION S GLOBAL NOTE CERTIFICATE
(for transfers pursuant to Section 3.5(b)(6)
of the Indenture)
Citibank, N.A., as Trustee
III Wall Street, 5th Floor
New York, New York 10043
Re: Levi Strauss & Co.
[6.80%1[or][7.00%] Notes
due November 1, 200[3] [or] 200[6] (the "Notes")
------------------------------------------------
Reference is hereby made to the Indenture, dated as of
November 6, 1996 (the "Indenture"), between Levi Strauss & Co., as Issuer, and
Citibank, N.A., as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This certificate relates to $_______ aggregate principal
amount of Notes held in definitive form (CUSIP No.____) by [insert name of
transferor] (the "Transferor"). The Transferor has requested an exchange or
transfer of such Notes to a Person that will take delivery in the form of an
equal principal amount of Notes evidenced by the Regulation S Global Security or
the Temporary Regulation S Global Security (CUSIP No.____).
In connection with such request and in respect of such Notes,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with (a) Rule 903 or Rule 904 under the Securities Act of
1933, as amended (the "Act"), or (b) Rule 144 under the Act, and accordingly the
Transferor does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule 903 or
Rule 904:
(A) the offer of the Notes was not made to a person in
the United States;
(B) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or
the Transferor and any person acting on its
behalf reasonably believed that the
transferee was outside the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated
offshore securities market and neither the
Transferor nor any person acting on its
behalf knows that
D-2-1
<PAGE>
the transaction was pre-arranged with a buyer
in the United States;
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable;
(D) the transaction is not part of a plan or scheme to
evade the registration requirements of the Act; and
(E) if such transfer is to occur during the Restricted
Period, upon completion of the transaction, the
beneficial interest being transferred as described
above was held with the Depository through
[Euroclear] [CEDEL]; or
(2) if the transfer has been effected pursuant to Rule 144:
(A) more than two years has elapsed since the date of
the closing of the initial placement of the Notes
pursuant to the Purchase Agreement, dated October
31, 1996, between the Issuer and the
representatives of the several purchasers named
therein; and
(B) the Notes have been transferred in a transaction
permitted by Rule 144 and made in accordance with
any applicable securities laws of any state of the
United States.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and Goldman, Sachs & Co., Lehman Brothers Inc., J.P.
Morgan Securities Inc., Morgan, Stanley & Co. Incorporated, BA Securities, Inc.
and Dillon, Read & Co. Inc. as initial purchasers of the Notes.
Dated: __________, ____ [Insert Name of Transferor]
By:___________________________
Name:
Title:
D-2-2
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
FISCAL AGENCY AGREEMENT
Between
LEVI STRAUSS & CO.
Issuer
and
CITIBANK, N.A.
Fiscal Agent
-----------------------------
Dated as of November 22, 1996
-----------------------------
(Y)20,000,000,000 4.25 per cent. Bonds due November 22, 2016
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties........................................................................................................1
1. Securities............................................................................................3
2. Fiscal Agent; Other Agents............................................................................4
3. Authorization and Authentication......................................................................4
4. Payment and Cancellation..............................................................................6
(a) Payment..................................................................................6
(b) Certification............................................................................7
(c) Withholding..............................................................................8
(d) Cancellation.............................................................................8
5. Exchange of Securities................................................................................8
6. Redemption............................................................................................9
7. Delivery of Certain Information.......................................................................9
8. Conditions of Fiscal Agent's Obligations.............................................................10
(a) Compensation and Indemnity..............................................................11
(b) Agency..................................................................................11
(c) Advice of Counsel.......................................................................11
(d) Reliance................................................................................11
(e) Interest in Securities, etc.............................................................11
(f) Non-Liability for Interest..............................................................12
(g) Certifications..........................................................................12
(h) No Implied Obligations..................................................................12
9. Resignation and Appointment of Successor.............................................................12
(a) Fiscal Agent and Paying Agent...........................................................12
(b) Resignation.............................................................................12
(c) Successors..............................................................................13
(d) Acknowledgement.........................................................................13
(e) Merger, Consolidation, etc..............................................................14
10. Payment of Taxes.....................................................................................14
11. Meetings and Amendments..............................................................................14
(a) Calling of Meeting, Notice and Quorum...................................................14
(b) Approval................................................................................15
(c) Binding Nature of Amendments, Notices, Notations, etc...................................16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(d) "Outstanding" Defined...................................................................16
12. Governing Law........................................................................................17
13. Notices..............................................................................................17
14. Consent to Service; Jurisdiction.....................................................................17
15. Headings.............................................................................................18
16. Currency Rate Indemnity..............................................................................18
17. Terms and Conditions.................................................................................18
18. Counterparts.........................................................................................18
</TABLE>
EXHIBIT A Form of Temporary Global Security
EXHIBIT B Form of Permanent Global Security
EXHIBIT C Form of Definitive Security
EXHIBIT D Terms and Conditions
EXHIBIT E Form of Certificate to be Given by Euroclear or Cedel
EXHIBIT F Form of Certificate to be Given by Beneficial Owners
-ii-
<PAGE>
FISCAL AGENCY AGREEMENT, dated as of November 22, 1996, between LEVI
STRAUSS & CO., a corporation duly organized under the laws of Delaware (the
"Issuer"), and CITIBANK, N.A. (London Branch), as Fiscal Agent.
1. Securities.
----------
The Issuer has, by a Purchase Agreement, dated November 21, 1996,
between the Issuer and Goldman Sachs International (the "Purchase Agreement"),
agreed to issue (Yen)20,000,000,000 aggregate principal amount of its 4.25 per
cent. Bonds due November 22, 2016 (the "Securities").
The Securities offered shall be initially represented by a single
temporary global security (the "Temporary Global Security") issued in fully
registered form without interest coupons, substantially in the form set forth in
Exhibit A hereto. The Temporary Global Security shall be executed by the Issuer
and delivered to the Fiscal Agent, and the Fiscal Agent shall, upon order of the
Issuer, authenticate such Temporary Global Security. Such Temporary Global
Security shall be registered in the name of National City Nominees Limited or
its nominee and deposited with Citibank, N.A. (London Branch), as common
depositary (the "Common Depositary") on behalf of Morgan Guaranty Trust Company
of New York (Brussels office) as operator of the Euroclear System ("Euroclear")
and Cedel Bank, societe anonyme ("Cedel") for credit to the respective accounts
of Euroclear or Cedel. The beneficial interests in the Temporary Global Note
will be exchangeable for beneficial interests in a permanent global Security
(the "Permanent Global Security"), in denominations of (Yen)l,000,000,000 and
integral multiples thereof, substantially in the form set forth in Exhibit B
hereto, on or after the Exchange Date upon and to the extent that the
certification requirements set forth below have been complied with. As used
herein, the term "Exchange Date" means the date that is 40 days after the later
of (i) the day that Goldman Sachs International, as initial purchaser of the
Securities, advises the Issuer and the Fiscal Agent is the day on which the
Securities are first offered to persons other than distributors (as defined in
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act")) in reliance on Regulation S and (ii) the closing of the offering of the
Securities under the Purchase Agreement, as notified to the Fiscal Agent and the
Issuer in writing by Goldman Sachs International. The Permanent Global Security
shall be executed by the Issuer and delivered to the Fiscal Agent, and the
Fiscal Agent shall, upon order of the Issuer, authenticate such Permanent Global
Security. The Permanent Global Security shall be registered in the name of
National City Nominees Limited and shall be deposited with the Common Depositary
for the benefit of the operator of Euroclear and Cedel to be held for the
account of the Issuer until the Temporary Global Security shall be exchanged for
the Permanent Global Security in the manner set forth below. The Permanent
Global Security will be exchangeable, in whole but not in part, but only as
provided in Section 3(g) below, for definitive Securities in minimum
denominations of (Yen)1,000,000,000 (the "Definitive Securities") issuable in
registered form, without coupons, in such name or names as Euroclear or Cedel
shall direct, all substantially in the form set forth in Exhibit C hereto. The
term "Securities" as used herein includes the Temporary Global Security, the
Permanent Global Security and the Definitive Securities.
<PAGE>
2. Fiscal Agent; Other Agents.
--------------------------
The Issuer hereby appoints Citibank, N.A. (London Branch) having a
corporate trust office ("Principal Office") at 336 Strand, London WC2R IHB, in
England, as fiscal agent and principal paying agent of the Issuer in respect of
the Securities upon the terms and subject to the conditions herein set forth,
and Citibank, N.A. (London Branch) hereby accepts such appointment. Citibank,
N.A. (London Branch), and any successor or successors as such fiscal agent
qualified and appointed in accordance with Section 9 hereof, are herein called
the "Fiscal Agent". The Fiscal Agent shall have the powers and authority
granted to and conferred upon it in the Securities and hereby and such further
powers and authority to act on behalf of the Issuer as may be mutually agreed
upon by the Issuer and the Fiscal Agent. All of the terms and provisions with
respect to such powers and authority contained in the Securities are subject to
and governed by the terms and provisions hereof.
The Issuer may, at its discretion, appoint one or more other or
additional agents (each of the principal paying agent, each paying agent
appointed herein and each such other or additional paying agent, (a "Paying
Agent" or "Paying Agents") for the payment (subject to applicable laws and
regulations) of the principal of (and premium, if any) and any interest on the
Securities, and in addition to the appointment contemplated by Section 3(i), one
or more agents (each transfer agent appointed herein and each such other or
additional transfer agent, a "Transfer Agent" or "Transfer Agents") for the
exchange of Securities, at such place or places as the Issuer may determine.
The Issuer shall promptly notify the Fiscal Agent of the name and address of
each Paying Agent and Transfer Agent appointed by it and of the country or
countries in which a Paying Agent or Transfer Agent may act in that capacity,
and will notify the Fiscal Agent of the resignation or termination of any Paying
Agent or Transfer Agent. Subject to the provisions of Section 9(c) hereof, the
Issuer may vary or terminate the appointment of any such Paying Agent or
Transfer Agent at any time and from time to time upon giving not less than
ninety days' notice to such Paying Agent or Transfer Agent, as the case may be,
and to the Fiscal Agent.
The Issuer shall cause notice of any resignation, termination or
appointment of any Paying Agent or Transfer Agent or of the Fiscal Agent and of
any change in the office through which any such Agent will act to be given to
the holders at their addresses as they appear in the Security Register.
3. Authorization and Authentication.
--------------------------------
(a) The Securities shall be executed on behalf of the Issuer by any
two of the following persons: its Chairman of the Board, its Chief Executive
Officer, its President or any of its Vice Presidents, its Treasurer or an
Assistant Treasurer (the "Authorized Officers"), under a facsimile of its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such officers, or any one of them, shall have ceased, for
any reason, to hold such offices prior to the authentication and delivery of the
Securities or did not hold such offices at the date of the Securities.
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<PAGE>
(b) The Issuer shall execute and deliver, on or prior to November 22,
1996 (the "Closing Date") the Temporary Global Security and the Permanent Global
Security to the Fiscal Agent, and the Fiscal Agent shall, upon the order of the
Issuer signed by an executive officer of the Issuer, authenticate the Temporary
Global Security and the Permanent Global Security. The Temporary Global
Security and the Permanent Global Security will be deposited with the Common
Depositary, to be held for credit to the respective accounts of Euroclear or
Cedel (or to such accounts as they may direct), except as otherwise provided in
Section 1 hereof in the case of the Permanent Global Security being held for the
account of the Issuer until the exchange of the Temporary Global Security.
(c) On or after the Exchange Date pursuant to instructions delivered
by the Issuer to the Common Depositary on the date hereof, the Temporary Global
Security may be exchanged as a whole or in part for the Permanent Global
Security without charge, but only upon presentation to the Common Depositary of
a certificate or certificates in substantially the form set forth in Exhibit E
hereto in writing, by tested telex or electronic transmission, from Euroclear or
Cedel and upon presentation to Euroclear or Cedel of a certificate or
certificates in substantially the form set forth in Exhibit F hereto in writing,
by tested telex or electronic transmission, from the beneficial owners of the
Temporary Global Security or portions thereof being exchanged.
(d) [Reserved]
(e) Upon any such exchange of a portion of the Temporary Global
Security for the Permanent Global Security, the Temporary Global Security shall
be endorsed by the Fiscal Agent to reflect the reduction of the principal amount
evidenced thereby, whereupon its remaining principal amount shall be reduced for
all purposes by the amount so exchanged, and the Permanent Global Security shall
be endorsed to reflect the increase of the principal amount evidenced thereby,
whereupon its principal amount shall be increased for all purposes by the amount
so exchanged. Until so exchanged in full, the Temporary Global Security shall
in all respects be entitled to the same benefits under this Agreement as the
Permanent Global Security authenticated and delivered hereunder.
(f) Promptly after the Temporary Global Security has been fully
exchanged, it shall be surrendered by the Common Depositary to the Fiscal Agent,
as the Issuer's agent, for cancellation.
(g) The Permanent Global Security is exchangeable, in whole but not
in part, for a Definitive Security or Securities without charge if the Permanent
Global Security is held on behalf of Euroclear or Cedel or an alternative
clearing system and Euroclear or Cedel or such clearing system is closed for
business for a continuous period of 14 days (other than by reason of holidays,
statutory or otherwise) or announces an intention permanently to cease business
or does in fact do so. Thereupon the holder of a beneficial interest in the
Permanent Global Security may give notice to the Fiscal Agent of its intention
to exchange the Permanent Global Security for Definitive Securities on a day
falling not less than 60 days after the day on which the notice requiring an
exchange is given and on which banks are open for business in the city of
London.
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<PAGE>
(h) Upon the exchange of a Permanent Global Security for Definitive
Securities as contemplated by clause (g) of this Section 3, the Permanent Global
Security shall be surrendered promptly by the Common Depositary to the Fiscal
Agent for cancellation. Any exchange of an interest in a Permanent Global
Security for Definitive Securities pursuant to this Section 3 shall be made free
of charge to the beneficial owners of the Permanent Global Security.
(i) The Issuer shall cause to be kept at the Principal Office of the
Fiscal Agent a register (the register maintained in such office and in any other
office or agency for such purpose being herein sometimes referred to as the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration and transfer of
Securities. The Fiscal Agent is hereby appointed "Security Registrar" for the
purpose of registering and transferring Securities as herein provided. Any
reference herein to the Transfer Agent or Agents shall include the Security
Registrar.
(j) The Fiscal Agent may, with the consent of the Issuer, appoint by
an instrument or instruments in writing one or more agents (which may include
itself) for the authentication of the Securities and, with such consent, vary or
terminate any such appointment upon written notice and approve any change in the
office through which any authentication agent acts. The Issuer (by written
notice to the Fiscal Agent and the authentication agent whose appointment is to
be terminated) may also terminate any such appointment at any time. The Fiscal
Agent hereby agrees to solicit written acceptances from the entities concerned
(in form and substance satisfactory to the Issuer) of any such appointments. In
its acceptance of such appointment, each such authentication agent shall agree
to act as an authentication agent pursuant to the terms and conditions of this
Agreement.
4. Payment and Cancellation.
------------------------
(a) Payment. Subject to the following provisions, the Issuer shall
-------
provide to the Fiscal Agent at its head office in Tokyo, Japan on or prior to
the applicable due date for payment of the Securities, funds required to make
payment of the principal of and interest on the Securities, at the times, in the
amounts, in such coin or currency and for the purposes set forth herein and in
the text of the Securities; and the Issuer hereby authorizes and directs the
Fiscal Agent from funds so paid to it to make or cause to be made payment of the
principal of (and premium, if any) and interest on the Securities as set forth
herein and in the text of the Securities. The Fiscal Agent will arrange
directly with the Paying Agents (if applicable) for the payment, and the Fiscal
Agent will make payment, in the manner provided herein and in the Securities,
from funds furnished by the Issuer, of the principal of (and premium, if any)
and interest on the Securities. Any such Paying Agent shall provide to the
Fiscal Agent, as promptly as practicable after the Interest Payment Date (as
defined in the text of the Securities) or maturity date or redemption date a
certificate as to the Securities so paid by the Paying Agent. Notwithstanding
the foregoing, the Issuer may provide directly to a Paying Agent funds for the
payment of the principal thereof (and premium, if any) and interest, payable
thereon under an agreement with respect to such funds containing substantially
the same terms and conditions set forth in this Section 4(a) and in Section 8(b)
hereof; and the Fiscal Agent shall have no responsibility with respect to any
funds so provided by the Issuer to any such Paying
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<PAGE>
Agent. The Issuer irrevocably confirms that funds will be deposited with an
account specified by the Fiscal Agent in such a manner so that the Fiscal Agent
will be able to make timely payments in accordance with the provisions of this
Agreement. If the Fiscal Agent or any Paying Agent has not for any reason
received on the relevant payment date sufficient amounts to satisfy all claims
in respect of payments then due on the Securities, the Fiscal Agent and any
Paying Agent shall not be required to make payment of any amount due on any
Security until the Fiscal Agent or such Paying Agent has received or has had
made available to it the full amount of the monies then due and payable in
respect of such Securities. Nevertheless, subject to the foregoing, if the
Fiscal Agent or any Paying Agent is satisfied that it will receive such full
amount later, it shall be entitled to pay principal of or interest on the
Securities due in accordance with their terms.
The principal of (and premium, if any) and interest on the Securities
shall be payable in Japanese Yen. Payment of principal shall be made to the
registered owner against surrender of Securities, subject to any applicable laws
and regulations, at the office of any Paying Agent. Payment of any installment
of interest on a Security shall be made to the person in whose name such
Security is registered at the close of business on April 15 and October 15
(whether or not such days are business days) in the year of the relevant
interest payment date (the "Record Date"), in accordance with such information
furnished to the Fiscal Agent by the Registrar promptly after each Record Date.
Payments of principal (and premium, if any) and interest will be made, subject
to any applicable laws and regulations, by transfer to a Japanese Yen account
maintained by the payee with a bank in Tokyo. Each registered owner shall give
notice of such Japanese Yen account, in the case of principal payments, to the
relevant Paying Agent not less than 15 days prior to the date of the payment to
be received, or, in the case of interest payments, to the Registrar not later
than the Record Date relating to the payment to be received, provided that if
such notice has been given to the Registrar and the applicable Paying Agent,
such registered owner shall give further notice to the Registrar and Paying
Agent only upon a change of any details as to such account. If a registered
owner fails to give such notice prior to the time limit specified above,
payments of principal (and premium, if any) and interest will be made, subject
to any applicable laws and regulations, by a Japanese Yen check drawn on a bank
in Tokyo unless the relevant Paying Agent or (as the case may be) the Registrar
at its discretion accepts such notice given after the time limit specified
above. Payments to non-residents of Japan shall be made to a non-resident
Japanese Yen account maintained by the payee with an authorized foreign exchange
bank in Tokyo or (as the case may be) by a Japanese Yen check drawn on an
authorized foreign exchange bank in Tokyo, subject to each case to any
applicable laws and regulations.
(b) Certification. The Issuer shall have the right reasonably to
-------------
require a holder of a Security, as a condition of payment of the principal of
(and premium, if any) or any interest on such Security, to present at such place
as the Issuer shall designate a certificate in such form as the Issuer may from
time to time prescribe to enable the Issuer to determine its duties and
liabilities with respect to (i) any taxes, assessments or governmental charges
which the Issuer, the Fiscal Agent or any withholding agent may be required to
deduct or withhold from payments in respect of such Security under any present
or future law of any jurisdiction or any regulation of any taxing authority
thereof and (ii) any reporting or other requirements under such laws or
regulations. To the extent not otherwise prohibited by applicable laws and
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<PAGE>
regulations, the Issuer shall be entitled to determine its duties and
liabilities with respect to such deduction, withholding, reporting or other
requirements on the basis of information contained in such certificate, or, if
no certificate shall be presented, on the basis of any presumption created by
any such law or regulation, and shall be entitled to act in accordance with such
determination.
The Fiscal Agent and each such withholding agent shall retain each
certificate received by it and relating to the Securities for so long as any of
the Securities are outstanding and in no event for less than four calendar years
after its receipt, and for such additional period thereafter as such certificate
may become material in the administration of applicable tax laws.
(c) Withholding. At least 10 days prior to the first date of payment
-----------
of interest on the Securities and at least 10 days prior to each date, if any,
of payment of principal (and premium, if any) or interest thereafter if there
has been any change with respect to the matters set forth in the below-mentioned
certificate, the Issuer will furnish the Fiscal Agent and each other Paying
Agent with a certificate of Authorized Officers instructing the Fiscal Agent and
each other Paying Agent whether such payment of principal of (and premium, if
any) or any interest on such Securities shall be made without deduction or
withholding for or on account of any tax, assessment or other governmental
charge. If any such deduction or withholding shall be required, then such
certificate shall specify, by country, the amount, if any, required to be
withheld on such payment to holders of such Securities, and the Issuer shall
provide to the Fiscal Agent on the applicable payment date the funds required to
make such payment net of any amounts required to be withheld or deducted as set
forth in such certificate. The Issuer agrees to indemnify the Fiscal Agent and
each other Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by them
in reliance on any certificate furnished pursuant hereto.
(d) Cancellation. All Securities delivered to the Fiscal Agent (or
------------
any other Agent appointed by the Issuer pursuant to Section 2 hereof) by a
holder for payment, redemption or exchange, or by the Issuer for cancellation,
or by the Common Depositary in accordance with Section 3 hereof, shall be
canceled and destroyed by the Fiscal Agent (or, if delivered to another Agent
appointed by the Issuer pursuant to Section 2 hereof, by such other Agent, which
shall thereupon furnish certificates of such destruction to the Fiscal Agent).
Upon such cancellation and destruction (or upon receipt of such certificates
from such other Agent), the Fiscal Agent shall furnish certificates of such
destruction to the Issuer.
5. Exchange of Securities.
----------------------
The Fiscal Agent, or its agent duly authorized by the Fiscal Agent, is
hereby authorized from time to time in accordance with the provisions of the
Securities and of this Section to authenticate and deliver:
(i) Securities in exchange for or in lieu of Securities of like tenor
and of like form which become mutilated, destroyed, stolen or lost; and
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<PAGE>
(ii) Upon partial redemption, Securities of authorized denominations
of a like tenor and form as the Securities so surrendered in exchange for
the unredeemed portion of any Securities repaid in part only.
Securities shall be dated the date from which interest on the
Securities first begins to accrue. Each Security authenticated and delivered
upon any exchange for or in lieu of the whole or any part of any Security shall
carry all the rights, if any, to interest accrued and unpaid and to accrue which
were carried by the whole or such part of such Security.
6. Redemption.
----------
All notices of redemption of the Securities shall be made in the name
and at the expense of the Issuer and shall be given in accordance with the
provisions applicable thereto set forth in the text of the Securities.
Whenever less than all the Securities at any time Outstanding are to
be redeemed at the option of the Issuer, the particular Securities to be
redeemed shall be selected not more than 60 days prior to the redemption date by
the Fiscal Agent from the Outstanding Securities not previously called for
redemption, by prorating, as nearly as may be practicable, the principal amount
of Securities to be redeemed. In any proration pursuant to this Section, the
Fiscal Agent shall make such adjustments, reallocations and eliminations as it
shall deem proper to the end that the principal amount of Securities so prorated
shall be (Yen)1,000,000,000 or a multiple thereof, by increasing or decreasing
or eliminating the amount which would be allocable to any holder on the basis of
exact proportion by an amount not exceeding (Yen)1,000,000,000. The Fiscal
Agent in its discretion may determine the particular Securities (if there are
more than one) registered in the name of any holder which are to be redeemed, in
whole or in part. Upon any partial redemption of a Security, the Issuer will
issue and the Fiscal Agent shall authenticate and deliver in exchange therefor
one or more Securities, of any authorized denomination as requested by the
holder, in aggregate principal amount equal to the unredeemed portion of the
principal of such Security.
7. Delivery of Certain Information.
-------------------------------
(a) The Issuer shall maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP (as defined in Condition 7 of
the Terms and Conditions of the Securities). So long as any Securities are
Outstanding (as defined in Section 11(d) hereof) and subject to the second
sentence of subsection (b) below, the Issuer will furnish or cause to be
furnished to the Fiscal Agent and, upon request of a holder of Securities, the
Fiscal Agent shall furnish to such holder, as soon as available, a copy (in
English):
(i) as soon as practicable and in any event within 60 days after the
end of each of the first three fiscal quarters of the fiscal year of the
Issuer, a copy of the consolidated balance sheet of the Issuer and its
Subsidiaries (as defined in Condition 7 of the Terms and Conditions of the
Securities), as at the end of the period, and the related consolidated
statements of income and cash flows of the Issuer and its
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<PAGE>
Subsidiaries for such fiscal quarter and for the fiscal year to date,
certified by the chief financial officer, treasurer or controller of the
Issuer as fairly presenting the financial condition of the Issuer and its
Subsidiaries in all material respects as at the dates indicated and the
results of their operations and changes in cash flows for the periods
indicated in accordance with GAAP, except for the absence of footnotes and
subject to changes resulting from audit and normal year-end adjustment;
(ii) as soon as practicable and in any event within 90 days after the
end of each fiscal year of the Issuer, commencing with fiscal year 1996, a
copy of the consolidated balance sheet of the Issuer and its Subsidiaries
as at the end of such year and the related consolidated statement of
income, stockholders' equity and cash flows of the Issuer and its
Subsidiaries for such fiscal year, accompanied by a report thereon of and a
letter from Arthur Andersen LLP or other independent public accountants of
recognized international standing; which report shall be unqualified as to
going concern and scope of audit and shall state that such consolidated
financial statements present fairly in all material respects the financial
position of the Issuer and its Subsidiaries as at the dates indicated and
the results of operations and cash flows for the periods indicated in
conformity with GAAP (except as otherwise stated therein) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepting
auditing standards;
(b) As soon as practicable after the same are available to the
Issuer, the Issuer will deliver to the Fiscal Agent and, upon request of a
holder of Securities, the Fiscal Agent shall furnish to such holder as soon as
available, a copy (in English), of all material financial statements, reports,
notices and proxy statements, if any, sent or made available by the Issuer to
its bondholders generally, of all material regular and periodic reports and
other filings, if any, made by the Issuer with any securities exchange or the
Securities and Exchange Commission, and of all press releases and other
statements made available generally by the Issuer to the public concerning
material developments in the business of the Issuer and its Subsidiaries taken
as a whole. Notwithstanding the foregoing, the Issuer shall have no obligation
under this subsection to deliver to the Fiscal Agent copies of (i) court filings
and related documents, (ii) state securities or "blue sky" filings, (iii)
filings relating to routine business matters such as permits, etc. and (iv)
filings pursuant to the consent decree between the Issuer and the U.S. Federal
Trade Commission dates July 12, 1978. As to any information contained in
materials furnished pursuant to this subsection, the Issuer shall not be
separately required to furnish such information under subsection (a) above, but
the foregoing shall not derogate the obligation of the Issuer to furnish the
information and material described in subsection (a) above at the times
specified therein.
8. Conditions of Fiscal Agent's Obligations.
----------------------------------------
The Fiscal Agent accepts it obligations herein set forth upon the
terms and conditions hereof, including the following, to all of which the Issuer
agrees and to all of which the rights of holders from time to time of Securities
are subject:
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(a) Compensation and Indemnity. The Fiscal Agent shall be entitled to
--------------------------
reasonable compensation as agreed with the Issuer for all services rendered by
it, and the Issuer agrees promptly to pay such compensation and to reimburse the
Fiscal Agent for the reasonable out-of-pocket expenses (including counsel fees)
incurred by it in connection with its services hereunder. The Issuer also
agrees to indemnify the Fiscal Agent for, and to hold it harmless against, any
loss, liability or expense, incurred without negligence or bad faith, arising
out of or in connection with its acting as Fiscal Agent hereunder, as well as
the reasonable costs and expenses of defending against any claim of liability in
the premises. The obligations of the Issuer under this Section 8(a) shall
survive payment of all the Securities or the resignation or removal of the
Fiscal Agent.
(b) Agency. In acting under this Agreement and in connection with the
------
Securities, the Fiscal Agent is acting solely as agent of the Issuer and does
not assume any responsibility for the correctness of the recitals in the
Securities (except for the correctness of the statement in its certificate of
authentication thereon) or any obligation or relationship of agency or trust,
for or with any of the owners or holders of the Securities, except that all
funds held by the Fiscal Agent for the payment of principal of (and premium, if
any) and any interest on the Securities shall be held in a segregated account
for such owners or holders, as the case may be, as set forth herein and in the
Securities, and the Fiscal Agent shall have no claim or right of set-off against
funds so held in such segregated account on account of amounts owing to the
Fiscal Agent from the Company; provided, however, that monies held in respect of
-------- -------
the Securities remaining unclaimed at the end of two years after the principal
of all the Securities shall have become due and payable (whether at maturity or
otherwise) and monies sufficient therefor shall have been duly made available
for payment shall, together with any interest made available for payment
thereon, be repaid to the Issuer, as provided and in the manner set forth in the
Securities. Upon such repayment, the aforesaid obligation to maintain a
segregated account shall terminate and all liability of the Fiscal Agent and
Paying Agents with respect to such funds shall thereupon cease.
(c) Advice of Counsel. The Fiscal Agent and any Paying Agent or
-----------------
Transfer Agent appointed by the Issuer pursuant to Section 2 hereof may consult
with their respective counsel or other counsel or professional advisors
satisfactory to them, and the opinion of such counsel or advisors shall be full
and complete authorization and protection in respect of any action taken or
suffered by them hereunder in good faith and without negligence and in
accordance with such opinion.
(d) Reliance. The Fiscal Agent and any Paying Agent or Transfer Agent
--------
appointed by the Issuer shall be protected and shall incur no liability for or
in respect of any action taken or thing suffered by it in reliance upon any
Security, notice, direction, consent, certificate, affidavit, statement, or
other paper or document believed by it, in good faith and without negligence, to
be genuine and to have been passed or signed by the proper parties.
(e) Interest in Securities, etc. The Fiscal Agent, any Paying Agent
----------------------------
or Transfer Agent appointed by the Issuer pursuant to Section 2 hereof and their
respective officers, directors and employees may become the owners of, or
acquire any interest in, any Securities, with the same rights that they would
have if they were not the Fiscal Agent, such
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<PAGE>
other Paying Agent or Transfer Agent or such person, and may engage or be
interested in any financial or other transaction with the Issuer, and may act
on, or as depository, trustee or agent for, any committee or body of holders of
Securities or other obligations of the Issuer, as freely as if they were not the
Fiscal Agent, such other Paying Agent or Transfer Agent or such person.
(f) Non-Liability for Interest. Subject to any agreement between the
--------------------------
Issuer and the Fiscal Agent to the contrary, the Fiscal Agent shall not be under
any liability for interest on monies at any time received by it pursuant to any
of the provisions of this Agreement or of the Securities.
(g) Certifications. Whenever in the administration of this Agreement
--------------
the Fiscal Agent shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Fiscal Agent
(unless other evidence be herein specifically prescribed) may, in the absence of
bad faith or negligence on its part, rely upon a certificate signed by any
person authorized by or pursuant to a resolution of the boards of directors of
the Issuer and delivered to the Fiscal Agent.
(h) No Implied Obligations. The duties and obligations of the Fiscal
----------------------
Agent shall be determined solely by the express provisions of this Agreement,
and the Fiscal Agent shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Fiscal Agent.
9. Resignation and Appointment of Successor.
----------------------------------------
(a) Fiscal Agent and Paying Agent. The Issuer agrees, for the benefit
-----------------------------
of the holders from time to time of the Securities, that there shall at all
times be a Fiscal Agent hereunder which shall be a bank or trust company in good
standing and having an established place of business in London, and authorized
under such laws to exercise corporate trust powers, and, to the extent required
by the provisions of the Securities, if any, a Paying Agent outside the United
States for payment of principal of (and premium, if any) and any interest on
such Securities, until all the Securities authenticated and delivered hereunder
(i) shall have been delivered to the Fiscal Agent for cancellation or (ii)
become due and payable and monies sufficient to pay the principal of (and
premium, if any) and any interest on the Securities shall have been made
available for payment and either paid or returned to the Issuer as provided
herein and in such Securities.
(b) Resignation. The Fiscal Agent may at any time resign by giving
-----------
written notice to the Issuer of such intention on its part, specifying the date
on which its desired resignation shall become effective, provided that such date
shall not be less than two (2) months from the date on which such notice is
given, unless the Issuer agrees to accept shorter notice. The Fiscal Agent
hereunder may be removed at any time by the filing with it of an instrument in
writing signed on behalf of the Issuer and specifying such removal and the date
when it shall become effective. Notwithstanding the dates of effectiveness of
resignation or removal, as the case may be, to be specified in accordance with
the preceding sentences, such resignation or removal shall take effect only upon
the appointment by the Issuer, as hereinafter provided, of a
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<PAGE>
successor Fiscal Agent (which, to qualify as such, shall be a bank or trust
company in good standing and having and acting through an established place of
business in London, authorized under such laws to exercise corporate trust
powers and having a combined capital and surplus in excess of U.S. $50,000,000)
and the acceptance of such appointment by such successor Fiscal Agent. Upon its
resignation or removal, the Fiscal Agent shall be entitled to payment by the
Issuer pursuant to Section 8 hereof of compensation for services rendered and to
reimbursement of out-of-pocket expenses incurred hereunder. If, by the day which
is 10 days before the expiration of any notice under this Section 9(b), the
Issuer has not appointed a successor Fiscal Agent, the Fiscal Agent shall be
entitled, on behalf of the Issuer, to appoint a Fiscal Agent in its place
meeting the requirements set out above (which successor Fiscal Agent must be
approved by the Issuer, provided that such approval shall not be unreasonably
withheld or delayed).
(c) Successors. In case at any time the Fiscal Agent or any Paying
----------
Agent (if such Paying Agent is the only Paying Agent located in a place where,
by the terms of the Securities or this Agreement, the Issuer is required to
maintain a Paying Agent) shall resign, or shall be removed, or shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or shall file a
voluntary petition in bankruptcy or make an assignment for the benefit of its
creditors or consent to the appointment of a receiver of all or any substantial
part of its property, or shall admit in writing its inability to pay or meet its
debts as they severally mature, or if a receiver of it or of all or any
substantial part of its property shall be appointed, or if an order of any court
shall be entered approving any petition filed by or against it under the
provisions of applicable receivership, bankruptcy, insolvency, reorganization or
other similar legislation, or if a receiver of it or its property shall be
appointed, or if any public officer shall take charge or control of it or of its
property or affairs, for the purpose of rehabilitation, conservation or
liquidation, a successor Fiscal Agent or Paying Agent, as the case may be,
qualified as aforesaid, shall be appointed by the Issuer by an instrument in
writing, filed with the successor Fiscal Agent or Paying Agent, as the case may
be, and the predecessor Fiscal Agent or Paying Agent, as the case may be. Upon
the appointment as aforesaid of a successor Fiscal Agent or Paying Agent, as the
case may be, and acceptance by such successor of such appointment, the Fiscal
Agent or Paying Agent, as the case may be, so succeeded shall cease to be Fiscal
Agent or Paying Agent, as the case may be, hereunder. If no successor Fiscal
Agent or other Paying Agent, as the case may be, shall have been so appointed by
the Issuer and shall have accepted appointment as hereinafter provided, and, in
the case of such other Paying Agent, if such other Paying Agent is the only
Paying Agent located in a place where, by the terms of the Securities or this
Agreement, the Issuer is required to maintain a Paying Agent, then any holder of
a Security who has been a bona fide holder of a Security for at least six
months, on behalf of himself and all others similarly situated, or the Fiscal
Agent may petition any court of competent jurisdiction for the appointment of a
successor agent. The Issuer shall give prompt written notice to each other
Paying Agent of the appointment of a successor Fiscal Agent and shall give
prompt written notice to the Fiscal Agent of the appointment of a successor
Paying Agent.
(d) Acknowledgement. Any successor Fiscal Agent appointed hereunder
---------------
shall execute, acknowledge and deliver to its predecessor and to the Issuer an
instrument accepting such appointment hereunder, and thereupon such successor
Fiscal Agent, without any
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<PAGE>
further act, deed or conveyance, shall become vested with all the authority,
rights, powers, trusts, immunities, duties and obligations of such predecessor
with like effect as if originally named as Fiscal Agent hereunder, and such
predecessor, upon payment of its compensation and reimbursement of its
disbursements then unpaid, shall thereupon become obligated to transfer, deliver
and pay over, and such successor Fiscal Agent shall be entitled to receive, all
monies, securities, books, records or other property on deposit with or held by
such predecessor as Fiscal Agent hereunder.
(e) Merger, Consolidation, etc. Any corporation into which the Fiscal
---------------------------
Agent hereunder may be merged, or any corporation resulting from any merger or
consolidation to which the Fiscal Agent shall be a party, or any corporation to
which the Fiscal Agent shall sell or otherwise transfer all or substantially all
the assets and business of the Fiscal Agent, provided that it shall be qualified
as aforesaid, shall be the successor Fiscal Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
10. Payment of Taxes.
----------------
The Issuer will pay all stamp and other duties, if any, which may be
imposed by the State of Delaware, the United States of America or any political
subdivision thereof or taxing authority of or in the foregoing with respect to
this Agreement or the issuance of the Securities.
11. Meetings and Amendments.
-----------------------
(a) Calling of Meeting, Notice and Quorum. A meeting of holders of
-------------------------------------
Securities may be called at any time and from time to time to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement or the Securities to be made, given or taken
by holders of Securities or to modify, amend or supplement the terms of the
Securities or this Agreement as hereinafter provided. The Fiscal Agent may at
any time call a meeting of holders of Securities for any such purpose to be held
at such time and at such place in London as the Fiscal Agent shall determine.
Notice of every meeting of holders of Securities, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be given as provided in the terms of the Securities, not
less than 30 nor more than 60 days prior to the date fixed for the meeting. In
case at any time the Issuer or the holders of at least 25% in aggregate
principal amount of the Outstanding Securities (as defined in subsection (d) of
this Section) shall have requested the Fiscal Agent to call a meeting of the
holders of Securities for any such purpose, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, the Fiscal
Agent shall call such meeting for such purposes by giving notice thereof.
To be entitled to vote at any meeting of holders of Securities, a
person shall be a holder of Outstanding Securities. The persons entitled to
vote a majority in principal amount of the Outstanding Securities shall
constitute a quorum. At the reconvening of any meeting adjourned for a lack of
a quorum, the persons entitled to vote 25% in principal amount the Outstanding
Securities shall constitute a quorum for the taking of an action set forth in
the
-14-
<PAGE>
notice of the original meeting. The Fiscal Agent may make such reasonable
and customary regulations as it shall deem advisable for any meeting of holders
of Securities with respect to the proof of the holdings of Securities, the
adjournment and chairmanship of such meeting, the appointment and duties of
inspectors of votes, the submission and examination of certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate.
(b) Approval. (i) At any meeting of holders of Securities duly called
--------
and held as specified above, upon the affirmative vote of the holders of not
less than a majority in aggregate principal amount of the Securities then
Outstanding represented at such meeting (or of such other percentage as may be
set forth in the text of the Securities with respect to the action being taken),
or (ii) with the written consent of the owners of not less than a majority in
aggregate principal amount of the Securities then Outstanding (or of such other
percentage as may be set forth in the text of the Securities with respect to the
action being taken), the Issuer and the Fiscal Agent may, but shall not be
obligated to, modify, amend or supplement the terms of the Securities or this
Agreement, in any way, and the holders of Securities may make, take or give any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement or the Securities to be made, given or taken
by holders of Securities; provided, however, that any resolution referred to in
-------- -------
clause (i) above shall be approved by the holders of not less than 25% in
aggregate principal amount of the Securities then Outstanding, and; provided,
--------
further, that no such action may, without the consent of the holder of each
- -------
Security affected thereby, (A) change the due date for the payment of the
principal of (or premium, if any) or any installment of interest on any
Security, (B) reduce the principal amount of any Security (or premium, if any,
thereon), the portion of such principal amount which is payable upon
acceleration of the maturity of such Security or the interest rate thereon, (C)
change the coin or currency in which or the required places at which payment
with respect to interest, premium or principal in respect of Securities is
payable, (D) permit the Issuer to redeem the Securities if, prior to such
action, the Issuer is not permitted so to do, or (E) reduce the proportion of
the principal amount of Securities required to constitute a quorum at any
meeting of holders of Securities for the adoption of any resolution or the vote
or consent of the holders of which is necessary to modify, amend or supplement
this Agreement or the terms and conditions of the Securities or to make, take or
give any request, demand, authorization, direction, notice, consent, waiver or
other action provided hereby or thereby to be made, taken or given. The Issuer
and the Fiscal Agent may, without the vote or consent of any holder of
Securities, amend this Agreement or the Securities for the purpose of curing any
ambiguity, or of curing, correcting or, supplementing any defective provision
thereof, or in any manner which the Issuer and the Fiscal Agent may deem
necessary or desirable and which they determine shall not be inconsistent with
the Securities and shall not materially adversely affect the interest of any
holder of Securities or in any manner permitted as set forth in the text of the
Securities.
It shall not be necessary for the vote or consent of the holders of
Securities to approve the particular form of any proposed modification,
amendment, supplement, request, demand, authorization, direction, notice,
consent, waiver or other action, but it shall be sufficient if such vote or
consent shall approve the substance thereof.
-15-
<PAGE>
(c) Binding Nature of Amendments, Notices, Notations, etc. Any
------------------------------------------------------
instrument given by or on behalf of any holder of a Security in connection with
any consent to or vote for any such modification, amendment, supplement,
request, demand, authorization, direction, notice, consent, waiver or other
action will be irrevocable once given and will be conclusive and binding on all
subsequent holders of such Security or any Security issued directly or
indirectly in exchange or substitution therefor or in lieu thereof. Any such
modification, amendment, supplement, request, demand, authorization, direction,
notice, consent, waiver or other action will be conclusive and binding on all
holders of Securities, whether or not they have given such consent or cast such
vote or were present at any meeting, and whether or not notation of such
modification, amendment, supplement, request, demand, authorization, direction,
notice, consent, waiver or other action is made upon the Securities. Notice of
any modification or amendment of, supplement to, or request, demand,
authorization, direction, notice, consent, waiver or other action with respect
to the Securities or this Agreement (other than for purposes of curing any
ambiguity or of curing, correcting or supplementing any defective provision
hereof or thereof) shall be given to each holder of Securities affected thereby,
in all cases as provided in such Securities.
Securities authenticated and delivered after the effectiveness of any
such modification, amendment, supplement, request, demand, authorization,
direction, notice, consent, waiver or other action may bear a notation in the
form approved by the Fiscal Agent and the Issuer as to any matter provided for
in such modification, amendment, supplement, request, demand, authorization,
direction, notice, consent, waiver or other action. New Securities modified to
conform, in the opinion of the Fiscal Agent and the Issuer, to any such
modification, amendment, supplement, request, demand, authorization, direction,
notice, consent, waiver or other action may be prepared by the Issuer,
authenticated by the Fiscal Agent (or any authentication agent appointed
pursuant to Section 3 hereof) and delivered in exchange for Outstanding
Securities.
(d) "Outstanding" Defined. For purposes of the provisions of this
---------------------
Agreement and the Securities, any Security authenticated and delivered pursuant
to this Agreement shall, as of any date of determination, be deemed to be
"Outstanding", except:
------
(i) Securities theretofore canceled by the Fiscal Agent or delivered
to the Fiscal Agent for cancellation or held by the Fiscal Agent for
reissuance but not reissued by the Fiscal Agent;
(ii) Securities which have been called for redemption in accordance
with their terms or which have become due and payable at maturity or
otherwise and with respect to which monies sufficient to pay the principal
thereof (and premium, if any) and any interest thereon shall have been made
available to the Fiscal Agent; or
(iii) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to this
Agreement;
provided, however, that in determining whether the holders of the requisite
- -------- -------
principal amount of Outstanding Securities are present at a meeting of holders
of Securities for quorum purposes or
-16-
<PAGE>
have consented to or voted in favor of any request, demand, authorization,
direction, notice, consent, waiver, amendment, modification or supplement
hereunder, (i) the principal amount of a Security which by its terms provides
for an amount less than the principal amount to be due and payable upon a
declaration of acceleration of the maturity thereof that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the maturity
thereof, and (ii) Securities owned directly or indirectly by the Issuer shall be
disregarded and deemed not to be Outstanding.
12. Governing Law.
-------------
Except as otherwise provided by applicable mandatory provisions of
law, this Agreement shall be governed by, and interpreted in accordance with,
the laws of the State of New York, United States of America.
13. Notices.
-------
All notices or communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to the Fiscal Agent shall
be delivered, transmitted by facsimile, telexed or telegraphed to it at 336
Strand, London WC2R 1HB, Attention: Bond Agency Department, facsimile
transmission no. 44171-500-0483 or if sent to the Issuer shall be delivered or
transmitted by facsimile to it at Levi Strauss & Co., Levi's Plaza, 1155 Battery
Street, IH1/5, San Francisco, California 94111, facsimile transmission no. (415)
501-1342, Attention: Treasurer. The foregoing addresses for notices or
communications may be changed by written notice given by the addressee to each
party hereto, and the addressee's address shall be deemed changed for all
purposes from and after the giving of such notice.
If the Fiscal Agent shall receive any notice or demand addressed to
the Issuer by the holder of a Security, the Fiscal Agent shall promptly forward
such notice or demand to the Issuer.
14. Consent to Service; Jurisdiction.
--------------------------------
The Issuer hereby appoints Citibank, N.A., 120 Wall Street in the
Borough of Manhattan, The City of New York (attention: Corporate Trust
Administration) and its successors as its authorized agent (the "Authorized
Agent") upon which process may be served in any action arising out of or based
on the Securities or this Agreement which may be instituted in any State or
Federal court in the City of New York by the holder of any Security and
expressly accepts the jurisdiction of any such court in respect of such action.
Such appointment, which the Fiscal Agent hereby accepts, shall be irrevocable
until all amounts in respect of the principal of (and premium, if any) and any
interest due and to become due on or in respect of all the Securities have been
either paid or discharged in full, unless and until a successor Fiscal Agent
shall have been appointed as such Authorized Agent and shall have accepted such
appointment. The Issuer shall take any and all action, including the filing of
any and all documents and instruments, that may be necessary to continue such
appointment or appointments in full force and effect as aforesaid. Service of
process upon the Authorized
-17-
<PAGE>
Agent at the address indicated above, as such address may be changed within the
Borough of Manhattan, The City of New York by notice given by the Authorized
Agent to the holders of the Securities, shall be deemed, in every respect,
effective service of process upon the Issuer. Notwithstanding the foregoing, any
action arising out of or based on the Securities may be instituted by the holder
of any Security in any other court of competent jurisdiction.
15. Headings.
--------
The section headings herein are for convenience only and shall not
affect the construction hereof.
16. Currency Rate Indemnity.
-----------------------
If a judgment or order is given by a court or tribunal of any
particular jurisdiction for the payment of any amounts owing under any of the
Securities to the holders thereof, such judgment or order is expressed in a
currency other than Yen, and the amount which is received (or could have been
received) by converting such other currency to Yen promptly following receipt at
the prevailing rate of exchange in a foreign exchange market reasonably selected
by such holder of Securities is less than the amount owed by the Issuer in Yen,
then the Issuer shall indemnify and hold each affected holder of Securities
harmless against the deficiency and any direct loss sustained as a result
thereof. The Issuer shall also pay the reasonable cost of the conversion but
shall not be obligated to pay any special or consequential damages.
17. Terms and Conditions.
--------------------
The Terms and Conditions of the Securities attached hereto as Exhibit
D shall be part of the terms of all the Securities and applicable thereto for
all purposes. However, the Issuer may prepare the Securities in a form that
includes Terms and Conditions numbered 1 through 6, inclusive, and 12 through
15, inclusive, only. The omission of such other Terms and Conditions from the
forms of Securities is for convenience only and shall not affect the Terms and
Conditions applicable to the Securities that shall include all of the Terms and
Conditions.
18. Counterparts.
------------
This Agreement may be executed in one or more counterparts, and by
each party separately on a separate counterpart, and each such counterpart when
executed and delivered shall be deemed to be an original. Such counterparts
shall together constitute one and the same instrument.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Fiscal
Agency Agreement as of the date first above written.
LEVI STRAUSS & CO.
By ________________________
Title:
By ________________________
Title:
Attest:
_________________________
CITIBANK, N.A. (LONDON BRANCH),
as Fiscal Agent
By ________________________
Title:
Attest:
_________________________
-19-
<PAGE>
EXHIBIT A
FORM OF TEMPORARY GLOBAL SECURITY
THIS SECURITY IS A TEMPORARY GLOBAL SECURITY WITHIN THE MEANING
OF THE FISCAL AGENCY AGREEMENT REFERRED TO HEREINAFTER. NO EX-
CHANGE OF AN INTEREST IN THIS TEMPORARY GLOBAL SECURITY MAY
BE MADE FOR AN INTEREST IN THE PERMANENT GLOBAL SECURITY
EXCEPT ON OR AFTER THE EXCHANGE DATE AND UPON DELIVERY
OF CERTIFICATIONS RELATING TO SUCH INTEREST IN THE
FORMS REQUIRED BY THE FISCAL AGENCY AGREEMENT.
THIS OBLIGATION HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED OR SOLD IN CONTRAVENTION OF THAT ACT.
LEVI STRAUSS & CO.
(Yen)20,000,000,000
4.25 per cent. Bonds due November 22, 2016
No. TG-1 ISIN: XS0071465586
TEMPORARY GLOBAL SECURITY
LEVI STRAUSS & CO., a corporation duly organized and existing under
the laws of the State of Delaware (the "Issuer"), for value received, hereby
promises to pay to National City Nominees Limited, or registered assigns, the
principal sum of Twenty Billion Japanese Yen ((Yen)20,000,000,000) on November
22, 2016 (or on such earlier date as such principal may become payable in
accordance with the Terms and Conditions (the "Conditions") of the Securities
designated above (the "Securities") which are attached hereto) and to pay
interest thereon from November 22, 1996 or from the most recent Interest Payment
Date (as defined in the Conditions) to which interest has been paid or duly
provided for, semi-annually in arrears on May 1 and November 1 in each year,
commencing May 1, 1997 (each an "Interest Payment Date"), and on the date of
maturity, at the rate of 4.25 per cent. per annum (calculated on the basis of a
year of twelve 30-day months), until the principal hereof is paid or made
available for payment, and, to the fullest extent permitted by applicable law,
at the rate of 4.25 per cent. per annum on any overdue principal and premium and
on any overdue instalment of interest.
A-1
<PAGE>
This Temporary Global Security is one of a duly authorized issue of
Securities of the Issuer designated as specified in the title hereof, issued and
to be issued under the Fiscal Agency Agreement, dated as of November 22, 1996
("Fiscal Agency Agreement"), between the Issuer and Citibank, N.A. (London
Branch), as Fiscal Agent ("Fiscal Agent"). On or after January 4, 1997 (the
"Exchange Date"), this temporary security is exchangeable in whole or from time
to time in part without charge upon request of the Holder hereof for a
beneficial interest in a duly executed and authenticated Permanent Global
Security in registered form, without coupons, of authorized denominations as
promptly as practicable following presentation of certification, in the form
required by the Fiscal Agency Agreement for such purpose, from Euroclear or
Cedel Bank, and upon presentation of certification to Euroclear or Cedel,
substantially in the form of certificate attached as Exhibit F to the Fiscal
Agency Agreement, from the beneficial owners of the Temporary Global Security or
portions thereof being exchanged. Upon any exchange of a part of this Temporary
Global Security for a beneficial interest in the Permanent Global Security, the
portion of the principal amount hereof so exchanged shall be endorsed by or on
behalf of the Fiscal Agent on the Schedule hereto, and the principal amount
hereof shall be reduced for all purposes by the amount so exchanged in order
that the Permanent Global Security represents an aggregate principal amount of
securities equal to the aggregate principal amount of beneficial interests in
this Temporary Global Security submitted for exchange.
Until exchanged in full for the Permanent Global Security, this
Temporary Global Security shall in all respects be entitled to the same benefits
and subject to the same terms and conditions of, and the Issuer shall be subject
to the same restrictions as those to be endorsed on, the Permanent Global
Security and those contained in the Fiscal Agency Agreement.
This Temporary Global Security shall be governed by and construed in
accordance with the laws of the State of New York.
Reference is hereby made to the provisions of the Conditions of this
Temporary Global Security attached hereto, which further provisions shall for
all purposes have the same effect as if set forth at this place.
All terms used in this Temporary Global Security which are defined in
the Fiscal Agency Agreement or the definitive Securities shall have the meanings
assigned to them therein.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Fiscal Agent by the manual signature of one of its duly
authorized officers, this Temporary Global Security shall not be valid or
obligatory for any purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Temporary Global
Security to be duly executed and its corporate seal to be hereunto affixed and
attested.
Dated: November 22, 1996
LEVI STRAUSS & CO.
By _________________________
Title:
By _________________________
Title:
[Corporate Seal]
Attest:
________________________
Title:
This is the Temporary Global Security referred to in the within-
mentioned Fiscal Agency Agreement and is authenticated by or on behalf of the
Fiscal Agent.
CITIBANK, N.A. (LONDON BRANCH),
as Fiscal Agent
By _________________________
Authorized Officer
A-3
<PAGE>
SCHEDULE OF
PRINCIPAL AMOUNT OF THE TEMPORARY GLOBAL SECURITY
The following subtractions of parts of the principal amount of this
Temporary Global Security have been made:
<TABLE>
<CAPTION>
Portion of the aggregate
principal amount of this
Temporary Global Security Remaining principal
exchanged for interests in amount of this Notation made on
Date of exchange or the Permanent Global Temporary Global behalf of the Fiscal
cancellation Security Security Agent
-------------------- ------------------------------ ----------------------- ------------------------
<S> <C> <C> <C>
(Yen) (Yen)
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
- -------------------- ------------------------------ ----------------------- ------------------------
</TABLE>
A-4
<PAGE>
EXHIBIT B
FORM OF PERMANENT GLOBAL SECURITY
THIS OBLIGATION HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED OR SOLD IN CONTRAVENTION OF THAT ACT.
LEVI STRAUSS & CO.
(Yen)0
4.25 per cent. Bonds due November 22, 2016
No. PG-1 ISIN: XS0071465586
PERMANENT GLOBAL SECURITY
LEVI STRAUSS & CO., a corporation duly organized under the laws of
Delaware (herein called the "Issuer"), for value received, hereby promises to
pay to National City Nominees Limited, or registered assigns, the principal sum
of Zero Japanese Yen ((Yen)0) (or such other amount as is shown in column four
on the Schedule attached hereto, but in no event to exceed (Yen)20,000,000,000)
on November 22, 2016 (or on such earlier date as such principal amount may
become payable in accordance with the Terms and Conditions (the "Conditions") of
the Securities designated above (the "Securities") which are attached hereto)
and to pay interest thereon from November 22, 1996 or from the most recent
Interest Payment Date (as defined in the Conditions) to which interest has been
paid or duly provided for, semi-annually in arrears on May 1 and November 1 in
each year, commencing May 1, 1997 (each an "Interest Payment Date"), and on the
date of maturity, at the rate of 4.25 per cent. per annum (calculated on the
basis of a year of twelve 30-day months), until the principal hereof is paid or
made available for payment, and, to the fullest extent permitted by applicable
law, at the rate of 4.25 per cent. per annum on any overdue principal and
premium and on any overdue instalment of interest. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will be paid
to the person in whose name this Permanent Global Security is registered at the
close of business on the April 15 or October 15 next preceding such Interest
Payment Date ("Record Date"). Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the person in whose name this
Permanent Global Security is registered on such Record Date and may be paid to
the person in whose name this Permanent Global Security is registered at the
close of business on a special record date for the payment of such defaulted
interest to be fixed by the Issuer or be paid at any time in any other lawful
manner not inconsistent with the requirement of any securities exchange on which
this Permanent Global Security may be listed. Such payments (including premium,
if any) shall be
B-1
<PAGE>
made by Japanese Yen check drawn on, or transfer to a Japanese Yen account
maintained by the payee with, a bank in the City of Tokyo. Payment of interest
on this Permanent Global Security will be made by Japanese Yen check drawn on a
bank in The City of Tokyo mailed to the address of the person entitled thereto
as such address shall appear in the Security Register (as defined in Condition 3
of the Conditions hereof) or, upon application by the Holder to the Fiscal Agent
not later than the Record Date in respect of such payment, by transfer to a
Japanese Yen account maintained by the Holder with a bank in the City of Tokyo.
Upon any exchange of a part of the Temporary Global Security for a
beneficial interest in this Permanent Global Security, the portion of the
principal amount hereof so exchanged shall be endorsed by or on behalf of the
Fiscal Agent on the Schedule hereto, and the principal amount hereof shall be
increased for all purposes by the amount so exchanged.
This Permanent Global Security is one of a duly authorized issue of
Securities of the Issuer designated as specified in the title hereof, issued and
to be issued under the Fiscal Agency Agreement, dated as of November 22, 1996
("Fiscal Agency Agreement"), between the Issuer and Citibank, N.A. (London
Branch), as Fiscal Agent ("Fiscal Agent"). This Permanent Global Security is
exchangeable, in whole but not in part, for a Definitive Security or Securities
without charge if (i) there occurs and is continuing any Event of Default under
Condition 6 or (ii) this Permanent Global Security is held on behalf of
Euroclear or Cedel or an alternative clearing system and Euroclear or Cedel or
such clearing system is closed for business for a continuous period of 14 days
(other than by reason of holidays, statutory or otherwise) or announces an
intention permanently to cease business or does in fact do so. Thereupon the
holder of a beneficial interest in this Permanent Global Security may give
notice to the Fiscal Agent of its intention to exchange the Permanent Global
Security for Definitive Securities on a day falling not less than 60 days after
the day on which the notice requiring an exchange is given and on which banks
are open for business in the city of London.
Reference is hereby made to the provisions of the Conditions of this
Permanent Global Security attached hereto, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Fiscal Agent by the manual signature of one of its duly
authorized officers, this Permanent Global Security shall not be valid or
obligatory for any purpose.
B-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed and its corporate seal to be affixed hereto and attested.
Dated: November 22, 1996
LEVI STRAUSS & CO.
By ________________________
Title:
By ________________________
Title:
[Corporate Seal]
Attest:
_________________________
Title:
This is the Permanent Global Security referred to in the within-
mentioned Fiscal Agency Agreement and is authenticated by or on behalf of the
Fiscal Agent.
CITIBANK, N.A. (LONDON BRANCH),
as Fiscal Agent
By ________________________
Authorized Officer
B-3
<PAGE>
SCHEDULE OF
PRINCIPAL AMOUNT OF THE PERMANENT GLOBAL SECURITY
The following increases to and subtractions from the principal amount
of this Permanent Global Security have been made:
<TABLE>
<CAPTION>
Reason for change in Increase to or
principal amount of subtraction from Aggregate principal Notation made on
this Permanent aggregate amount following such behalf of the
Date Global Security/*/ principal amount increase or subtraction Fiscal Agent
- ------ ----------------------- ------------------ ------------------------- ------------------
<S> <C> <C> <C> <C>
(Yen) (Yen)
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
- ------ ----------------------- ------------------ ------------------------- ------------------
</TABLE>
____________________
/*/ State whether increase/subtraction follows (1) exchange of all or a
portion of the Temporary Global Note, (2) redemption of all or a
portion of this Permanent Global Security, (3) payment and cancellation
of Permanent Global Security or (4) exchange of this Permanent Global
Security for Definitive Securities.
B-4
<PAGE>
EXHIBIT C
FORM OF DEFINITIVE SECURITY
THIS OBLIGATION HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED OR SOLD IN
CONTRAVENTION OF THAT ACT.
LEVI STRAUSS & CO.
(Yen)________
4.25 per cent. Bonds due November 22, 2016
No. D-______________ ISIN: XS0071465586
LEVI STRAUSS & CO., a corporation duly organized under the laws of
Delaware (herein called the "Issuer"), for value received, hereby promises to
pay to __________, or registered assigns, the principal sum of _______________
Japanese Yen ((Yen)__________) on November 22, 2016 (or on such earlier date as
such principal amount may become payable in accordance with the Terms and
Conditions (the "Conditions") of the Securities designated above (the
"Securities") which are attached hereto) and to pay interest thereon from
November 22, 1996 or from the most recent Interest Payment Date (as defined in
the Conditions) to which interest has been paid or duly provided for, semi-
annually in arrears on May 1 and November 1 in each year, commencing May 1, 1997
(each an "Interest Payment Date"), and on the date of maturity, at the rate of
4.25 per cent. per annum (calculated on the basis of a year of twelve 30-day
months), until the principal hereof is paid or made available for payment, and,
to the fullest extent permitted by applicable law, at the rate of 4.25 per cent.
per annum on any overdue principal and premium and on any overdue instalment of
interest. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the person in whose name this Security
is registered at the close of business on the April 15 or October 15 next
preceding such Interest Payment Date ("Record Date"). Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
person in whose name this Security is registered on such Record Date and may be
paid to the person in whose name this Security is registered at the close of
business on a special record date for the payment of such defaulted interest to
be fixed by the Issuer or be paid at any time in any other lawful manner not
inconsistent with the requirement of any securities exchange on which this
Security may be listed. Such payments (including premium, if any) shall be made
by Japanese Yen check drawn on, or transfer to a Japanese Yen account maintained
by the payee with, a bank in the City of Tokyo. Payment of interest on this
Security will be made by Japanese Yen check drawn on a bank in The City of Tokyo
mailed to the address of the person
C-1
<PAGE>
entitled thereto as such address shall appear in the Security Register (as
defined in Condition 3 of the Terms and Conditions hereof) or, upon application
by the Holder to the Fiscal Agent not later than the Record Date in respect of
such payment, by transfer to a Japanese Yen account maintained by the Holder
with a bank in the City of Tokyo. The Issuer covenants that until this Security
has been delivered to the Fiscal Agent for cancellation, or monies sufficient to
pay the principal of and premium, if any, and interest on this Security has been
made available for payment and either paid or returned to the Issuer, it will at
all times maintain an office or agency outside the United States for the payment
of the principal of and premium, if any, and interest on the Securities as
herein provided.
This Security is one of a duly authorized issue of Securities of the
Issuer designated as specified in the title hereof, issued and to be issued
under the Fiscal Agency Agreement, dated as of November 22, 1996 ("Fiscal Agency
Agreement"), between the Issuer and Citibank, N.A. (London Branch), as Fiscal
Agent ("Fiscal Agent"). Reference is hereby made to the provisions of the
Conditions of this Security attached hereto, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Fiscal Agent by the manual signature of one of its duly
authorized officers, this Security shall not be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed and its corporate seal to be affixed hereto and attested.
Dated: November 22, 1996
LEVI STRAUSS & CO.
By __________________________
Title:
By __________________________
Title:
[Corporate Seal]
Attest:
_________________________
Title:
This is one of the Securities referred to in the within-mentioned
Fiscal Agency Agreement and is authenticated by or on behalf of the Fiscal
Agent.
C-2
<PAGE>
CITIBANK, N.A. (LONDON BRANCH),
as Fiscal Agent
By _______________________
Authorized Officer
C-3
<PAGE>
EXHIBIT D
TERMS AND CONDITIONS OF THE SECURITIES
1. This Security is one of a duly authorized issue of securities of
the Issuer in the aggregate principal amount of 20,000,000,000 Japanese Yen
((Yen)20,000,000,000), designated as its 4.25 per cent. Bonds due November 22,
2016 (herein called the "Securities"). The Issuer, for the benefit of the
Holders (as defined in Condition 2 herein) from time to time of the Securities,
has entered into a Fiscal Agency Agreement, dated as of November 22, 1996
(herein called the "Fiscal Agency Agreement"), between the Issuer and Citibank,
N.A. (London Branch), as Fiscal Agent (herein called the "Fiscal Agent", which
term includes any successor fiscal agent under the Fiscal Agency Agreement),
copies of which Fiscal Agency Agreement are on file and available for inspection
at the corporate trust office of the Fiscal Agent in London. Upon the written
request of any Holder, the Fiscal Agent will provide a copy of the Fiscal Agency
Agreement to such Holder.
The Securities are unsecured direct, unconditional and general
obligations of the Issuer and will rank pari passu, without any preference or
---- -----
priority of payment, among themselves and with all other evidences of
indebtedness issued in accordance with the Fiscal Agency Agreement and with all
other unsecured and unsubordinated indebtedness of the Issuer.
2. The Securities are issuable as registered Securities. The
Securities are issuable in authorized denominations of ((Yen)1,000,000,000 and
integral multiples thereof. As used herein, the term "Holder", when used with
respect to any Security, means the person in whose name such Security is
registered in the Security Register.
3. The Issuer shall maintain in London an office or agency where
Securities may be surrendered for registration of transfer or exchange. The
Issuer has initially appointed the corporate trust office (the "Principal
Office") of the Fiscal Agent as its agent in London for such purpose and has
agreed to cause to be kept at such office a register (the register maintained in
such office and in any other office or agency for such purpose being herein
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer will provide for the
registration and transfers of Securities. The Issuer reserves the right to vary
or terminate the appointment of the Fiscal Agent as security registrar or any
transfer agent or to appoint additional or other registrars or transfer agents
or to approve any change in the office through which any security registrar or
transfer agent acts, provided that there will at all times be a security
registrar in London.
The transfer of a Security is registrable on the Security Register
upon surrender of such Security at the Principal Office of the Fiscal Agent duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Fiscal Agent duly executed by, the Holder
thereof or his attorney duly authorized in writing. Upon such surrender of this
Security for registration of transfer, the Issuer shall execute, and the Fiscal
Agent shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more
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<PAGE>
new Securities, dated the date of authentication thereof, of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder upon request confirmed in writing,
Securities may be exchanged for Securities of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Securities to be
exchanged at the office of any transfer agent or at the Principal Office of the
Fiscal Agent. Any registration of transfer or exchange will be effected upon
the transfer agent or the Fiscal Agent, as the case may be, being satisfied with
the documents of title and identity of the person making the request and subject
to such reasonable regulations as the Issuer may from time to time agree with
the transfer agents and the Fiscal Agent. Whenever any Securities are so
surrendered for exchange, the Issuer shall execute, and the Fiscal Agent shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
In the event of a redemption in part, the Issuer shall not be required
(i) to register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the date notice is given
identifying the Securities to be redeemed or (ii) to register the transfer of or
exchange any registered Security, or portion thereof, called for redemption.
All Securities issued upon any registration of transfer or exchange of
Securities shall be valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits, as the Securities surrendered upon such
registration of transfer or exchange. No service charge shall be made for any
registration of transfer or exchange, but the Issuer may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith, other than an exchange in connection with a partial
redemption of a Security not involving any registration of a transfer.
The Issuer and the Fiscal Agent and any other paying agency of the
Issuer may deem and treat the person in whose name a Security is registered the
owner thereof for all purposes whether or not such Security be overdue, and
neither the Issuer, the Fiscal Agent nor any such agent shall be affected by
notice to the contrary.
4. (a) Subject to the following provisions, the Issuer shall
provide to the Fiscal Agent at its head office in the City of Tokyo, on or prior
to the applicable due date for the payment of Securities, funds required to make
payment of the principal of and interest on the Securities, at the times, in the
amounts, in such coin or currency and for the purposes set forth herein and in
the text of the Securities; and the Issuer hereby authorizes and directs the
Fiscal Agent from funds so paid to it to make or cause to be made payment of the
principal of (and premium, if any) and interest on the Securities as set forth
herein and in the text of the Securities. The Fiscal Agent will arrange
directly with the Paying Agents (if applicable) for the payment, and the Fiscal
Agent will make payment, in the manner provided herein and in the Securities,
from funds furnished by the Issuer, of the principal of (and premium, if any)
and interest on the Securities.
The principal of (and premium, if any) and interest on the Securities
shall be payable in Japanese Yen. Payment of principal shall be made to the
registered owner against
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<PAGE>
surrender of Securities, subject to any applicable laws and regulations, at the
office of any Paying Agent. Payment of any installment of interest on a Security
shall be made to the person in whose name such Security is registered at the
close of business on April 15 and October 15 (whether or not such days are
business days) in the year of the relevant interest payment date (the "Record
Date"), in accordance with such information furnished to the Fiscal Agent by the
Registrar promptly after each Record Date. Payments of principal (and premium,
if any) and interest will be made, subject to any applicable laws and
regulations, by transfer to a Japanese Yen account maintained by the payee with
a bank in Tokyo. Each registered owner shall give notice of such Japanese Yen
account, in the case of principal payments, to the relevant Paying Agent not
less than 15 days prior to the date of the payment to be received, or, in the
case of interest payments, to the Registrar not later than the Record Date
relating to the payment to be received. If a registered owner fails to give such
notice prior to the time limit specified above, payments of principal (and
premium, if any) and interest will be made, subject to any applicable laws and
regulations, by a Japanese Yen check drawn on a bank in Tokyo unless the
relevant Paying Agent or (as the case may be) the Registrar at its discretion
accepts such notice given after the time limit specified above. Payments to non-
residents of Japan shall be made to a non-resident Japanese Yen account
maintained by the payee with an authorized foreign exchange bank in Tokyo or (as
the case may be) by a Japanese Yen check drawn on an authorized foreign exchange
bank in Tokyo, subject to each case to any applicable laws and regulations. Any
monies paid by the Issuer to the Fiscal Agent for the payment of the principal
of or premium, if any, or interest on any Securities and remaining unclaimed at
the end of two years after such principal, premium or interest shall have become
due and payable (whether at maturity, upon call for redemption or otherwise) and
monies sufficient therefor shall have been duly made available for payment shall
then be repaid to the Issuer upon its written request, and upon such repayment
all liability of the Fiscal Agent and the Paying Agents with respect thereto
shall cease, without, however, limiting in any way any obligation the Issuer may
have to pay the principal of or premium, if any, and interest on this Security
as the same shall become due.
(b) In any case where the due date for the payment of the principal of
and premium, if any, or interest on any Security or the date fixed for
redemption of any Security shall be at any place of payment a day on which
banking institutions in such place or in Tokyo or London are authorized or
obligated by law to close, then payment of principal, premium or interest need
not be made on such date at such place but may be made on the next succeeding
day at such place which is not a day on which banking institutions in such place
or in Tokyo or London are authorized or obligated by law to close, with the same
force and effect as if made on the date for such payment or the date fixed for
redemption, and no interest shall accrue for the period after such date.
5. (a) On November 1, 2006 and on any Interest Payment Date
thereafter, the Securities are subject to redemption, at the option of the
Issuer in whole or in part, upon not less than 30 nor more than 60 days' prior
written notice given as hereinafter provided, at a redemption price equal to the
Make Whole Redemption Amount.
(b) In the case of any partial redemption of Securities, the
Securities to be redeemed shall be selected by the Fiscal Agent not more than 60
days prior to the redemption date, from the Outstanding Securities not
previously called for redemption, by prorating, as
D-3
<PAGE>
nearly as may be practicable, the principal amount of Securities to be redeemed.
In any proration pursuant to this Condition 5, the Fiscal Agent shall make such
adjustments, reallocations and eliminations as it shall deem proper to the end
that the principal amount of Securities so prorated shall be (Yen)l,000,000,000
or a multiple thereof, by increasing or decreasing or eliminating the amount
which would be allocable to any Holder on the basis of exact proportion by an
amount not to exceed (Yen)1,000,000,000.
(c) Notices to redeem Securities shall be given in writing mailed,
first-class postage prepaid, to each Holder of Securities, or portions thereof,
so to be redeemed, at his address as it appears in the Security Register.
Neither the failure to give notice nor any defect in any notice given to any
particular Holder of a Security shall affect the sufficiency of any notice with
respect to other Securities. Notices to redeem Securities shall specify the
date fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of the Securities to
be redeemed (or portion thereof in the case of a partial redemption of a
Security), that interest accrued to the date fixed for redemption (unless the
redemption date is an Interest Payment Date) will be paid as specified in said
notice, and that on and after said date interest thereon will cease to accrue.
(d) If notice of redemption has been given in the manner set forth in
clause (c) of this Condition 5 the Securities so to be redeemed shall become due
and payable on the redemption date specified in such notice and upon
presentation and surrender of the Securities at the place or places specified in
such notice the Securities shall be paid and redeemed by the Issuer at the
places and in the manner herein specified and at the redemption price herein
specified together with accrued interest (unless the redemption date is an
Interest Payment Date) to the redemption date. From and after the redemption
date, if monies for the redemption of Securities called for redemption shall
have been made available at the corporate trust office of the Fiscal Agent for
redemption on the redemption date, the Securities called for redemption shall
cease to bear interest and the only right of the holders of such Securities
shall be to receive payment of the redemption price together with accrued
interest (unless the redemption date is an Interest Payment Date) to the
redemption date as aforesaid. If monies for the redemption of the Securities
are not made available for payment until after the redemption date, the
Securities called for redemption shall not cease to bear interest until such
monies have been so made available.
(e) Any Security which is to be redeemed only in part shall be
surrendered with, if the Issuer or the Fiscal Agent so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Issuer and
the Fiscal Agent duly executed by, the Holder thereof or his attorney duly
authorized in writing, and the Issuer shall execute, and the Fiscal Agent shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
(f) Securities redeemed or otherwise acquired by the Issuer or their
subsidiaries will forthwith be delivered to the Fiscal Agent for cancellation
and may not be reissued or resold.
D-4
<PAGE>
The following terms used in this Condition 5 shall have the following
meanings:
"Adjusted JGB Rate" means a rate of interest per annum calculated by
the Calculation Agent corresponding to the calculated yield per annum of a
Japanese Government Bond ("JGB") bearing a maturity equal to the Remaining Term,
such yield to be interpolated between the yields on (i) the JGB with a constant
maturity closest to and greater than the Remaining Term and (ii) the JGB with a
constant maturity closest to and less than the Remaining Term, plus the Credit
Spread.
"Calculation Agent" means Goldman Sachs International or, if it is
unavailable or unwilling to serve, any other banking or investment banking firm
of recognized international standing appointed from time to time by the Issuer
to act as Calculation Agent hereunder.
"Credit Spread" means .45 per cent. from November 1, 2006 to and
including November 1, 2011, and .25 per cent. thereafter.
"Make Whole Redemption Amount" in respect of any Security means the
aggregate present value as of such date of each yen of principal being redeemed
or paid and the amount of interest (exclusive of interest accrued to such date)
that would have been payable in respect of each such yen if such redemption or
payment had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Adjusted JGB Rate from the respective dates
on which principal and interest would have been payable if such redemption or
payment had not been made; provided, however, that beginning November 1, 2006 to
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and including November 1, 2011, such amount shall not be less than 100 per cent.
of the aggregate principal amount of the Securities being so redeemed.
"Remaining Term" means the remaining term of the Securities from the
redemption date.
6. In the event of the occurrence of any of the following
events (each, an "Event of Default")
(a) default in the payment of the principal of or premium, if any, of
any Security when due (whether at maturity, upon redemption or otherwise); or
(b) default in the payment of any interest on any Security for a
period of more than 30 days after the date when due; or
(c) default in the performance or breach of any other covenant,
warranty or agreement contained in the Securities or, if applicable to the
Securities, in the Fiscal Agency Agreement for a period of 60 days after the
date on which written notice of such default requiring the Issuer to remedy the
same and stating that such notice is a "Notice of Default" shall first have been
given to the Issuer by the Fiscal Agent or to the Issuer and the Fiscal Agent by
the holders of at least 25% in aggregate principal amount of the Outstanding
Securities; or
(d) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed of the Issuer or under any mortgage, indenture
or instrument
D-5
<PAGE>
under which there may be issued or by which there may be secured or evidenced
any indebtedness for money borrowed of the Issuer with a principal amount then
outstanding, individually or in the aggregate, in excess of $25,000,000, whether
such indebtedness now exists or shall hereafter be created, which default shall
constitute a failure to pay any portion of the principal of such indebtedness
when due and payable after the expiration of any applicable grace period with
respect thereto or shall have resulted in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been discharged or such
failure to pay or such acceleration having been rescinded or annulled, within a
period of 30 days after the date on which written notice of such failure to pay
or such acceleration, requiring the Issuer to remedy the same and stating that
such notice is a "Notice of Default", shall first have been given to the Issuer
by the Fiscal Agent or to the Issuer and the Fiscal Agent by the holders of at
least 25% in aggregate principal amount of the Outstanding Securities; or
(e) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Issuer in an involuntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree or order adjudging the Issuer a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Issuer under any
applicable law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Issuer or of any
substantial part of the property of the Issuer, or ordering the winding up or
liquidation of the affairs of the Issuer, and any such decree or order for
relief or any such other decree or order shall continue unstayed and in effect
for a period of 60 consecutive days; or
(f) commencement by the Issuer of a voluntary case or proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Issuer to the entry of a decree or order for relief in respect of
the Issuer in an involuntary case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Issuer, or the filing by
the Issuer of a petition or answer or consent seeking reorganization or relief
under any such applicable law, or the consent by the Issuer to the filing of
such petition or to the appointment of or the taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Issuer or of any substantial part of its property, or the making by the
Issuer of an assignment for the benefit of creditors, or the taking of action by
the Issuer in furtherance of any such action;
then, in the case of any Event of Default specified in clause (e) or (f) above,
the principal of, any accrued interest on and any unpaid additional amounts in
respect of the Securities then Outstanding (as such term is defined in the
Fiscal Agency Agreement) shall ipso facto become immediately due and payable
---- -----
without any declaration or other act on the part of the Fiscal Agent or the
holder of any Security. If any Event of Default specified in clause (a) or (b)
above occurs and is continuing, the holder of any Security may, by notice in
writing to the Issuer, declare the principal of such Security to be immediately
due and payable, and upon such declaration the principal of and any accrued
interest on such Security shall become immediately
D-6
<PAGE>
due and payable. If any other Event of Default shall have occurred and be
continuing, the Fiscal Agent shall, at the request of the holders of not less
than 25% in principal amount of the Outstanding Securities, by written notice to
the Issuer, declare the principal of all the Securities to be due and payable
immediately, and upon such declaration the principal of and any accrued interest
on shall become immediately due and payable. The right of the Fiscal Agent to
give any such notice shall terminate if the Event of Default giving rise to such
right shall have been cured before such right is exercised.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
holders of a majority in principal amount of the Outstanding Securities, by
written notice to the Issuer and the Fiscal Agent, may rescind and annul such
declaration and its consequences if
(1) the Issuer has paid or deposited with the Fiscal Agent, a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and, to the extent
that payment of such interest is lawful, interest thereon at the rate
provided herein, and
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate provided herein,
and
(2) all Events of Default, other than the nonpayment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
As provided in Section 17 of the Fiscal Agency Agreement, Terms and
Conditions 7 through 11, inclusive, may be omitted from the "Terms and
Conditions" of the Securities, but shall remain applicable to the Securities.
7. For so long as any of the Securities remain Outstanding or
any amount remains unpaid on any of the Securities, the Issuer will comply with
the terms of the covenants set forth below:
(a) The Issuer shall at all times preserve and keep in full force and
effect its corporate existence and rights and franchises material to its
business and its goodwill and the business and the goodwill of each of its
Subsidiaries, except where the failure to do so would not in the aggregate have
a Material Adverse Effect (as defined below).
D-7
<PAGE>
(b) The Issuer shall comply with the requirements of each applicable
Requirement of Law (as defined below), except where the failure to do so would
not in the aggregate have a Material Adverse Effect.
(c) The Issuer shall pay, and cause each of its Subsidiaries (as
defined below) to pay, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges not exceeding
$5,000,000 in the aggregate) imposed upon them or any of their properties or
assets or in respect of any of their franchises, business, income or property
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
(other than claims not exceeding $5,000,000 in the aggregate) which have become
due and payable and which by law have or may become a Lien (as defined below)
upon any of their properties or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided that no such governmental
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made therefor.
(d) The Issuer shall maintain or cause to be maintained in good
repair, working order and condition all properties used or useful in the
business of the Issuer and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof, if
the failure to perform such actions would in the aggregate have a Material
Adverse Effect. The Issuer shall maintain or cause to be maintained, through
self-insurance or with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations, if the failure
to do so would (as to all such failures in the aggregate) have a Material
Adverse Effect.
(e) The following terms used in this Condition 7 and/or, as
applicable, in Conditions 8 or 9, shall have the following meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Attributable Indebtedness," in respect of any sale and leaseback
transaction, means, as of the time of determination, the total obligation
(discounted to present value at the rate per annum equal to the discount rate
which would be applicable to a capital lease obligation with like term in
accordance with generally accepted accounting principles) of the lessee for
rental payments (other than amounts required to be paid on account of property
taxes, maintenance, repairs, insurance, water rates and other items which do not
constitute payments
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<PAGE>
for property rights) during the remaining portion of the initial term of the
lease included in such sale and leaseback transaction.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (i) all current liabilities (excluding any indebtedness for
money borrowed having a maturity of less than 12 months from the date of the
most recent consolidated balance sheet of the Issuer but which by its terms is
renewable or extendable beyond 12 months from such date at the option of the
borrower) and (ii) all goodwill, trade names, patents, unamortized debt discount
and expense and any other like intangibles, all as set forth on the most recent
consolidated balance sheet of the Issuer and computed in accordance with
generally accepted accounting principles.
"Funded Indebtedness" means (i) all Indebtedness having a maturity of
more than 12 months from the date as of which the determination is made or
having a maturity of 12 months or less but by its terms being renewable or
extendible beyond 12 months from such date at the option of the borrower and
(ii) rental obligations payable more than 12 months from such date under leases
which are capitalized in accordance with generally accepted accounting
principles (such rental obligations to be included as Funded Indebtedness at the
amount so capitalized as of such date of determination).
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Indebtedness" means obligations (other than nonrecourse obligations)
of, or guaranteed or assumed by, the Issuer for borrowed money, including
obligations evidenced by bonds, debentures, notes or other similar instruments
and reimbursement and cash collateralization of letters of credit, bankers'
acceptances, interest rate hedge and currency hedge agreements.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, security interest, lien,
encumbrance, or other security arrangement of any kind or nature whatsoever on
or with respect to such property or assets (including any conditional sale or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
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<PAGE>
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) of the Issuer and its Subsidiaries taken as a whole;
(b) a material impairment of the ability of the Issuer to perform under the
Fiscal Agency Agreement or the Securities, and to avoid any Event of Default; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Issuer of the Fiscal Agency Agreement or the
Securities.
"Officers' Certificate," when used with reference to the Issuer, means
a written certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer or any Vice
President of the Issuer and by any one of the Treasurer, the Controller, an
Assistant Treasurer, an Assistant Controller, the Secretary or an Assistant
Secretary of the Issuer, and delivered to the Fiscal Agent.
"Opinion of Counsel" means a written opinion of counsel selected by
the Issuer, which counsel shall be reasonably acceptable to the Fiscal Agent.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Principal Property" means any contiguous or proximate parcel of real
property owned by, or leased to, the Issuer or any of its Restricted
Subsidiaries, and any equipment located at or comprising a part of any such
property, having a gross book value (without deduction of any depreciation
reserves), as of the date of determination, in excess of 1.0% of Consolidated
Net Tangible Assets.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Restricted Subsidiary" means any Subsidiary of the Issuer which owns
or leases a Principal Property.
"Subsidiary" of the Issuer means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Issuer, or
one or more of the Subsidiaries of the Issuer, or a combination thereof.
8. (a) The Issuer will not, and will not permit any Restricted
Subsidiary to, enter into any sale and leaseback transaction with respect to any
Principal Property unless: (i) the sale and leaseback transaction is solely with
the Issuer or another Restricted Subsidiary; (ii) the lease is for a period not
in excess of three years, including renewal rights; (iii) the lease secures or
relates to industrial revenue or pollution control bonds; (iv) the Issuer or
such Restricted Subsidiary would (at the time of entering into such arrangement)
be entitled as
D-10
<PAGE>
described in clauses (i) through (viii) of the second paragraph of subparagraph
(b), without equally and ratably securing this Security, to create, incur,
issue, assume or guarantee Indebtedness secured by a Lien on such Principal
Property in the amount of the Attributable Indebtedness arising from such sale
and leaseback transaction; (v) the Issuer or such Restricted Subsidiary, within
180 days after the sale of such Principal Property in connection with such sale
and leaseback transaction is completed, applies an amount equal to the greater
of (A) the net proceeds of the sale of the Principal Property leased or (B) the
fair market value of the Principal Property leased to (1) the retirement of
Securities, other Funded Indebtedness of the Issuer ranking on a parity with the
Securities, or Funded Indebtedness of a Restricted Subsidiary or (2) the
purchase of other property which will constitute a Principal Property having a
value at least equal to the value of the Principal Property leased; or (vi) the
Attributable Indebtedness of the Issuer and its Restricted Subsidiaries in
respect of such sale and leaseback transaction and all other sale and leaseback
transactions entered into after the date of the Fiscal Agency Agreement (other
than any such sale and leaseback transactions as would be permitted as described
in clauses (i) through (v) of this sentence), plus the aggregate principal
amount of Indebtedness secured by Liens on Principal Properties then outstanding
(not including any such Indebtedness secured by Liens described in clauses (i)
through (viii) of the second paragraph of subparagraph (b) below) which do not
equally and ratably secure such outstanding Securities (or secure such
outstanding Securities on a basis that is prior to other Indebtedness secured
thereby), would not exceed 10% of Consolidated Net Tangible Assets.
(b) The Issuer will not, and will not permit any Restricted Subsidiary
to, create, incur, issue, assume or guarantee any Indebtedness secured by a Lien
upon any Principal Property, or upon shares of capital stock or Indebtedness
issued by any Restricted Subsidiary and owned by the Issuer or any Restricted
Subsidiary, now or hereafter acquired, without effectively providing
concurrently that this Security is secured equally and ratably with or, at the
option of the Issuer, prior to such Indebtedness so long as such Indebtedness
shall be so secured.
The foregoing restriction shall not apply to, and there shall be
excluded from Indebtedness in any computation under such restriction,
Indebtedness secured by (i) Liens on any property existing at the time of the
acquisition thereof; (ii) Liens on property of a corporation existing at the
time such corporation is merged into or consolidated with the Issuer or a
Restricted Subsidiary or at the time of a sale, lease or other disposition all
or substantially all of the properties of such corporation (or a division
thereof) to the Issuer or a Restricted Subsidiary, provided that any such Lien
--------
does not extend to any property owned by the Issuer or any Restricted Subsidiary
immediately prior to such merger, consolidation, sale, lease or disposition;
(iii) Liens on property of a corporation existing at the time such corporation
becomes a Restricted Subsidiary; (iv) Liens in favor of the Issuer or a
Restricted Subsidiary; (v) Liens to secure all or part of the cost of
acquisition, construction, development or improvement of the underlying
property, or to secure Indebtedness incurred to provide funds for any such
purpose, provided that the commitment of the creditor to extend the credit
--------
secured by any such Lien shall have been obtained not later than 180 days after
the later of (A) the completion of the acquisition, construction, development or
improvement of such property or (B) the placing in operation of such property or
of such property as so constructed, developed or improved; (vi) Liens in favor
of the United States of America or any State thereof, or any department, agency
D-11
<PAGE>
or instrumentality or political subdivision thereof, to secure partial,
progress, advance or other payments; (vii) Liens securing industrial revenue or
pollution control bonds; and (viii) Liens existing on the date of the Fiscal
Agency Agreement or any extension, renewal or replacement or refunding of any
Indebtedness secured by a Lien existing on the date of the Fiscal Agency
Agreement or referred to in clause (i), (ii), (iii) or (v); provided, however,
-------- -------
that the principal amount of Indebtedness secured thereby and not otherwise
authorized by clauses (i) through (vii) shall not exceed the principal amount of
Indebtedness, plus any premium or fee payable in connection with any such
extension, renewal, replacement, or refunding, so secured at the time of such
extension, renewal, replacement or refunding.
Notwithstanding the restrictions described above, the Issuer and its
Restricted Subsidiaries may create, incur, issue, assume or guarantee
Indebtedness secured by Liens without equally and ratably securing this Security
if, at the time of such creation, incurrence, issuance, assumption or guarantee,
after giving effect thereto and to the retirement of any Indebtedness which is
concurrently being retired, the aggregate amount of all outstanding Indebtedness
secured by Liens which would otherwise be subject to such restrictions (other
than any Indebtedness secured by Liens permitted as described in clauses (i)
through (viii) of the immediately preceding paragraph) plus all Attributable
Indebtedness in respect of sale and leaseback transactions with respect to
Principal Properties (with the exception of such transactions which are
permitted under clauses (i) through (v) of the first sentence of the first
paragraph of subparagraph (a) above) does not exceed 10% of Consolidated Net
Tangible Assets.
9. (a) The Issuer shall not consolidate with or merge into any
other Person or convey, transfer or lease all or substantially all of the
Issuer's properties and assets to any Person, and the Issuer shall not permit
any Person to consolidate with or merge into the Issuer or convey, transfer or
lease its properties and assets substantially as an entirety to the Issuer,
unless:
(i) in case the Issuer shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of the
Issuer's properties and assets to any Person, the Person formed by such
consolidation or into which the Issuer is merged or the Person which
acquires by conveyance or transfer, or which leases, all or substantially
all of the Issuer's properties and assets shall be a corporation,
partnership, trust or other entity, shall be organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an amendment to the
Fiscal Agency Agreement, executed and delivered to the Fiscal Agent, in
form satisfactory to the Fiscal Agent, the due and punctual payment of the
principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of the Fiscal Agency Agreement
on the part of the Issuer to be performed or observed;
(ii) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Issuer or any
Subsidiary as a result of such transaction as having been incurred by the
Issuer or such Subsidiary at the time of
D-12
<PAGE>
such transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have
happened and be continuing;
(iii) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Issuer would
become subject to a Lien which would not be permitted by the Fiscal Agency
Agreement, the Issuer or such successor Person, as the case may be, shall
take such steps as shall be necessary effectively to secure this Security
equally and ratably with (or prior to) all indebtedness secured thereby;
and
(iv) the Issuer has delivered to the Fiscal Agent an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an amendment
to the Fiscal Agency Agreement is required in connection with such
transaction, such amendment comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
(b) Upon any consolidation of the Issuer with, or merger of the
Issuer into, any other Person or any conveyance, transfer, sale or lease of all
or substantially all the properties and assets of the Issuer in accordance with
subparagraph (a) above, the successor Person formed by such consolidation or
into which the Issuer is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under the Fiscal Agency Agreement with the same effect
as if such successor Person had been named as the Issuer herein, and thereafter
the predecessor Person shall be relieved of all obligations and covenants under
the Fiscal Agency Agreement and this Security.
10. Section 7 of the Fiscal Agency Agreement, which requires the
Issuer to provide the Fiscal Agent with certain information is hereby
incorporated mutatis mutandis by reference herein.
------- --------
11. If any mutilated Security is surrendered to the Fiscal Agent
or a Paying Agent, the Issuer shall execute, and the Fiscal Agent or such Paying
Agent, as the case may be, shall authenticate and deliver in exchange therefor,
a new Security of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
If there shall be delivered to (x) the Issuer and (y) the Fiscal Agent
or a Paying Agent (i) evidence to their satisfaction of the destruction, loss or
theft of any Security and (ii) such security or indemnity as may be required by
them to save each of them and any agent of each of them harmless, then, in the
absence of notice to the Issuer or the Fiscal Agent or any such Paying Agent
that such Security has been acquired by a bona fide purchaser, the Issuer shall
execute, and upon their request the Fiscal Agent or such Paying Agent shall
authenticate and deliver in lieu of any such destroyed, lost or stolen Security,
a new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
D-13
<PAGE>
Upon the issuance of any new Security under this Condition, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and the expenses of the Fiscal Agent or such Paying
Agent) connected therewith.
Every new Security issued pursuant to this Condition in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone.
Any new Security delivered pursuant to this Condition shall be so
dated that neither gain nor loss in interest shall result from such exchange.
The provisions of this Condition 11 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
12. Section 11 of the Fiscal Agency Agreement, which Section is
hereby incorporated mutates mutandis by reference herein, provides that, with
------- --------
certain exceptions as therein provided and with the consent of the holders of a
majority in aggregate principal amount of the Outstanding Securities present at
a meeting duly called pursuant thereto or by written consent of a majority in
aggregate principal amount of all Outstanding Securities, the Issuer and the
Fiscal Agent may, but shall not be obligated to, modify, amend or supplement the
Fiscal Agency Agreement or the terms of the Securities or may give consents or
waivers or take other actions with respect thereto. Any such modification,
amendment, supplement, consent, waiver or other action shall be conclusive and
binding on the Holder of this Security and on all future holders of this
Security and of any Security issued in exchange therefor or in lieu thereof,
whether or not notation thereof is made upon this Security. The Fiscal Agency
Agreement and the terms of the Securities may be modified or amended by the
Issuer and the Fiscal Agent, without the consent of any holders of Securities
for the purpose of (i) adding to the covenants of the Issuer for the benefit of
the holders of Securities or (ii) surrendering any right or power conferred upon
the Issuer, or (iii) securing the Securities pursuant to the requirements of the
Securities or otherwise, or (iv) relaxing or eliminating the restrictions on
payment of principal or interest in respect of Securities in the United States
to the extent then permitted under applicable regulations of the United States
Department of the Treasury, and provided no adverse tax consequences would
result to the Holders of the Securities or (v) evidencing the succession of a
Successor Person to the Issuer and the assumption by any such Successor Person
of the covenants and obligations of the Issuer in the Securities or in the
Fiscal Agency Agreement pursuant to Condition 9 thereof or (vi) correcting or
supplementing any defective provision contained in the Securities or in the
Fiscal Agency Agreement, to all of which each holder of any Security, by
acceptance thereof, consents.
13. No reference herein to the Fiscal Agency Agreement and no
provision of this Security or of the Fiscal Agency Agreement shall alter or
impair the obligation of the Issuer, which is absolute and unconditional to pay
the principal of and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
D-14
<PAGE>
14. If a judgment or order is given by a court or tribunal of any
particular jurisdiction for the payment of any amounts owing under any of the
Securities to the holders thereof, such judgment or order is expressed in a
currency other than Yen, and the amount which is received (or could have been
received) by converting such other currency to Yen promptly following receipt at
the prevailing rate of exchange in a foreign exchange market reasonably selected
by such holder of Securities is less than the amount owed by the Issuer in Yen,
then the Issuer shall indemnify and hold each affected holder of Securities
harmless against the deficiency and any direct loss sustained as a result
thereof. The Issuer shall also pay the reasonable cost of the conversion but
shall not be obligated to pay any special or consequential damages.
15. (a) This Security shall be governed by and construed in
accordance with the laws of the State of New York.
(b) The Issuer has appointed Citibank, N.A., 120 Wall Street in the
Borough of Manhattan, The City of New York (attention: Corporate Trust
Administration) and its successors as its Authorized Agent upon which process
may be served in any action arising out of or based on the Securities or this
Agreement which may be instituted in any State or Federal court in the City of
New York by the holder of any Security and expressly accepts the jurisdiction of
any such court in respect of such action. Such appointment, which the Fiscal
Agent hereby accepts, shall be irrevocable until all amounts in respect of the
principal of (and premium, if any) and any interest due and to become due on or
in respect of all the Securities have been either paid or discharged in full,
unless and until a successor Fiscal Agent shall have been appointed as such
Authorized Agent and shall have accepted such appointment. The Issuer shall
take any and all action, including the filing of any and all documents and
instruments, that may be necessary to continue such appointment or appointments
in full force and effect as aforesaid. Service of process upon the Authorized
Agent at the address indicated above, as such address may be changed within the
Borough of Manhattan, The City of New York by notice given by the Authorized
Agent to the holders hereof, shall be deemed, in every respect, effective
service of process upon the Issuer.
(c) Notwithstanding the foregoing, any action arising out of or based
on the Securities may be instituted by the holder of any Security in any other
court of competent jurisdiction.
D-15
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL
CERTIFICATE
LEVI STRAUSS & CO.
(Yen)20,000,000,000 4.25 percent. Bonds due November 22, 2016
Reference is hereby made to the Fiscal Agency Agreement, dated as of
November 22, 1996 (the "Fiscal Agency Agreement"), between Levi Strauss & Co.,
as Issuer, and Citibank, N.A. (London Branch), as Fiscal Agent. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Fiscal Agency Agreement.
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
to the effect set forth in the Fiscal Agency Agreement, as of the date hereof,
(Yen)_______ aggregate principal amount of the above-captioned Securities are
beneficially owned by non-U.S. Persons and are not held for purposes of resale
directly or indirectly to a U.S. Person or to a person within the United States
or its possessions.
As used herein, "United States" means the United States of America,
its territories and possessions, any state of the United States, and the
District of Columbia. As used herein, U.S. Person has the meaning assigned to
it in Rule 902 under the Securities Act of 1933, as amended.
We further certify that as of the date hereof we have not received any
notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of the
part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof.
E-1
<PAGE>
We understand that this certification is required in connection with
certain securities laws of the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings. This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Goldman Sachs International as
the initial purchasers of the Securities.
Dated: ____________, 199_
By:_________________________
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, BRUSSELS
OFFICE, as
Operator of the Euroclear Clearance
System][or]
[CEDEL BANK, SOCIETE ANONYME]
E-2
<PAGE>
EXHIBIT F
FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS
CERTIFICATE
LEVI STRAUSS & CO.
(Yen)20,000,000,000 4.25 percent. Bonds due November 22, 2016
Reference is hereby made to the Fiscal Agency Agreement, dated as of
November 22, 1996 (the "Fiscal Agency Agreement"), between Levi Strauss & Co.,
as Issuer, and Citibank, N.A. (London Branch), as Fiscal Agent. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Fiscal Agency Agreement.
This certificate relates to (Yen)_______________ aggregate principal
amount of Securities which are evidenced by the Temporary Global Security and
held with the Common Depositary through Euroclear or CEDEL or both in the name
of _______________ [insert name of holder] (the "Holder").
In respect of such Securities, the Holder does hereby certify that as
of the date hereof, the above-captioned Securities are beneficially owned by
non-U.S. Persons and are not held for purposes of resale directly or indirectly
to a U.S. Person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of America,
its territories and possessions, any state of the United States, and the
District of Columbia. As used herein, U.S. Person has the meaning assigned to
it in Rule 902 under the Securities Act of 1933, as amended.
We undertake to advise you immediately by tested telex on or prior to
the date on which you intend to submit your certification relating to the
Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
F-1
<PAGE>
We understand that this certification is required in connection with
certain securities laws in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings. This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Goldman Sachs International as
the initial purchaser of the Securities.
Dated: ____________, 199_*
__________________________
Account Holder
______________________________
* To be dated no earlier than 15 days prior to the exchange date to which
the certification relates.
F-2
<PAGE>
EXHIBIT 4.3
COUNTERPART NO. __ OF __ SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO
THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
- --------------------------------------------------------------------------------
LEASE INTENDED AS SECURITY
Dated as of December 3, 1999
among
LEVI STRAUSS & CO.
as Lessee
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Agent
and
THE PERSONS LISTED ON SCHEDULE I HERETO
as Lessors
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I DEFINITIONS.............................................................................. 2
ARTICLE II GRANT OF SECURITY INTEREST AND LEASE; GENERAL PROVISIONS................................. 14
Section 2.1 Funding; Payment of Funded Amount................................................. 14
Section 2.2 Application of Funds; Lease of Collateral......................................... 14
Section 2.3 Time and Place of Funding Date.................................................... 15
Section 2.4 Nature of Transaction............................................................. 15
Section 2.5 Intentionally Omitted............................................................. 15
Section 2.6 NO WARRANTY....................................................................... 15
Section 2.7 Legal and Tax Representation...................................................... 16
Section 2.8 Computations...................................................................... 16
Section 2.9 Capital Rent...................................................................... 16
Section 2.10 Conditions for Subsequent Tranche Fundings........................................ 16
ARTICLE III CONDITIONS TO FUNDING DATE............................................................... 17
Section 3.1 Conditions to the Tranche I Funding .............................................. 17
Section 3.2 Conditions to Each Subsequent Tranche Funding..................................... 19
Section 3.3 Other Documents................................................................... 22
ARTICLE IV TERM, RENT AND PAYMENT................................................................... 22
Section 4.1 Term.............................................................................. 22
Section 4.2 Rent Payments..................................................................... 22
Section 4.3 Place and Manner of Payment....................................................... 22
Section 4.4 Net Lease......................................................................... 23
Section 4.5 Overdue Amounts................................................................... 23
Section 4.6 No Termination or Abatement....................................................... 23
ARTICLE V POSSESSION, ASSIGNMENT, USE AND MAINTENANCE OF COLLATERAL................................ 24
Section 5.1 Possession and Use of Collateral; Compliance with Laws............................ 24
Section 5.2 Subleases and Assignments......................................................... 24
Section 5.3 Maintenance....................................................................... 26
Section 5.4 Alterations, Modifications, etc................................................... 26
Section 5.5 Liens............................................................................. 27
Section 5.6 Identifying Numbers; Legend; Changes; Inspection.................................. 28
ARTICLE VI RISK OF LOSS; INSURANCE.................................................................. 28
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 6.1 Casualty and Replacement.......................................................... 28
Section 6.2 Insurance Coverages............................................................... 31
Section 6.3 Insurance Certificates............................................................ 32
ARTICLE VII INDEMNIFICATION......................................................................... 32
Section 7.1 General Indemnification........................................................... 32
Section 7.2 General Tax Indemnity............................................................. 33
Section 7.3 After-Tax Basis................................................................... 35
ARTICLE VIII EVENTS OF DEFAULT; REMEDIES............................................................. 36
Section 8.1 Events of Default................................................................. 36
Section 8.2 Remedies.......................................................................... 38
Section 8.3 Sale of Collateral................................................................ 39
Section 8.4 Application of Proceeds........................................................... 39
Section 8.5 Right to Perform Obligations...................................................... 39
Section 8.6 Power of Attorney................................................................. 40
Section 8.7 Remedies Cumulative; Consents..................................................... 40
ARTICLE IX AGENT................................................................................... 40
Section 9.1 Appointment of Agent; Powers and Authorization to Take Certain Actions............ 40
Section 9.2 Reliance.......................................................................... 41
Section 9.3 Action Upon Instructions Generally................................................ 42
Section 9.4 Indemnification................................................................... 42
Section 9.5 Independent Credit Investigation.................................................. 43
Section 9.6 Refusal to Act.................................................................... 43
Section 9.7 Resignation or Removal of Agent; Appointment of Successor......................... 44
Section 9.8 Separate Agent.................................................................... 44
Section 9.9 Termination of Agency............................................................. 44
Section 9.10 Compensation of Agency............................................................ 45
Section 9.11 Limitations....................................................................... 45
ARTICLE X DISTRIBUTIONS TO LESSORS................................................................ 45
Section 10.1 Prorata Distribution.............................................................. 45
Section 10.2 Timing of Distribution............................................................ 46
ARTICLE XI LEASE TERMINATION....................................................................... 46
Section 11.1 Release of Collateral............................................................. 46
Section 11.2 Early Termination Right for All of the Collateral................................. 46
Section 11.3 Early Payment and Termination Rights for Less Than All of the Collateral.......... 46
Section 11.4 Right to Sell A Unit.............................................................. 47
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE XII REPRESENTATIONS AND WARRANTIES.......................................................... 47
Section 12.1 Representations and Warranties of Lessee.......................................... 47
Section 12.2 Representations and Warranties of Lessors......................................... 53
Section 12.3 Representations and Warranties of Agent........................................... 53
ARTICLE XIII COVENANTS............................................................................... 54
Section 13.1 Covenants of Lessee............................................................... 54
Section 13.2 Covenants of Agent................................................................ 57
Section 13.3 Covenants of Lessors.............................................................. 58
ARTICLE XIV REGISTRATION, TRANSFER, EXCHANGE,REPLACEMENT AND ASSIGNMENT OF CERTIFICATES............. 58
Section 14.1 Certificates Represent Lessor Interests........................................... 58
Section 14.2 Lost, Stolen or Damaged Certificates.............................................. 59
Section 14.3 Lessor Assignments................................................................ 59
ARTICLE XV OWNERSHIP AND GRANT OF SECURITY INTEREST................................................ 60
Section 15.1 Grant of Security Interest........................................................ 60
Section 15.2 Retention of Proceeds............................................................. 60
ARTICLE XVI MISCELLANEOUS........................................................................... 61
Section 16.1 Payment of Transaction Costs and Other Costs...................................... 61
Section 16.2 Effect of Waiver.................................................................. 61
Section 16.3 Survival of Covenants............................................................. 61
Section 16.4 Applicable Law.................................................................... 62
Section 16.5 Effect and Modification........................................................... 62
Section 16.6 Notices........................................................................... 62
Section 16.7 Consideration for Consents to Waivers and Amendments.............................. 62
Section 16.8 Counterparts...................................................................... 63
Section 16.9 Severability...................................................................... 63
Section 16.10 Successors and Assigns............................................................ 63
Section 16.11 No Third-Party Beneficiaries...................................................... 63
Section 16.12 Brokers........................................................................... 63
Section 16.13 Captions; Table of Contents....................................................... 63
Section 16.14 Schedules and Exhibits............................................................ 63
Section 16.15 Submission to Jurisdiction........................................................ 63
Section 16.16 Jury Trial........................................................................ 64
Section 16.17 Confidentiality................................................................... 64
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
-----------------
CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedule I List of Agent and Lessors; Addresses for Notices and Payments
Schedule II Description of Equipment
Schedule III Payment Schedules
Schedule 2.10 Pro Forma Amortization Schedule
Schedule 12.1(b) Recordings, Filings and Governmental Permits
Schedule 12.1 (k) List of Patents, Patent Rights, Trademarks, Service Marks, Trade Names,
Copyrights, Licenses and other Intellectual Property Rights
</TABLE>
Exhibit A Form of Funding Date Certificate
Exhibit B Form of Opinion of Counsel to Lessee
Exhibit C Form of Certificate
Exhibit D Form of Officer's Certificate of Lessee
Exhibit E Form of Secretary's Certificate Of Lessee
iv
<PAGE>
LEASE INTENDED AS SECURITY
--------------------------
This LEASE INTENDED AS SECURITY (as amended and supplemented from time to
time, this "Lease") is entered into as of December 3, 1999 among: LEVI STRAUSS &
-----
CO., a Delaware corporation ("Lessee"), with its principal office at 1155
------
Battery Street, San Francisco, California 94111; FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association ("Agent"), not in its individual
-----
capacity (except as specifically set forth herein) but solely in its capacity as
Agent hereunder; and the Persons listed from time to time in Schedule I hereto
----------
as lessors, as such Schedule may from time to time be amended (each individually
a "Lessor" and collectively the "Lessors"; provided that no such reference shall
------ ------- --------
be deemed to refer to any Person who is not a holder of a Certificate at the
date of determination).
R E C I T A L S:
- - - - - - - -
WHEREAS, the parties intend that this transaction constitutes a lease from
Lessors to Lessee while preserving ownership in the Collateral to Lessee, and
the transaction shall be characterized as a secured financial transaction for
Federal and state tax, bankruptcy, commercial law and UCC purposes; and
WHEREAS, (i) on the applicable Funding Date, each Lessor acquiring a
Certificate on such Funding Date shall transfer to Agent such Lessor's Funding
to be made on such Funding Date in accordance with the provisions and conditions
of this Lease; (ii) on the Tranche I Funding Date, Lessee will grant to Agent,
for the benefit of all Lessors, a security interest in the items of personal
property described on Schedule II hereto (such items, together with any
-----------
replacements that may be hereafter substituted for any thereof and subject to
this Lease from time to time, being referred to collectively as the "Equipment")
---------
and the other Collateral (as hereinafter defined); and (iii) on each applicable
Funding Date, Agent shall advance the Funded Amount funded on such Funding Date
to Lessee in accordance with the provisions and conditions of this Lease; and
WHEREAS, upon the granting of the security interest in the Equipment and
the other Collateral on or prior to the Tranche I Funding Date, each Lessor
shall hold an undivided interest in such security interest equal to such
Lessor's Investment Percentage (as such Investment Percentage may be increased
as a result of Subsequent Tranche Fundings by such Lessor), which undivided
interest shall be represented by a Certificate or Certificates registered in
such Lessor's name, pursuant to Section 14.1 hereof, upon the terms and
------------
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual terms and conditions herein
contained, the parties hereto agree as follows:
ARTICLE I
1
<PAGE>
DEFINITIONS
In this Lease and each other Operative Document, unless the context
otherwise requires:
(a) any term defined below by reference to another instrument or document
shall continue to have the meaning ascribed thereto whether or not such other
instrument or document remains in effect;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) a reference to a part, clause, section, article, exhibit or schedule is
a reference to a part, clause, section and article of, and exhibit and schedule
to, such Operative Document;
(e) a reference to any statute, regulation, proclamation, ordinance or law
includes all statutes, regulations, proclamations, ordinances or laws amending,
supplementing, supplanting, varying, consolidating or replacing them, and a
reference to a statute includes all regulations, proclamations and ordinances
issued or otherwise applicable under that statute;
(f) a reference to a document includes any amendment or supplement to, or
replacement or novation of, that document;
(g) a reference to a party to a document includes that party's successors
and permitted assigns; and
(h) a reference to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement
------- -------
followed by or referable to an enumeration of specific matters to matters
similar to those specifically mentioned.
Further, each of the parties to the Operative Documents and their counsel
have reviewed and revised the Operative Documents, or requested revisions
thereto, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall be inapplicable in construing and
interpreting the Operative Documents.
"Accrual Rent" shall mean, with respect to each Rent Period, an amount
------------
equal to interest accrued on the Lease Balance outstanding during such period at
the Interest Rate.
"Administrative Charge" means at any time with respect to the Lease Balance
---------------------
being prepaid in whole or in part pursuant to Sections 11.2, 11.3 or 11.4, or
------------- ---- ----
otherwise or being declared or becoming due and payable pursuant to Section 8.2,
-----------
the amount (but not less than zero) obtained by subtracting (X) the aggregate
amount of the Lease Balance prepaid or paid or being declared or
2
<PAGE>
becoming due and payable on such date (as the case may be), from (Y) the sum of
the Present Values of (A) the amount of the Lease Balance being so prepaid or
paid or being declared or becoming due and payable (assuming that the Payment
Obligation is satisfied by Lessee at the end of the Term and the payment of such
portion of the Lease Balance as scheduled on Schedule III and each Payment
Schedule) plus (B) the Accrual Rent which would have been payable on the
----
portion of the Lease Balance being prepaid or paid or being declared or becoming
due and payable (assuming that the Payment Obligation is satisfied by Lessee at
the end of the Term, that the Lease Balance will be paid as specified in the
foregoing clause (A), and that all installments of Accrual Rent with respect
thereto will be paid when due in accordance with Schedule III and each Payment
Schedule). "Present Value", for any amount, shall be computed on a quarterly
-------------
basis at a discount rate equal to the sum of 1.00% plus the Treasury Yield. The
"Treasury Yield" shall be determined by reference to the most recent Federal
--------------
Reserve Statistical Release H.15 (519) or any comparable successor publication
which has become available not more than two days prior to the date of
prepayment or payment or the date as of which such amount becomes or is declared
due and payable, as the case may be (or, if such Statistical Release is no
longer published, any publicly available source of similar market data
acceptable to the Required Lessors), and shall be the most recent yield on
actively traded United States Treasury securities adjusted to a constant
maturity equal to the then remaining weighted average life to maturity, rounded
to the nearest month, of the remaining rental obligations under this Lease. If
no maturity exactly corresponding to such rounded weighted average life to
maturity for such obligation shall appear therein, yields for the two most
closely corresponding published maturities shall be calculated pursuant to the
foregoing sentence and the Treasury Yield shall be interpolated from such yields
on a straight-line basis (rounding, in the case of relevant periods, to the
nearest month). If such rates shall not have been so published, the Treasury
Yield shall be calculated on the basis of the arithmetic mean of the arithmetic
means of the secondary market ask rates, as of approximately 3:30 P.M., New York
City time, on such calculation days, for the actively traded U.S. Treasury
security or securities with a maturity or maturities most closely corresponding
to such rounded weighted average life to maturity as reported by three primary
United States Government securities dealers in New York City of national
standing selected in good faith by Agent.
"Affiliate" of any Person shall mean any other Person directly or
---------
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, the term "control" (including the correlative
-------
meanings of the terms "controlling," "controlled by" and "under common control
----------- ------------- --------------------
with"), as used with respect to any Person, shall mean the possession, directly
- ----
or indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise, provided (but without limiting the foregoing) that no
--------
pledge of voting securities of any Person without the current right to exercise
voting rights with respect thereto shall by itself be deemed to constitute
control over such Person.
"Agent" shall have the meaning provided in the introductory paragraph of
-----
this Lease, and wherever Agent is used herein, such reference shall mean "Agent,
on behalf of the Lessors," unless specifically stated otherwise.
3
<PAGE>
"Applicable Administrative Charge" shall mean, as of any date of
--------------------------------
determination in respect of any event, any Administrative Charge determined to
be due and owing in respect of such event.
"Applicable Laws" shall mean all existing and future applicable laws
---------------
(including Environmental Laws), rules, regulations, statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of, and interpretations
by, any Authority, and applicable judgments, decrees, injunctions, writs, orders
or like action of any court, arbitrator or other administrative, judicial or
quasi-judicial tribunal or agency of competent jurisdiction (including those
pertaining to health, safety or the environment), to which Lessee or any Unit is
subject.
"Appraisal" shall mean an appraisal of the Collateral from an Appraiser
---------
received pursuant to the terms of this Lease.
"Appraised Value" shall mean, (i) with respect to the Collateral as of any
---------------
date of determination, the Fair Market Value of the Collateral as set forth in
the Appraisal therefor as of the Tranche I Funding Date, and (ii) with respect
to any Unit as of any date of determination, the Fair Market Value of such Unit
as set forth in the Appraisal therefor as of the Tranche I Funding Date.
"Appraiser" shall mean (a) Arthur Andersen, LLP with respect to the
---------
Collateral as of any Funding Date and (b) with respect to any replacements for
the Collateral pursuant to Section 6.1, such other Person as may be selected by
-----------
the Required Lessors.
"Authority" shall mean any applicable foreign, federal, state, county,
---------
municipal or other government or governmental, quasi-governmental or regulatory
authority, agency, board, body, commission, instrumentality, court or tribunal,
or any political subdivision of any thereof, or arbitrator or panel of
arbitrators.
"Available Investment Percentage" shall mean, as of any Funding Date, a
-------------------------------
percentage equal to 100% minus the aggregate Investment Percentages of all
Lessors as of the day immediately preceding such Funding Date.
"Basic Rent" shall have the meaning provided in Section 4.2.
---------- -----------
"Board of Directors" shall mean, with respect to a corporation, either the
------------------
board of directors or any duly authorized committee of that board of directors
which, pursuant to the by-laws of such corporation, has the same authority as
that board of directors as to the matter at issue.
"Business Day" shall mean any day on which Federal and state chartered
------------
banks in the State of New York City, New York, San Francisco, California and
Salt Lake City, Utah are open for commercial banking business.
4
<PAGE>
"Capital Rent" shall mean, for each Payment Date during the Term, that
------------
portion of the installment of Basic Rent payable on such Payment Date designated
as Capital Rent on Schedule III and each Payment Schedule.
"Casualty" shall mean any of the following events in respect of any Unit:
--------
(a) the loss of such Unit or the loss of use thereof due to theft,
disappearance, destruction or damage beyond economic repair from any cause
whatsoever, or the rendering of such Unit permanently unfit for normal use for
any reason whatsoever (other than obsolescence); (b) any damage to such Unit
which results in an insurance settlement with respect to such Unit on the basis
of a total loss or a constructive or compromised total loss; (c) the permanent
condemnation, confiscation or seizure of, or requisition of title to or use of,
such Unit; or (d) as a result of any Applicable Laws or other action by any
Authority, the use of such Unit in the normal course of Lessee's business shall
have been prohibited, directly or indirectly, for a period equal to the lesser
of (i) 180 consecutive days and (ii) the remaining Term.
"Casualty Amount" shall mean, with respect to any Unit as of any date
---------------
specified for payment thereof, a portion of the Lease Balance equal to the
product obtained by multiplying the entire outstanding Lease Balance by the Unit
Value Fraction of such Unit, plus all Accrual Rent accrued on such portion of
----
the Lease Balance to the date of payment.
"Casualty Proceeds" shall have the meaning specified in Section 6.1(d).
----------------- --------------
"Casualty Recoveries" shall have the meaning provided in Section 6.1(c).
------------------- --------------
"Certificate" shall have the meaning provided in Section 14.1.
----------- ------------
"Claims" shall mean liabilities, obligations, damages, losses, demands,
------
penalties, fines, claims, actions, suits, judgments, settlements, utility
charges, costs, fees, expenses and disbursements (including, without limitation,
reasonable legal fees (including allocated time charges of internal counsel) and
reasonable expenses and costs of investigation which, in the case of counsel or
investigators retained by an Indemnitee, shall be reasonable) of any kind and
nature whatsoever.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Collateral" shall mean all of Lessee's right, title and interest in and to
----------
each of the following, however arising and whether now existing or hereafter
acquired or arising:
(a) the Equipment (including all Parts thereof, accessions thereto
and replacements and substitutions therefor);
(b) all contracts necessary to operate and maintain the Equipment;
5
<PAGE>
(c) any rights to a rebate, offset or other assignment, warranty or
service under a purchase order, invoice or purchase agreement with any
manufacturer of any of the Equipment;
(d) all books, manuals, logs, records, writings, data bases,
information and other property relating to, used or useful in connection
with, evidencing, embodying, incorporating or referring to, any of the
foregoing;
(e) the rights of Lessee to use all software that is used at any time
during the Term in connection with the operation of the Equipment at the
locations where the Equipment is situated, provided that to the extent any
such software is used by Lessee other than in connection with the
Equipment, then in the event Agent exercises any remedy set forth in
Article VIII, Lessee shall be entitled to use that portion of such software
------------
that Lessee uses other than in connection with the Equipment, at no cost to
Lessee; and
(f) all of Lessee's right, title and interest in any Subleases, and
all products, accessions, rents, issues, profits, returns, income and
proceeds of and from any and all of the foregoing Collateral (including
proceeds which constitute property of the types described in clauses (a),
------- -
(b), (c), (d) and (e) above and, to the extent not otherwise included, all
- - - -
payments under insurance (whether or not Lessor 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).
"Collateral Value" shall mean the lesser of eighty percent (80%) of the
----------------
Appraised Value of the Collateral as of the Tranche I Funding Date, and One
Hundred Fifteen Million Six Hundred Forty-Eight Thousand Dollars ($115,648,000).
"Commitment" shall mean, as to any Lessor, such Lessor's obligation to make
----------
amounts available in consideration of such Lessor's interest in the Collateral,
in an aggregate amount not to exceed at any one time outstanding the amount set
forth opposite such Lessor's name on Schedule III, as such Schedule may be
------------
amended from time to time to reflect Subsequent Tranche Fundings.
"Competitor" shall mean a Person that directly, or indirectly through any
----------
Affiliates, engages in businesses similar to those engaged in by Lessee and its
Affiliates as of the Tranche I Funding Date, as reasonably determined by Lessee.
"Deposit Account" shall have the meaning specified in Section 6.1(d).
--------------- --------------
"Depreciated Collateral Value" shall mean, as of any Payment Date, the
----------------------------
depreciated Collateral Value as set forth opposite such Payment Date on Schedule
--------
III hereto, provided that if any Unit has been released from the scope of this
- --- --------
Lease and the Security Interest pursuant to any of Sections 6.1(a), 11.3 or
--------------- ----
11.4, the Depreciated Collateral Value shall be reduced by subtracting the
- ----
6
<PAGE>
product of the Unit Value Fraction of the released Unit and the Depreciated
Collateral Value as of the date of determination.
"Employee Benefit Plan" shall mean an employee benefit plan (within the
---------------------
meaning of Section 3(3) of ERISA, including any Multiemployer Plan), or any
"plan" as defined in Section 4975(e) (1) of the Code and as interpreted by the
Internal Revenue Service and the Department of Labor in rules, regulations,
releases or bulletins in effect at the time of any determination under the
Operative Documents.
"Environmental Laws" shall mean and include the Resource Conservation and
------------------
Recovery Act of 1976, the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), the Hazardous Materials Transportation Act of 1975, the
Toxic Substances Control Act, the Clean Air Act, the Federal Insecticide,
Fungicide and Rodenticide Act and all similar federal, state and local
environmental laws, ordinances, rules, orders, statutes, decrees, judgments,
injunctions, codes and regulations, and any other federal, state or local laws,
ordinances, rules, codes and regulations, and any other federal, state or local
laws, ordinances, rules, codes and regulations relating to the environment,
human health or natural resources or the regulation or control of or imposing
liability or standards of conduct concerning human health, the environment,
Hazardous Materials or the clean-up or other remediation of a Unit.
"Equipment" shall have the meaning provided in the Recitals.
---------
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
------
amended.
"ERISA Affiliate" shall mean each entity required to be aggregated with
---------------
Lessee pursuant to the requirement of Section 414(b) or 414(c) of the Code.
"Event of Default" shall have the meaning provided in Section 8.1.
---------------- -----------
"Fair Market Value" shall mean, with respect to any Unit as of any date,
-----------------
the retail price which a purchaser would pay to purchase such Unit in an arm's-
length transaction between a willing buyer and a willing seller, neither of them
being under any compulsion to buy or sell. In making any determination of Fair
Market Value, the Appraiser may assume such Unit has been maintained in
accordance with the requirements of this Lease and that such Unit is in the
condition in which it is required to be hereunder as of the date for which such
determination is made. The Appraiser shall use such reasonable methods of
appraisal as are chosen by Agent upon instructions from the Required Lessors.
"Funded Amount" shall mean, with respect to any Lessor, the amount advanced
-------------
by such Lessor on each Funding Date on which such Lessor advances funds, or with
respect to any Funding Date, the aggregate amount advanced by all Lessors on
such Funding Date.
7
<PAGE>
"Funding" shall mean the advance of funds by the Lessors pursuant to
-------
Section 2.1 on the Tranche I Funding Date or any Subsequent Tranche Funding
- -----------
Date, as applicable.
"Funding Date" shall mean the Tranche I Funding Date or any Subsequent
------------
Tranche Funding Date, as applicable.
"Funding Date Certificate" shall have the meaning provided in Section 3.1.
------------------------ -----------
"GAAP" shall mean generally accepted accounting principles in the United
----
States as in effect from time to time, applied on a consistent basis both as to
classification of items and amounts.
"Governmental Action" shall mean all applicable permits, authorizations,
-------------------
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, decrees, licenses, exemptions, publications, filings, notices to and
declarations of or with, or required by, any Authority, or required by any
Applicable Laws.
"Hazardous Material" shall mean any substance, waste or material which is
------------------
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous by listing characteristic or definition under
any Environmental Law, including petroleum, crude oil or any fraction thereof,
petroleum derivatives, by-products and other hydrocarbons, and is or becomes
regulated by any Authority, including any agency, department, commission, board
or instrumentality of the United States, any State or any political subdivision
thereof, and also including asbestos, asbestos containing materials, urea
formaldehyde foam insulation, polychlorinated biphenyls ("PCBs") and radon gas.
----
"Incipient Default" shall mean any condition, event or act, which with
-----------------
notice or lapse of time or both, would become an Event of Default.
"Indemnitee" shall mean each Lessor, Agent (in its individual capacity) and
----------
their respective Affiliates, successors, permitted assigns, permitted
transferees, contractors, employees, officers, directors, shareholders,
partners, participants, representatives and agents; provided, however, that in
-------- -------
no event shall Lessee be an Indemnitee.
"Insurance Requirements" means all terms and conditions of any insurance
----------------------
policy required by this Lease to be maintained by Lessee, and all requirements
of the issuer of any such policy.
"Interest Rate" shall mean, with respect to the Tranche I Funding, a fixed
-------------
interest rate equal to the yield on the U.S. Treasury Security whose maturity
date most closely approximates the weighted average life of the Lease as of the
Funding Date, plus 290 basis points, which shall be set 2 Business Days before
the Tranche I Funding Date, and with respect to any Subsequent Tranche Funding,
such interest rate as Lessee and such Subsequent Tranche Lessors shall agree.
"Investment Percentage" shall mean, as to any Tranche I Lessor, such
---------------------
Tranche I Lessor's Funded Amount on the Tranche I Funding Date divided by the
Collateral Value as of the Tranche
8
<PAGE>
I Funding Date, and as to any Subsequent Tranche Lessor, such Subsequent Tranche
Lessor's Funded Amount on the applicable Subsequent Tranche Funding Date divided
by the Depreciated Collateral Value as of the applicable Subsequent Tranche
Funding Date, in each case stated as a percentage, rounded to the nearest
0.001%.
"Lease" shall have the meaning provided in the introductory paragraph of
-----
this Lease.
"Lease Balance" shall mean, as of any date of determination, (i) with
-------------
respect to all Lessors, the aggregate of the Funded Amounts on all Funding Dates
less all payments of Capital Rent and payments thereof pursuant to Sections 6.1,
------------
8.2, 11.2, 11.3 and 11.4 theretofore paid by Lessee, and (ii) with respect to
- --- ---- ---- ----
any individual Lessor, such Lessor's aggregate Funded Amount, less all payments
of Capital Rent and payments thereof pursuant to Sections 6.1, 8.2, 11.2, 11.3
------------ --- ---- ----
and 11.4 theretofore paid by Lessee multiplied by such Lessor's Percentage
----
Interest at the time the particular payment is made.
"Lessee" shall have the meaning provided in the introductory paragraph of
------
this Lease.
"Lessor" shall have the meaning provided in the introductory paragraph of
------
this Lease.
"Lessor Liens" shall mean Liens on or against any Unit (a) which result
------------
from any act of, or any Claim against, Agent or any Lessor unrelated to the
transactions contemplated by the Operative Documents or (b) which result from
any Tax owed by any such Person, except any Tax for which Lessee is obligated to
indemnify.
"Lien" shall mean any lien, mortgage, deed of trust, encumbrance, pledge,
----
charge, lease, easement, servitude, right of others or security interest of any
kind, including any thereof arising under any conditional sale or other title
retention agreement.
"Material Adverse Effect" shall mean any change or changes, effect or
-----------------------
effects or condition or conditions that individually or in the aggregate are or
could reasonably be expected to be materially adverse to (i) the transactions
contemplated by the Operative Documents, (ii) the ability of Lessee to perform
its obligations under the Operative Documents or (iii) the validity or
enforceability of any of the Operative Documents or any rights or remedies under
any thereof.
"Maximum Commitment Amount" shall mean $115,648,000.
-------------------------
"Multiemployer Plan" shall have the meaning assigned to the term
------------------
"multiemployer plan" in Section 3(37) of ERISA.
"Officer's Certificate" of a Person means a certificate signed by a
---------------------
Responsible Officer of such Person.
9
<PAGE>
"Operative Documents" shall mean this Lease (including all Annexes,
-------------------
Exhibits and Schedules hereto), the Certificates, and such other documents
regarding the transactions contemplated hereby as the Lessors may reasonably
require.
"Part" shall have the meaning provided in Section 5.4.
---- -----------
"Payment Date" shall mean the last day of each Rent Period.
------------
"Payment Obligation" shall have the meaning specified in Section 11.1.
------------------ ------------
"Payment Schedule" shall mean a schedule with respect to each Lessor making
----------------
a Funding on each Funding Date showing as of each Payment Date the Accrual
Rent, the Capital Rent and the Lease Balance (assuming all Rent payments are
made as scheduled).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Pension Plan" shall mean, with respect to any Person, a "pension plan" as
------------
such term is defined in Section 3(2) of ERISA which is subject to Title IV of
ERISA and to which such Person may have any liability or contingent liability,
including, but not limited to, liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason or being deemed to be a contributing sponsor
under Section 4069 of ERISA.
"Percentage Interest" shall mean, with respect to any Lessor, that Lessor's
-------------------
Investment Percentage divided by the aggregate of Investment Percentages of all
Lessors as of the date of determination.
"Permitted Contest" shall mean actions taken by a Person to contest in good
-----------------
faith, by appropriate proceedings initiated timely and diligently prosecuted,
the legality, validity or applicability to any Unit or any interest therein of
any Person of: (a) any law, regulation, rule, judgment, order, or other legal
provision or judicial or administrative requirements; (b) any term or condition
of, or any revocation or amendment of, or other proceeding relating to, any
authorization or other consent, approval or other action by any Authority; or
(c) any Lien or Tax; provided that the initiation and prosecution of such
--------
contest would not: (i) result in, or materially increase the risk of, the
imposition of any criminal liability on any Indemnitee; (ii) materially and
adversely affect the Liens created by the Operative Documents or the right,
title or interest of Agent, on behalf of all Lessors, in or to any of the
Collateral or the right of Agent, on behalf of all Lessors, to receive payment
of all or any portion of any payment of Rent, Lease Balance, Administrative
Charge or any other amount payable under the Operative Documents; (iii) permit,
or pose a material risk of, the sale or forfeiture of, or foreclosure on, any
Unit; or (iv) have a Material Adverse Effect on the Fair Market Value, utility
or remaining useful life of any Unit or any interest therein or the continued
economic operation thereof; and provided further that in any event adequate
-------- -------
reserves in accordance with GAAP are maintained against any adverse
determination of such contest.
<PAGE>
"Permitted Liens" shall mean (i) any rights in favor of Agent, on behalf of
---------------
all Lessors, pursuant to this Lease; (ii) materialmen's, mechanics', workers',
artisan's, repairmen's, employees' or other like Liens securing payment of the
price of goods or services rendered in the ordinary course of business for
amounts the payment of which is not overdue or is being contested pursuant to a
Permitted Contest; (iii) any Lessor Lien; and (iv) Liens for current Taxes which
are not delinquent or the validity of which is being contested pursuant to a
Permitted Contest.
"Permitted Modification" shall have the meaning specified in Section 5.4.
---------------------- -----------
"Person" shall mean an individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, limited liability company,
unincorporated organization or Authority.
"Plan" shall mean an "employee benefit plan" as defined in section 3(3) of
----
ERISA.
"Prohibited Transaction" shall mean a transaction that is prohibited under
----------------------
Code Section 4975 or ERISA Section 406 and not exempt under Code Section 4975 or
ERISA Section 408.
"Release" shall mean the release, deposit, disposal or leak of any
-------
Hazardous Material into or upon or under any land or water or air, or otherwise
into the environment, including, without limitation, by means of burial,
disposal, discharge, emission, injection, spillage, leakage, seepage, leaching,
dumping, pumping, pouring, escaping, emptying, placement and the like.
"Rent" shall mean Basic Rent and Supplemental Rent, collectively.
----
"Rent Period" shall mean a period beginning on the Tranche I Funding Date
-----------
and ending on the date which numerically corresponds to the date which is one
day prior to the date three months after the Tranche I Funding Date, and each
consecutive three-month period thereafter; provided, however, that (a) if such
-------- -------
Rent Period would otherwise end on a day which is not a Business Day, then such
Rent Period shall be extended to the next following Business Day, and (b) no
Rent Period may end later than the last day of the Term. The initial Rent Period
for each Subsequent Tranche Funding shall begin on each such Subsequent Tranche
Funding Date and shall end at the end of the then current Rent Period.
Thereafter, the Rent Periods for Subsequent Tranche Fundings shall correspond to
the Rent Periods for the Tranche I Funding.
"Reportable Event" shall mean a "reportable event" described in Section
----------------
4043(b) of ERISA and the regulations thereunder.
"Required Lessors" shall mean, as of the date of determination, holders of
----------------
Certificates representing more than 66-2/3% of the Investment Percentages of all
Lessors as of the date of determination.
11
<PAGE>
"Responsible Officer" shall mean the Chairman or Vice Chairman of the Board
-------------------
of Directors, the Chairman or Vice Chairman of the Executive Committee of the
Board of Directors, the President, any Senior Vice President, Executive Vice
President or Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer or Trust Officer
"Sale" shall mean the sale by Lessee of a Unit as a consequence of Lessee's
----
reorganization of its distribution operations to a party who shall not be an
Affiliate of Lessee, or any Person with whom Lessee or any such Affiliate has an
understanding or arrangement regarding the future use, possession or ownership
of such Unit, in an arm's length transaction for a price substantially equal to
the Fair Market Value of such Unit.
"Schedule III" shall mean the Schedule III attached hereto, as supplemented
------------
on each Subsequent Tranche Funding Date, which shall contain, as of the date of
determination, a Payment Schedule for each Lessor.
"SEC" shall mean the United States Securities and Exchange Commission.
---
"Securities Act" shall mean the Securities Act of 1933.
--------------
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934.
-----------------------
"Security Interest" shall have the meaning defined in Section 15.1.
----------------- ------------
"Service Provider" shall mean a company, which is not an Affiliate of
----------------
Lessee, which operates and manages one or more Units for Lessee pursuant to a
contract with Lessee.
"Site" shall mean each of Lessee's three distribution facilities located at
----
(i) Hebron, Kentucky, (ii) Canton, Mississippi and (iii) Henderson, Nevada.
"Sublease" shall have the meaning provided in Section 5.2.
-------- -----------
"Subsequent Tranche Funding" shall mean any Funding made on any Subsequent
--------------------------
Tranche Funding Date.
"Subsequent Tranche Funding Date" shall mean any Business Day on which (i)
-------------------------------
all of the conditions set forth in Section 2.10 and Article III with respect to
------------ -----------
any Subsequent Tranche Funding have been satisfied or waived as determined in
the sole discretion of the applicable Subsequent Tranche Lessors and (ii) the
Funded Amount transferred to Agent by the Subsequent Tranche Lessors with
respect to such Subsequent Tranche Funding is advanced to Lessee by Agent from
funds Agent has received from such Subsequent Tranche Lessors in accordance with
this Lease.
12
<PAGE>
"Subsequent Tranche Lessor" shall mean a Lessor who provides a Funding
-------------------------
pursuant to the terms and provisions of this Lease to Agent on a Subsequent
Tranche Funding Date, and any assignees of such Lessors.
"Subsidiary" shall mean, with respect to any Person, any corporation or
----------
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Supplemental Rent" shall mean any and all amounts, liabilities and
-----------------
obligations other than Basic Rent which Lessee assumes or agrees or is otherwise
obligated to pay under this Lease or any other Operative Document (whether or
not designated as Supplemental Rent) to Agent, any Lessor or any other Person,
including, without limitation, any Administrative Charge, indemnities and
damages for breach of any covenants, representations, warranties or agreements.
"Taxes" and "Tax" shall mean any and all fees (including, without
----- ---
limitation, documentation, recording, license and registration fees), taxes
(including, without limitation, income (whether net, gross or adjusted gross),
gross receipts, sales, rental, use, turnover, value-added, property, excise and
stamp taxes), levies, imposts, duties, charges, assessments or withholdings of
any nature whatsoever, together with any penalties, fines or interest thereon or
additions thereto.
"Term" shall have the meaning provided in Section 4.1.
---- -----------
"Termination Date" shall mean the date on which the Term ends pursuant to
----------------
(a) Article VIII in connection with an Event of Default, (b) Section 11.2 in
------------ ------------
connection with an early termination, (c) Section 11.1 in connection with the
------------
expiration of the Term, or (d) with respect to an individual Unit, Section 11.3
------------
or Section 11.4 in connection with partial prepayments.
------------
"Tranche I Funding" shall mean the Funding made on the Tranche I Funding
-----------------
Date.
"Tranche I Funding Date" shall mean the date on which all of the conditions
----------------------
set forth in Article III with respect to the Tranche I Funding have been
-----------
satisfied or waived in writing and the Tranche I Funding is advanced to Lessee
by Agent from funds Agent has received from the Tranche I Lessors in accordance
with this Lease.
"Tranche I Lessors" shall mean those Lessors who provide Funding to Agent
-----------------
pursuant to the terms and provisions of this Lease on the Tranche I Funding
Date, and any assignees of such Lessors.
"Transaction Costs" shall mean
-----------------
(i) the actual fees and expenses of (a) Mayer, Brown & Platt and (b)
any local or special counsel incurred by Agent in connection with the
negotiation, preparation, execution and delivery of the term sheet, the
commitment letters, the Operative Documents,
13
<PAGE>
and the transactions contemplated thereby incurred by Agent through the
Funding Date (subject to the provisions of Section 3.1(f);
--------------
(ii) the fees and expenses of the Appraiser;
(iii) the reasonable fees, costs and expenses of Agent; and
(iv) all costs of searching and perfecting a first priority security
interest in the Collateral.
"UCC" shall mean the Uniform Commercial Code of New York or any other
---
applicable jurisdiction.
"Unit" shall mean all of the Collateral located at a Site constituting an
----
integrated automated distribution warehouse storage and stock selection system,
consisting of, but not being limited to, conveyor systems, sorting equipment,
rotating storage structure units, inspection and work stations, and bulk storage
rack systems, all for the purpose of receiving, sorting, packaging and shipping
Lessee's products to its customers.
"Unit Value Fraction" shall mean, with respect to any Unit, a fraction the
-------------------
numerator of which is the Appraised Value of such Unit and the denominator of
which is the Appraised Value of all of the Collateral then subject to this
Lease, including such Unit.
"Welfare Plan" shall mean, with respect to any Person, a "welfare plan" as
------------
such term is defined in Section 3(1) of ERISA to which such Person or any ERISA
Affiliate to such Person may have any liability or contingent liability.
ARTICLE II
GRANT OF SECURITY INTEREST AND LEASE; GENERAL PROVISIONS
Section II.1 Funding; Payment of Funded Amount.
---------------------------------
(a) On each Funding Date hereunder, subject to the terms and
conditions hereinafter set forth, and in reliance on the representations
and warranties contained herein or made pursuant hereto, upon receipt of
the Funding Date Certificate with respect to such Funding Date, each Lessor
making a Funding on such Funding Date shall transfer to Agent on such
Funding Date an amount equal to such Lessor's Commitment as set forth on
Schedule III to this Lease with respect to such Funding Date, as
supplemented from time to time in accordance with the provisions of this
Lease.
(b) Remittances pursuant to this Section 2.1 shall be made in
-----------
immediately available funds by wire transfer to the account of Agent set
forth below (or as otherwise
14
<PAGE>
specified by Agent to each Lessor not less than three Business Days prior
to the date of the Funding) and must be received by Agent by 2:00 p.m., New
York time, on the Funding Date:
Bank: First Security Bank, National Association
Corporate Trust Services
79 South Main Street
Salt Lake City, Utah 84111
ABA Routing #: 124-0000-12
Account #: 051-0922115
Re: Levi Strauss Acct. #36088
Section II.2 Application of Funds; Lease of Collateral. On the Tranche I
-----------------------------------------
Funding Date and any Subsequent Tranche Funding Date, upon (a) receipt by Agent
of all amounts to be paid on the applicable Funding Date by the Lessors pursuant
to Section 2.1, and (b) satisfaction or waiver of each of the conditions set
-----------
forth in Section 3.1 for the Tranche I Funding Date or Section 3.2 for a
----------- -----------
Subsequent Tranche Funding Date, and in consideration for the grant of the
Security Interest by Lessee to Agent pursuant to Section 15.1, Agent, on behalf
------------
of the Lessors, shall advance, from the funds made available by the Lessors to
Agent on each Funding Date pursuant to Section 2.1, an amount equal to the
-----------
Funded Amount funded on such Funding Date in immediately available funds
remitted by wire transfer or direct credit to the account specified by Lessee in
the Funding Date Certificate.
Section II.3 Time and Place of Funding Date. Each Funding shall take
------------------------------
place on the Funding Date set forth in the Funding Date Certificate, commencing
at 2:00 p.m., New York time, subject to the following:
(i) the Tranche I Funding and Tranche I Funding Date shall occur on
a Business Day on or after the date hereof and not later than December 7,
1999 unless mutually extended by the Tranche I Lessors and Lessee;
(ii) Subsequent Tranche Fundings and Subsequent Tranche Funding Dates
shall each occur on a Business Day as agreed by the Subsequent Tranche
Lessors funding on such Subsequent Tranche Funding Date and Lessee; and
(iii) in no event shall the aggregate amount advanced by the Lessors
exceed the Maximum Commitment Amount, nor shall the aggregate amount
advanced by any Lessor exceed such Lessor's Commitment, nor shall any
Lessor be obligated to advance any portion of its Lease Balance which has
been repaid by Lessee.
Section II.4 Nature of Transaction. It is the intent of the parties that:
---------------------
(a) Lessee retains beneficial ownership of the Collateral and the transaction
will be characterized as a secured financial transaction for Federal and state
tax, bankruptcy, commercial law and UCC purposes, (b) this Lease
15
<PAGE>
grants a first priority security interest in the Equipment and the other
Collateral to Agent, for the benefit of the Lessors, and (c) the obligations of
Lessee to pay Capital Rent and Accrual Rent shall be treated as payments of
principal and interest, respectively. Each of the parties to this Lease agrees
that it will not, nor will any Affiliate at any time take any action or fail to
take any action with respect to the filing of any tax return, including an
amended tax return, inconsistent with the intention of the parties expressed in
this Section 2.4.
-----------
Section II.5 Intentionally Omitted.
---------------------
Section II.6 NO WARRANTY. LESSEE HEREBY AGREES THAT THE COLLATERAL IS
-----------
LEASED HEREUNDER IN ITS "AS IS," PRESENT CONDITION SUBJECT TO (i) ANY RIGHTS OF
ANY PARTIES IN POSSESSION THEREOF, (ii) THE STATE OF TITLE THERETO EXISTING AT
THE TIME SUCH COLLATERAL IS SUBJECTED TO THIS LEASE, (iii) ANY STATE OF FACTS
WHICH AN ACCURATE PHYSICAL INSPECTION MIGHT SHOW, AND LESSEE CONFIRMS THAT ITS
EXECUTION AND DELIVERY OF THE FUNDING DATE CERTIFICATE SHALL CONSTITUTE ITS
CERTIFICATION THAT IT HAS INSPECTED AND ACCEPTS, AS BETWEEN LESSORS AND LESSEE,
EACH UNIT WHICH IS THE SUBJECT MATTER HEREOF, (iv) ALL APPLICABLE LAWS, AND (v)
ANY VIOLATIONS OF APPLICABLE LAWS WHICH MAY EXIST AT THE COMMENCEMENT OF THE
TERM. LESSEE ACKNOWLEDGES AND AGREES THAT (a) EACH UNIT IS OF A SIZE, DESIGN,
CAPACITY AND MANUFACTURE SELECTED BY LESSEE, (b) LESSEE IS SATISFIED THAT THE
SAME IS SUITABLE FOR ITS PURPOSES, (c) NEITHER ANY LESSOR NOR AGENT IS A
MANUFACTURER THEREOF OR A DEALER IN PROPERTY OF SUCH KIND, (d) NEITHER ANY
LESSOR NOR AGENT SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT DEFECT IN ANY
UNIT, OR THE FAILURE OF ANY UNIT TO COMPLY WITH APPLICABLE LAWS (ENVIRONMENTAL
OR OTHERWISE) AND/OR INSURANCE REQUIREMENTS, AND (e) NEITHER ANY LESSOR NOR
AGENT HAS MADE, OR DOES OR WILL MAKE, (y) ANY REPRESENTATION OR WARRANTY OR
COVENANT, WITH RESPECT TO THE TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, CONDITION, QUALITY, DESCRIPTION, DURABILITY OR SUITABILITY OF ANY SUCH
UNIT IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES AND USES OF LESSEE
OR (z) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY UNIT, IT BEING AGREED THAT ALL RISKS WITH RESPECT TO THE
FOREGOING SHALL BE BORNE BY LESSEE.
Section II.7 Legal and Tax Representation. Lessee acknowledges and agrees
----------------------------
that neither any Lessor nor Agent has made any representations and warranties
concerning the tax, accounting or legal characteristics of this Lease and that
Lessee has obtained and relied on such tax, accounting and legal advice
regarding this Lease and the other Operative Documents as it deems appropriate.
Section II.8 Computations. All computations of accrued amounts pursuant
------------
to the Operative Documents shall be made on the basis of a 360-day year of
twelve 30-day months.
16
<PAGE>
Section II.9 Capital Rent. Capital Rent under this Lease for each
------------
Subsequent Tranche Lessor shall be no greater than an amount sufficient to
reduce the portion of the Lease Balance attributable to any such Subsequent
Tranche Funding to an amount equal to 50% of the amount of such Subsequent
Tranche Funding as of the expiration of the Term.
Section II.10 Conditions for Subsequent Tranche Fundings. No consent of
------------------------------------------
any Tranche I Lessor or any prior Subsequent Tranche Lessor shall be required
for any Subsequent Tranche Funding. The Payment Schedules of the Subsequent
Tranche Lessors advancing funds on any Subsequent Tranche Funding Date shall not
provide for amortizations of such Subsequent Tranche Lessors' Lease Balances
which are greater than that set forth on the pro-forma amortization schedule
attached hereto as Schedule 2.10, provided that any such Subsequent Tranche
------------- --------
Lessor's interest in the Collateral shall equal its Investment Percentage,
provided, further, that the aggregate of all Funded Amounts that may be funded
- -------- -------
on a particular Subsequent Tranche Funding Date shall not exceed the product of
the Available Investment Percentage multiplied by the Depreciated Collateral
Value as of such Subsequent Tranche Funding Date.
ARTICLE III
CONDITIONS TO FUNDING DATE
Section III.1 Conditions to the Tranche I Funding. The obligation of
-----------------------------------
each Tranche I Lessor to make a Funding on the Tranche I Funding Date hereunder
and of Agent to advance such amounts to Lessee shall be subject to the
fulfillment to the satisfaction of (including, with respect to writings, such
writings being in form and substance reasonably satisfactory to each Tranche I
Lessor), or the waiver in writing by each Tranche I Lessor of, the conditions
precedent set forth in this Section 3.1 on or prior to the Tranche I Funding
-----------
Date (except that the obligation of any party hereto shall not be subject to the
performance or compliance of such party or of any of such party's Affiliates).
(a) Funding Date Certificate; Invoices. Lessee shall have delivered
----------------------------------
to Agent and each Tranche I Lessor, not later than 12:00 noon, New York
time, on a date mutually agreed upon by the parties not later than the
second (2nd) Business Day prior to the proposed Tranche I Funding Date, (i)
an irrevocable written notice substantially in the form of Exhibit A (a
---------
"Funding Date Certificate"), setting forth (A) the proposed Tranche I
-------------------------
Funding Date and (B) wire transfer or debit and credit instructions for the
disbursement of funds, and which will state that the Collateral is leased
in its "as is" present condition for all purposes of this Lease, whereupon
the Collateral shall immediately become subject to and be governed by all
the provisions of this Lease, and (ii) a Payment Schedule for each Tranche
I Lessor.
(b) Appraisal. Agent and each Tranche I Lessor shall have received an
---------
Appraisal to the satisfaction of the Tranche I Lessors opining (by use of
appraisal methods satisfactory to all of the Tranche I Lessors) (i) that
the Fair Market Value of the Collateral as of the Tranche I Funding Date is
not less than $144,560,000, and (ii) that the Fair Market Value
17
<PAGE>
of the Collateral at the end of the Term is reasonably expected to be at
least equal to fifty percent (50%) of the Fair Market Value of the
Collateral as of the Tranche I Funding Date.
(c) Lease. Agent and each Tranche I Lessor shall have received a
-----
fully executed counterpart of this Lease; provided, however, only Agent
-------- -------
shall receive the original counterpart marked "Counterpart No. 1 - Agent's
Original Copy."
(d) Search Reports. Agent shall have received, and delivered to each
--------------
Tranche I Lessor on request, reports acceptable to counsel to the Tranche I
Lessors as to Lessee and the Collateral from each appropriate state and
county filing or recording office, each dated as close to the Tranche I
Funding Date as practicable, in respect of a search of the applicable UCC
files and any indices of Liens maintained by such offices (including, if
applicable, indices of judgment, revenue and tax liens), which search
reports shall evidence Lessee's ownership of the Collateral as of the
Tranche I Funding Date free and clear of all Liens.
(e) Financing Statements. Agent shall have received from Lessee duly
--------------------
executed UCC financing statements or amendments thereto identifying Lessee
as debtor and Agent as secured party for the benefit of the Tranche I
Lessors, and describing this Lease as a secured transaction, and such
financing statements shall have been filed in each applicable jurisdiction.
(f) Transaction Costs; Fees. Lessee shall have paid to Agent, for the
-----------------------
benefit of Agent and the Tranche I Lessors, any Transaction Costs invoiced
in reasonable detail and not previously paid. Such payment shall be made
by wire transfer or debit and credit of immediately available funds to the
account specified for Agent on Schedule I. On or prior to the Tranche I
----------
Funding Date, Lessee shall have paid to BA Leasing & Capital Corporation
(in its individual capacity, "BALCAP") the arrangement fee provided for in
------
that certain letter agreement dated July 16, 1999, between Lessee and
BALCAP.
(g) Opinions of Counsel. Each Tranche I Lessor, Agent and their
-------------------
respective counsel shall have received the opinions of (a) Bingham Dana
LLP, counsel to Lessee, and Albert Moreno, Esq., General Counsel to Lessee,
and (b) Miller, Griffin & Marks, P.S.C., Watkins, Ludlum, Winter & Stennis,
P.A., and Jones Vargas, which are the Kentucky, Mississippi and Nevada
counsel, respectively, to Lessee, which opinions collectively shall address
the matters set forth in Exhibit B-1. By its execution hereof, Lessee
-----------
expressly instructs each such counsel to execute and deliver such opinions
to the Persons designated in the preceding sentence.
(h) Corporate Status and Proceedings. Agent shall have received:
--------------------------------
(i) certificates of existence and good standing with respect to
Lessee from the Secretary of State of the State of its incorporation,
dated no earlier than the 15th day prior to the Tranche I Funding
Date;
18
<PAGE>
(ii) an Officer's Certificate of Lessee substantially in the
form of Exhibit D, dated the Tranche I Funding Date, with respect to
---------
representations and warranties and Events of Default or Incipient
Defaults; and
(iii) a Certificate of the Secretary or Assistant Secretary of
Lessee substantially in the form of Exhibit E, dated the Tranche I
---------
Funding Date, with respect to Lessee's governing documents,
resolutions and incumbent officers.
(i) Consents and Approvals. All necessary consents, approvals and
----------------------
authorizations of, and declarations, registrations and filings with,
Authorities and nongovernmental Persons including, without limitation, the
agents and lenders under Lessee's existing credit facilities, required to
consummate the transactions contemplated by this Lease shall have been
obtained or made by Lessee and shall be in full force and effect.
(j) Payment of Impositions. All Taxes payable on or prior to the
----------------------
Tranche I Funding Date in connection with the execution, delivery,
recording or filing of any of the Operative Documents, in connection with
the filing of any of the financing statements and any other documents, and
in connection with the consummation of any other transactions contemplated
hereby or by any of the other Operative Documents, shall have been paid in
full by Lessee.
(k) Insurance Certificates. Agent shall have received (and each
-----------------------
Tranche I Lessor shall have received a copy thereof from Agent) a current
certificate from Lessee to the effect that insurance complying with Section
-------
6.2 of this Lease is in full force and effect as of the Tranche I Funding
---
Date, and there shall be no past due premiums in respect of any such
insurance.
(l) Absence of Material Adverse Effect. Since August 29, 1999, no
----------------------------------
Material Adverse Effect shall have occurred.
(m) No Casualty. No Casualty shall have occurred with respect to any
-----------
Unit in which the Security Interest has been granted as of the Tranche I
Funding Date.
(n) Representations and Warranties True; Absence of Defaults. Each of
--------------------------------------------------------
the representations and warranties made by or on behalf of Lessee under the
Operative Documents shall be true on and as of the Tranche I Funding Date,
and there shall exist no Incipient Default or Event of Default.
(o) Certificates. Each Tranche I Lessor shall have received from
------------
Lessee a Certificate duly executed by Lessee and registered in such Tranche
I Lessor's name evidencing such Tranche I Lessor's right to receive Accrual
Rent, Capital Rent and the Lease Balance set forth on such Lessor's Payment
Schedule, and Supplemental Rent, in each case
19
<PAGE>
as provided in this Lease, or, in the event of a foreclosure on any or all
of the Collateral, in accordance with Section 8.4(c).
--------------
(p) Opinion of Counsel to Agent. The Tranche I Lessors shall have
---------------------------
received a satisfactory opinion of counsel to Agent.
(q) Proceedings Satisfactory, etc. All proceedings taken in
------------------------------
connection with the Tranche I Funding Date and all documents relating
thereto shall be reasonably satisfactory to each Tranche I Lessor and their
respective counsel, and each such Person shall have received copies of such
documents as they may reasonably request in connection therewith, all in
form and substance reasonably satisfactory to each such Person.
Section III.2 Conditions to Each Subsequent Tranche Funding. The
---------------------------------------------
obligation of each Subsequent Tranche Lessor to make its Funding on the
applicable Subsequent Tranche Funding Date hereunder and of Agent to advance
such amounts to Lessee shall be subject to the fulfillment to the satisfaction
of (including, with respect to writings, such writings being in form and
substance reasonably satisfactory to each Subsequent Tranche Lessor), or the
waiver in writing by each Subsequent Tranche Lessor of, the conditions precedent
set forth in this Section 3.2 on or prior to the applicable Subsequent Tranche
-----------
Funding Date (except that the obligation of any party hereto shall not be
subject to the performance or compliance of such party or of any of such party's
Affiliates).
(a) Funding Date Certificate; Invoices. Lessee shall have delivered
----------------------------------
to Agent and each Subsequent Tranche Lessor, not later than 12:00 noon, New
York time, on a date mutually agreed upon by the parties not later than the
second (2nd) Business Day prior to the proposed Subsequent Tranche Funding
Date, a Funding Date Certificate with respect to such Subsequent Tranche
Funding Date, setting forth (i) the proposed Subsequent Tranche Funding
Date and (ii) wire transfer or debit and credit instructions for the
disbursement of funds.
(b) Appraisal. Each Subsequent Tranche Lessor shall have received a
---------
copy of and approved the Appraisal described in Section 3.1(b).
--------------
(c) Supplement to Lease. Agent, acting on behalf of each Lessor,
-------------------
Lessee, and each Subsequent Tranche Lessor making a Funding on such
Subsequent Funding Date shall execute and deliver to each Lessor a fully
executed counterpart of a supplement to this Lease dated as of such
Subsequent Tranche Funding Date which shall add such Subsequent Tranche
Lessors as Lessors hereunder and set forth their respective Commitments.
Each such supplement to this Lease shall become effective upon execution
and delivery thereof by Agent, Lessee and each such Subsequent Tranche
Lessor and shall include a Payment Schedule for each Subsequent Tranche
Lessor making a Funding on such Subsequent Tranche Funding Date, which
additional Payment Schedules shall supplement Schedule III. Agent shall
receive the original counterparts marked "Counterpart No. 1 - Agent's
Original Copy" of each such supplement.
20
<PAGE>
(d) Search Reports. Agent shall have delivered to each such
--------------
Subsequent Tranche Lessor copies of the reports described in Section
-------
3.1(d), dated down to such Subsequent Tranche Funding Date, which reports
------
shall be acceptable to each such Subsequent Tranche Lessor, and Agent shall
deliver copies of the date-downs to each other Lessor on request.
(e) Opinions of Counsel. Each Subsequent Tranche Lessor and Agent,
-------------------
and their respective counsels, shall have received copies of the opinions
described in Section 3.1(g), dated down as necessary or appropriate as of
--------------
such Subsequent Tranche Funding Date, together with letters from the
counsels for Lessee listed in Section 3.1(g), stating that each such
--------------
Subsequent Tranche Lessor and Agent, and their respective counsels, are
entitled to rely on such opinion letters, or date downs thereof, as of such
Subsequent Tranche Funding Date. By its execution hereof, Lessee expressly
instructs each such counsel to execute and deliver such opinions to the
Persons designated in the preceding sentence.
(f) Corporate Status and Proceedings. Agent shall have received:
--------------------------------
(i) certificates of existence and good standing with respect
to Lessee from the Secretary of State of the State of its
incorporation, dated no earlier than the 15th day prior to such
Subsequent Tranche Funding Date;
(ii) an Officer's Certificate of Lessee substantially in the
form of Exhibit D, dated such Subsequent Tranche Funding Date, with
---------
respect to representations and warranties and absence of defaults; and
(iii) a Certificate of the Secretary or Assistant Secretary of
Lessee substantially in the form of Exhibit E, dated such Subsequent
---------
Tranche Funding Date, with respect to Lessee's governing documents,
resolutions and incumbent officers.
(g) Consents and Approvals. All necessary consents, approvals and
----------------------
authorizations of, and declarations, registrations and filings with,
Authorities and nongovernmental Persons, including, without limitation, the
agents and lenders under Lessee's existing credit facilities, required to
consummate the transactions contemplated by this Lease shall have been
obtained or made by Lessee and shall be in full force and effect as of such
Subsequent Tranche Funding Date.
(h) Payment of Impositions. All Taxes payable on or prior to such
----------------------
Subsequent Tranche Funding Date in connection with the execution, delivery,
recording or filing of any of the Operative Documents, in connection with
the filing of any of the financing statements and any other documents, and
in connection with the consummation of any other transactions contemplated
hereby or by any of the other Operative Documents, shall have been paid in
full by Lessee.
21
<PAGE>
(i) Insurance Certificates. Each Subsequent Tranche Lessor
----------------------
shall have received from Agent a copy of a current certificate from Lessee
to the effect that insurance complying with Section 6.2 of this Lease is in
-----------
full force and effect as of such Subsequent Tranche Funding Date, and there
shall be no past due premiums in respect of any such insurance.
(j) Absence of Material Adverse Effect. Since August 29, 1999,
----------------------------------
no Material Adverse Effect shall have occurred.
(k) No Casualty. No Casualty shall have occurred with respect to
-----------
any Unit in which the Security Interest has been granted as of such
Subsequent Tranche Funding Date.
(l) Representations and Warranties True; Absence of Defaults.
--------------------------------------------------------
Each of the representations and warranties made by or on behalf of Lessee
under the Operative Documents shall be true on and as of such Subsequent
Tranche Funding Date, and there shall exist no Incipient Default or Event
of Default on or as of such date.
(m) Certificates. Each Subsequent Tranche Lessor shall have
------------
received from Lessee a Certificate duly executed by Lessee and registered
in such Subsequent Tranche Lessor's name evidencing such Subsequent Tranche
Lessor's right to receive Accrual Rent, Capital Rent and the Lease Balance
set forth on such Lessor's Payment Schedule in each case as provided in
this Lease, or, in the event of a foreclosure on any or all of the
Collateral, in accordance with Section 8.4(c).
--------------
(n) Opinion of Counsel to Agent. Each Subsequent Tranche Lessor
---------------------------
shall have received a copy of the opinion of counsel to Agent described in
Section 3.1(p), dated down as necessary or appropriate as of such
--------------
Subsequent Tranche Funding Date, together with a letter from the counsel
for Agent, stating that each such Subsequent Tranche Lessor and their
respective counsel are entitled to rely on such opinion letter, or date
down thereof, as of such Subsequent Tranche Funding Date.
(o) Proceedings Satisfactory, etc. All proceedings taken in
------------------------------
connection with such Subsequent Tranche Funding Date and all documents
relating thereto shall be reasonably satisfactory to each Subsequent
Tranche Lessor and their respective counsel, and each such Person shall
have received copies of such documents as they may reasonably request in
connection therewith, all in form and substance reasonably satisfactory to
each such Person.
Section III.3 Other Documents. On or prior to any Funding Date, all other
---------------
Operative Documents shall have been executed by Lessee and delivered to the
appropriate recipients thereof, including, without limitation, amendments to the
credit agreements of Lessee necessary to authorize this Lease.
ARTICLE IV
22
<PAGE>
TERM, RENT AND PAYMENT
Section IV.1 Term. Unless earlier terminated, the term of this Lease
----
shall commence on and include the Tranche I Funding Date and, regardless of a
Lessor's Funding Date, end on, but not include, the fifth anniversary thereof
(the "Term").
----
Section IV.2 Rent Payments. On each Payment Date during the Term, Lessee
-------------
shall pay to Agent, for the benefit of the Lessors, payments of rent as set
forth opposite the applicable Payment Date on the Lessors' Payment Schedules
("Basic Rent"). Scheduled installments of Basic Rent may be adjusted pursuant
- ------------
to Sections 6.1(a), 11.3 and 11.4.
--------------- ---- ----
Section IV.3 Place and Manner of Payment. Rent and all other sums due to
---------------------------
Agent or any Lessor hereunder shall be paid in immediately available funds and
if payable to Agent or to a Lessor, at the office of Agent or such Lessor
specified on Schedule I, or at such other office of Agent or any Lessor as such
----------
Person may from time to time specify to Lessee in a notice pursuant to this
Lease. All such payments shall be received by Agent or Lessor, as applicable,
not later than 11:00 a.m., New York time, on the date due; funds received after
such time shall for all purposes under the Operative Documents be deemed to have
been received by Agent on the next succeeding Business Day. Any payments
received by Agent not later than 11:00 a.m., New York time, shall be sent by
Agent to the Lessors in immediately available funds no later than 1 p.m., New
York time, on the same day, and any payments received by Agent from or on behalf
of Lessee after 11:00 a.m., New York time, shall be sent to Lessors as soon
after receipt as practicable, but not later than noon, New York time, on the
next succeeding Business Day.
Section IV.4 Net Lease. This Lease is a net lease and Lessee's obligation
---------
to pay all Rent payable hereunder shall be absolute and unconditional under any
and all circumstances and, without limiting the generality of the foregoing,
Lessee shall not be entitled to any abatement or reduction of Rent or any setoff
against Rent, Administrative Charge, indemnity or other amount, whether arising
by reason of any past, present or future claims of any nature by Lessee against
Agent or any Lessor, or otherwise. Except as otherwise expressly provided
herein, this Lease shall not terminate, nor shall the obligations of Lessee be
otherwise affected: (a) by reason of any defect in the condition,
merchantability, design, construction, quality or fitness for use of, damage to,
or loss of possession or use, obsolescence or destruction, of any or all of the
Collateral, however caused; or (b) by the taking or requisitioning of any or all
of the Collateral by condemnation or otherwise; or (c) by the invalidity or
unenforceability or lack of due authorization by Agent, any Lessor or Lessee or
other infirmity of this Lease or any other Operative Document; or (d) by the
attachment of any Lien of any third party to any Unit; or (e) by any prohibition
or restriction of or interference with Lessee's use of any or all of the
Collateral by any Person; or (f) by the insolvency of or the commencement by or
against Agent or any Lessor of any bankruptcy, reorganization or similar
proceeding; or (g) by any other cause, whether similar or dissimilar to the
foregoing, any present or future law to the contrary notwithstanding. It is the
intention of the parties that all Rent payable by Lessee hereunder shall be
payable in all events in the manner and at the times herein provided unless
Lessee's obligations in respect thereof have been terminated or modified
pursuant to the express
23
<PAGE>
provisions of this Lease or any amendment hereto. To the extent permitted by
Applicable Law, Lessee hereby waives any and all rights which it may now have or
which may at any time be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Lease, in whole or in part, except
strictly in accordance with the express terms hereof. Each rental, indemnity or
other payment made by Lessee hereunder shall be final, and Lessee shall not seek
to recover (except as expressly provided in this Lease) all or any part of such
payment from Agent or any Lessor for any reason whatsoever. Without affecting
Lessee's obligation to pay Rent, payable hereunder, Lessee may seek damages for
a breach by Agent or any Lessor of its obligations under this Lease.
Section IV.5 Overdue Amounts. Lessee shall pay to Agent, for the benefit
---------------
of Lessors, on demand, interest at the rate per annum which is 2% above the
Interest Rate on any overdue amount of Rent, Lease Balance, Administrative
Charge, Casualty Amount or any other payment due under this Lease and (to the
extent permitted by Applicable Laws) such interest shall accrue from the date
due (not taking into account any grace period) until payment is made.
Section IV.6 No Termination or Abatement. Lessee shall remain obligated
---------------------------
under this Lease in accordance with its terms and, consistent with the intention
of the parties expressed in Sections 2.4 and 15.1, shall not take any action to
-------- --- ----
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Agent or any Lessor, or any action with respect to this
Lease which may be taken by any custodian, receiver, liquidator, assignee,
trustee or sequestrator (or other similar official) of such Person. Lessee
hereby waives all right (i) to terminate or surrender this Lease (except as
provided herein) or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms, and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be
bound by all of the terms and conditions contained in this Lease.
24
<PAGE>
ARTICLE V
POSSESSION, ASSIGNMENT, USE AND MAINTENANCE OF COLLATERAL
Section V.1 Possession and Use of Collateral; Compliance with Laws.
------------------------------------------------------
Lessee agrees that the Collateral will be used and operated in material
compliance with any and all Applicable Laws and/or Insurance Requirements.
Lessee shall procure and maintain in effect all licenses, registrations,
certificates, permits, approvals and consents required by Applicable Laws or by
any Authority in connection with the ownership, use and operation of each Unit
and the other Collateral. Lessee shall not (a) use, operate, maintain or store
any Unit or any portion thereof in violation of Section 5.3 or any Insurance
-----------
Requirement; (b) sublease, assign or otherwise permit the use of any Unit except
as may be permitted by Section 5.2; (c) except as set forth in Section 5.2 or
----------- -----------
11.4, sell, assign or transfer any of its rights hereunder or in any Unit or any
- ----
part of the Collateral, or directly or indirectly create, incur or suffer to
exist any Lien on any of its rights hereunder or in any Unit or any part of the
Collateral, except for Permitted Liens; or (d) except in connection with any
maintenance or repair thereof in accordance with Sections 5.3 and 5.4 hereof,
------------ ---
permit any Unit to be located at any location other than the location of such
Unit as of the Tranche I Funding Date and as set forth opposite such Unit on
Schedule I to the Funding Date Certificate for the Tranche I Funding. Lessee
will defend the transfer of the Security Interest against the claims or demands
of all Persons. Lessee shall not use any Collateral, or permit any Collateral
to be used, for the transportation or storage of Hazardous Material, except for
Hazardous Materials usual and incidental to operation and maintenance of such
Collateral, which shall be stored, used and disposed of in material compliance
with all Applicable Laws.
Section V.2 Subleases and Assignments. LESSEE SHALL NOT, WITHOUT THE
-------------------------
PRIOR WRITTEN CONSENT OF THE REQUIRED LESSORS, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD, SUBLEASE OR OTHERWISE RELINQUISH POSSESSION OF ANY UNIT,
OR ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER,
AND ANY ATTEMPTED SUBLEASE, RELINQUISHMENT, ASSIGNMENT, TRANSFER OR ENCUMBERING
BY LESSEE SHALL BE NULL AND VOID, except as provided in this Section 5.2. Each
-----------
sublease entered into in accordance with this Section 5.2 shall be referred to
-----------
as a "Sublease", and each Person which is the other party to a Sublease shall be
--------
referred to as a "Sublessee". So long as no Incipient Default or Event of
---------
Default shall have occurred and be continuing, Lessee may sublease, without the
prior written consent of the Lessors or Agent, one or more Units to (i) a
wholly-owned Subsidiary of Lessee or (ii) a Service Provider; provided, that any
--------
Sublease entered into pursuant to this Section 5.2 must satisfy each of the
-----------
following conditions:
(a) such Sublease shall (i) automatically expire upon the termination
of this Lease, (ii) be expressly subordinate and subject to this Lease and
the Liens created hereunder, and (iii) expressly require the Collateral
subject thereto to be returned as directed by the Agent or the Required
Lessors upon notice to the Sublessee that an Event of Default shall have
occurred and be continuing;
25
<PAGE>
(b) such Sublease shall be in writing and shall expressly prohibit any
further assignment, sublease or transfer;
(c) such Sublease shall not contain a bargain purchase option in favor
of the Sublessee or any other provision pursuant to which the Sublessee may
obtain record or beneficial title to any Unit or any Part leased thereunder
from Lessee;
(d) such Sublease shall prohibit the Sublessee from making any
alterations or modifications to any Unit that would violate this Lease;
(e) such Sublease shall require the Sublessee to maintain each Unit
subleased thereunder in accordance with Section 5.3 and the first sentence
-----------
in Section 5.4;
-----------
(f) all of Lessee's rights, title and interest in, to and under such
Sublease shall be pledged by Lessee to Agent, for the benefit of Lessors,
as collateral for Lessee's obligations under the Operative Documents, and
such pledge shall be perfected by delivery of an executed original
counterpart upon the execution and delivery thereof, marked as the sole
original execution counterpart for UCC purposes, to the Agent, and Lessee
shall, at its own cost and expense, do any further act and execute,
acknowledge, deliver, file, register and record any further documents which
the Lessors may reasonably request in order to create, perfect, preserve
and protect Agent's Lien, for the benefit of the Lessors, in such Sublease;
(g) Lessee shall not, without Agent's prior written consent, permit or
consent to any renewal or extension of a Sublease at any time when Lessee
has knowledge that an Incipient Default or Event of Default has occurred
and is continuing;
(h) No Unit or Part shall be removed from the location at which it was
located on the Tranche I Funding Date, except as permitted pursuant to
Sections 5.3, 5.4, 6.1, 11.3 and 11.4; and
------------ --- --- ---- ----
(i) Lessee shall notify Agent in writing not less than 30 days prior
to entering into any Sublease, which notice shall include a description of
the Unit or Collateral to be leased thereunder.
The liability of Lessee with respect to this Lease and each of the other
Operative Documents shall not be altered or affected in any way by the existence
of any Sublease.
Section V.3 Maintenance. At all times during the Term, Lessee shall, at
-----------
its own cost and expense, keep, repair, maintain, manage, monitor and preserve
each Unit and Part in at least as good order and operating condition, repair and
appearance as of the date hereof, ordinary wear and tear excepted, so as to
preserve its remaining economic useful life, utility and residual value, and in
material conformance with (i) such maintenance and repair standards and
procedures as are set forth in the manufacturer's manuals or service contracts
pertaining to the Unit or Part, (ii) such standards
26
<PAGE>
or procedures as may be required to enforce warranty claims against each vendor
and manufacturer of each Unit or Part, (iii) customary industry standards as
would be used by prudent Competitors of Lessee so as to keep the Unit or Part in
first-class condition, (iv) all Applicable Laws and Insurance Requirements, and
in the event that Applicable Laws require any alteration, replacement or
addition of or to any Part on any Unit, Lessee will conform therewith at its own
expense, and (v) at least in conformity with Lessee's standard practices for
properties of a similar nature. Notwithstanding any other restriction in this
Lease, Lessee may remove any Part from any Site for purposes of complying with
its obligations in this Section 5.3, provided that Lessee shall use all
----------- --------
commercial diligence in carrying out such obligations and effect the prompt
return of the Part to the Site, and Lessee shall take all necessary steps to
ensure that the Unit from which such Part was removed will be able to be
operated as contemplated by this Lease during the period of time during which
such Part is not at the Site.
In no event shall Lessee discriminate as to the use or maintenance of any Unit
(including the periodicity of maintenance or record keeping in respect of such
Unit) as compared to the highest standards of Lessee (or any of its Affiliates)
with respect to equipment of a similar nature which Lessee (or any Affiliates)
owns or leases. Lessee shall prepare and deliver to Agent within a reasonable
time prior to the required date of filing (and, to the extent permissible, file
on behalf of Agent and Lessors) any and all reports to be filed by Agent or any
Lessor with any Authority by reason of the transaction described herein. Agent
and each Lessor shall inform Lessee of any request for such reports received by
it. Lessee shall maintain or cause to be maintained, and shall permit the Agent
and Lessors to inspect, all records, logs and other materials required by any
Authority having jurisdiction over the Collateral or Lessee, to be maintained in
respect of each Unit. Lessee hereby waives any right now or hereafter conferred
by law to make repairs on the Collateral at the expense of Agent or any Lessor.
Section V.4 Alterations, Modifications, etc. In case any Unit or any
--------------------------------
material component thereof (each component, a "Part"), is required to be
----
altered, added to, replaced or modified in order to comply with any Applicable
Laws or to comply with Sections 5.1 or 5.3 hereof (a "Required Alteration"),
------------ --- -------------------
Lessee shall make such Required Alteration at its own expense. In addition, in
case any portion of a Unit or Part is required to be altered, added to, replaced
or modified in order to comply with any Applicable Laws or to comply with
Sections 5.1 or 5.3 hereof, but such alteration, addition, replacement or
- ------------ ---
modification does not constitute a Required Alteration, Lessee shall make such
alteration, addition, replacement or modification at its own expense, without,
however, being required to provide a certificate pursuant to the third to last
sentence of this Section 5.4. Lessee shall have the right to make any
-----------
modification, alteration or improvement to any Part (herein referred to as a
"Permitted Modification"), provided that any Parts installed or replacements
- ----------------------- --------
made by Lessee upon any Unit (including, without limitation, Permitted
Modifications) shall be considered accessions to such Unit and a security
interest therein shall be immediately and automatically vested in Agent, for the
benefit of Lessors. All replacement Parts shall be free and clear of all Liens
(other than Permitted Liens) and shall be in as good an operating condition as,
and shall have a value, utility and remaining economic useful life at least
equal to, the Parts replaced, assuming such replaced Parts and the relevant
Collateral were immediately prior to such replacement or the event
27
<PAGE>
or events necessitating such replacement in the condition and repair required to
be maintained by the terms hereof. Notwithstanding any other restriction in this
Lease, Lessee may remove any Part from any Site for purposes of making a
Required Alteration or a Permitted Modification, provided that Lessee shall use
--------
all commercial diligence in making such Required Alterations or Permitted
Modifications and effect the prompt return of the Part to the Site, and Lessee
shall take all necessary steps to ensure that the Unit from which such Part was
removed will be able to be operated as contemplated by this Lease during the
period of time during which such Part is not at the Site. Any Part at any time
removed from any Unit shall remain subject to the interests of Agent and Lessors
under the Operative Documents, no matter where located, until such time as such
Part shall be replaced by a Part which has been incorporated or installed in or
attached to such Unit and which meets the requirements for a replacement Part
specified above. No later than 45 days after the end of each fiscal quarter of
Lessee in which Lessee makes a Required Alteration or a Permitted Modification,
Lessee shall deliver to Agent, for the benefit of Lessors, a certificate
evidencing the granting by Lessee to Agent, for the benefit of Lessors, of a
security interest in all replacement Parts not previously subjected to this
Lease and such other documents (including UCC-1's) in respect of such Part or
Parts as the Required Lessors may reasonably request in order to confirm that a
security interest in such Part or Parts has passed to Agent, for the benefit of
Lessors, as hereinabove provided. All replacements pursuant to this Section 5.4
-----------
shall be purchased by Lessee with its own funds. There shall be no obligation
on the part of the Agent or any Lessor to pay for or otherwise finance any such
replacement.
Section V.5 Liens. Lessee will not directly or indirectly create, incur,
-----
assume or suffer to exist any Lien (other than Permitted Liens) on or with
respect to (i) any Unit or any Part thereof or any other Collateral, Agent's or
any Lessor's interest therein, or any other interest therein, or (ii) this Lease
or any of Agent's or any Lessor's interests hereunder. Lessee, at its own
expense, will, within sixty (60) days, unless challenged in a Permitted Contest,
pay, satisfy and otherwise take such actions as may be necessary to keep this
Lease and the Collateral free and clear of, and to duly discharge or eliminate
or bond in a manner satisfactory to Agent and the Required Lessors, any such
Lien not excepted above if the same shall arise at any time. Lessee will notify
Agent in writing promptly upon becoming aware of any Tax or other Lien (other
than any Lien excepted above) that shall attach to the Collateral or any Unit,
and of the full particulars thereof. Without limiting the foregoing, Lessee
shall not assign or pledge any of its rights under any Sublease to any Person
other than Agent, for the benefit of Lessors. Without limiting the foregoing,
Lessee covenants and agrees that it will keep each Unit free and clear of any
Liens of the owner or owners of any interest in the real estate on which such
Unit may from time to time be located and any purchaser of, or present or future
creditor obtaining a lien on, such real estate, and will obtain and deliver,
promptly after delivery or change in the location of any Unit, such waivers
(including, without limitation, waivers from mortgagees and landlords) of any of
the foregoing in recordable form reasonably satisfactory to Agent and each
Lessor as are necessary to so maintain such Unit free and clear as aforesaid.
Section V.6 Identifying Numbers; Legend; Changes; Inspection. To the
------------------------------------------------
extent reasonably practicable, as agreed upon by Agent and Lessee, Lessee will
cause each Unit or Part to be kept numbered with the identification number as
shall be set forth on Schedule II, and Lessee will at all
28
<PAGE>
times keep and maintain, plainly, distinctly, permanently and conspicuously
marked on each Unit or Part in letters not less than one inch in height, the
words "SUBJECT TO A SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL
ASSOCIATION, AS AGENT FOR THE LESSORS UNDER A LEASE INTENDED AS SECURITY DATED
AS OF DECEMBER 3, 1999" or other appropriate words designated by Agent or the
Required Lessors, with appropriate changes thereof and additions thereto as from
time to time may be required by law in order to protect Agent's security
interest, for the benefit of the Lessors, in such Unit. Lessee will replace
promptly any such words which may be removed, defaced, obliterated or destroyed.
Lessee will not change the identification number of any Unit or Part, unless and
until (i) a statement of new number or numbers to be substituted therefor shall
have been delivered to Agent and filed, recorded and deposited by the Lessee in
all public offices where this Lease or any document or instrument required to
perfect the liens intended to be created hereunder shall have been filed,
recorded and deposited or any financing statement has been filed in respect
thereof and (ii) Lessee shall have furnished Agent an opinion of counsel
addressed to Agent and the Lessors in form and substance reasonably satisfactory
to Agent and the Required Lessors to the effect that filing, recordation and
deposit of such statement will protect the right and security interest of Agent,
on behalf of the Lessors, in such Unit or Part, and that no other filing,
recording, deposit or giving of notice with or to any other Federal, state or
local government or agency thereof is necessary to protect such right and
security interest. The Collateral may be lettered with the names or initials or
other insignia customarily used by the Lessee or its permitted Sublessee but
Lessee will not allow the name of any other Person to be placed on any Unit or
Part, as designation that might be interpreted as a claim of ownership. Upon the
request of Agent or the Required Lessors, Lessee shall make the Collateral
available to Agent or any Lessor, its agents, or its assignees for inspection at
reasonable times and at reasonable locations and upon reasonable notice and
shall also make Lessee's records pertaining to the Collateral available for
inspection, provided that from and after the occurrence of an Event of Default,
--------
all costs and expenses of the Agent or any Lessor in connection with such
inspection shall be borne by Lessee.
ARTICLE VI
RISK OF LOSS; INSURANCE
Section VI.1 Casualty and Replacement.
------------------------
(a) Casualty. Upon the occurrence of a Casualty prior to or during
--------
the Term, Lessee shall give Agent prompt written notice thereof (a
"Casualty Notice") and Lessee shall pay to Agent, for the benefit of the
---------------
Lessors, the Casualty Amount of the Unit suffering such Casualty, which
payment shall be made upon the earliest to occur of (i) Lessee receiving
insurance proceeds, (ii) 90 days after such Casualty and (iii) the
expiration or earlier termination of this Lease (the "Casualty Settlement
-------------------
Date"), provided that if any such payment would result in there being only
---- --------
one Unit subject to this Lease, Lessee shall be obligated to repay to Agent
the entire outstanding Lease Balance after such payment plus all accrued
and unpaid Accrual Rent and other amounts due under the Operative
Documents,
29
<PAGE>
such full repayment to be made no later than the Casualty Settlement Date,
and upon the indefeasible payment of such full repayment, this Lease and
the Security Interest shall be terminated and released. Lessee shall
continue to make all payments of Rent due under this Lease until and
including the Casualty Settlement Date. Upon payment on such Casualty
Settlement Date of the Casualty Amount in respect of any Unit suffering a
Casualty, the remaining scheduled payments of Basic Rent, if any, as well
as the amount of the Lease Balance remaining following the payment of the
final installment of Basic Rent at the end of the Term shall each be
reduced, for each Lessor, by an amount equal to the product of the
scheduled amount of such Basic Rent payment or such remaining Lease
Balance, for each Lessor, as the case may be (determined in each case prior
to the receipt of such Casualty Amount), multiplied by the Unit Value
Fraction of the Unit suffering such Casualty.
(b) Repair of a Unit. If a Unit or any portion thereof suffers a
----------------
condemnation, loss or other damage as a result of any occurrence which does
not result in a Casualty, Lessee shall give Agent prompt written notice
thereof and shall, not more than 90 days after the date of such notice, or
such longer period as reasonably required to repair or replace such Unit,
so long as Lessee has diligently commenced and is diligently pursuing such
repair or replacement, repair or replace the portion of such Unit which has
suffered such condemnation, loss or other damage, with replacement Parts
meeting the suitability standards hereinafter set forth, provided that
Lessee shall not be required to give such notice if the damage to the Unit
is not material. Notwithstanding the preceding sentence, if the
condemnation, loss or other damage will, in Lessee's reasonable judgment,
cost more than $5,000,000 to repair or replace, Lessee shall immediately
provide notice of such condemnation, loss or other damage to Agent, and if
such repair or replacement is not completed in accordance with this Lease
within 120 days after the date of such notice and Lessee has not deposited
Casualty Proceeds in the Deposit Account pursuant to Section 6.1(d) with
--------------
respect to such condemnation, loss or damage, Lessee shall deposit into the
Deposit Account funds in the amount of such estimated cost of repair and
replacement. To be suitable as a replacement Part, an item must be the
same or substantially similar general type, value, function and utility as
the Part suffering the damage, and be free and clear of any Liens other
than Permitted Liens. Lessee shall cause such instruments and documents
(including UCC-1 Financing Statements) as may be required by the Required
Lessors to be executed and delivered to Agent and the Lessors in order to
subject such replacement Part(s) to this Lease and to perfect the lien of
this Lease on such replacement Part(s), and upon such execution and
delivery and the receipt by Agent of (i) evidence reasonably satisfactory
to the Required Lessors of Lessee's compliance with the insurance
provisions of Section 6.2 with respect to such replacement Part(s), and
-----------
(ii) an opinion of counsel to Lessee in form and substance reasonably
satisfactory to Agent and the Lessors opining, among other things, to the
effect that all appropriate filings, recordings and other acts have been
taken to protect the right and the Security Interest of Agent, on behalf of
the Lessors, in such replacement Part(s) and that no other filing,
recording, deposit, or giving of notice with or to any Authority is
necessary to protect such right and the Security Interest in such
replacement Part(s), such replacement Part(s) shall be deemed part of the
applicable Unit for all purposes hereof.
30
<PAGE>
(c) Use of Proceeds. If Agent has received the amount payable with
---------------
respect to the Casualty and all other amounts due hereunder, and no Event
of Default shall have occurred and be continuing, Lessee shall be entitled
to receive from Agent the proceeds of any recovery in respect of a Unit
which has suffered a Casualty from insurance or otherwise ("Casualty
--------
Recoveries"), and Agent, subject to the rights of any insurer insuring the
----------
Collateral as provided herein and the indefeasible payment of the amount
payable with respect to the Casualty, shall execute and deliver to Lessee,
or to its assignee or nominee, any such documents as may be reasonably
required to release the Unit from the terms of this Lease, in such form as
may reasonably be requested by Lessee without warranty of any kind,
provided that if any Casualty Proceeds with respect to loss or damage
--------
arising out of a single event is less than $5,000,000 and no Event of
---
Default or uncured Incipient Default shall have occurred and be continuing,
Agent shall deliver such Casualty Proceeds to Lessee and except for the
last sentence of this Section 6.1(c), the provisions of Sections 6.1(c) and
-------------- ---------------
6.1(d) shall not apply thereto. All fees, costs and expenses relating to a
------
substitution as described herein shall be borne by Lessee. Except as
otherwise provided in this Section 6.1, Lessee shall not be released from
-----------
its obligations hereunder in the event of, and shall bear the risk of, any
Casualty or other loss or damage to any Unit or Part prior to or during the
Term and thereafter until all of Lessee's obligations hereunder are fully
performed. Any payments (including, without limitation, insurance proceeds)
received at any time by Agent or Lessee from any Authority or other party
with respect to any loss or damage to any Unit not constituting a Casualty
will, provided no Event of Default shall have occurred and be continuing,
be applied directly in payment of repairs or for replacement of property in
accordance with the provisions of Section 6.1(b), if not already paid by
--------------
Lessee, or if already paid by Lessee and no Event of Default shall have
occurred and be continuing, shall be applied to reimburse Lessee for such
payment, and any balance remaining after compliance with said Section with
respect to such loss or damage shall be retained by Lessee.
(d) Deposit of Funds. Subject to Section 6.1(c), all Casualty
---------------- --------------
Recoveries or other payments (including, without limitation, insurance
proceeds) received at any time by Agent or Lessee from any Authority or
other party with respect to any Casualty or other loss or damage to a Unit
(collectively, "Casualty Proceeds") shall be deposited into a deposit
-----------------
account established by Agent for the benefit of the Lessors (the "Deposit
-------
Account"). Any Casualty Proceeds in the Deposit Account shall be remitted
-------
promptly to Lessee after, with respect to a Casualty or other condemnation,
loss or damage, Lessee's compliance with the requirements of clause (a) or
----------
clause (b), as applicable, of this Section 6.1, provided that no Casualty
---------- -----------
Proceeds shall be remitted if at the time remittance would otherwise be
proper there shall have occurred and be continuing an Event of Default or
an Incipient Default.
(e) Assumption of Risk. LESSEE HEREBY ASSUMES ALL RISK OF LOSS,
------------------
DAMAGE, THEFT, TAKING, DESTRUCTION, CONFISCATION, REQUISITION,
COMMANDEERING, TAKING BY EMINENT DOMAIN OR CONDEMNATION, PARTIAL OR
COMPLETE, OF OR TO EACH UNIT,
31
<PAGE>
HOWEVER CAUSED OR OCCASIONED, SUCH RISK TO BE BORNE BY LESSEE WITH RESPECT
TO EACH UNIT DURING THE TERM. LESSEE AGREES THAT NO OCCURRENCE SPECIFIED IN
THE PRECEDING SENTENCE SHALL IMPAIR, IN WHOLE OR IN PART, ANY OBLIGATION OF
LESSEE UNDER THIS LEASE, INCLUDING, WITHOUT LIMITATION, THE OBLIGATION TO
PAY RENT .
Section VI.2 Insurance Coverages. Lessee shall at all times, at its
-------------------
expense, cause to be carried and maintained with financially sound and reputable
insurers, insurance against loss or damage to the Collateral, of the kinds and
in the amounts customarily maintained by similar Persons engaged in similar
operations in similar jurisdictions and carry such other insurance as is usually
carried by such Persons, provided that in any event Lessee will maintain:
--------
(a) Casualty Insurance -- "all risk" insurance against risks of
------------------
physical loss or damage with respect to the Collateral with deductibles and
in such minimum amounts as are consistent with industry standards;
provided, however, that at no time shall the amount of coverage, on a
-------- -------
replacement cost basis, be less than (x) the outstanding Lease Balance plus
(y) an amount equal to the aggregate amount of Accrual Rent to be accrued
under this Lease for 90 days following the date of determination;
(b) Public Liability Insurance -- combined single limit insurance
--------------------------
against claims for bodily injury, death or property damage in amounts at
least equal to $10,000,000 per occurrence and $10,000,000 in the aggregate,
with such deductibles as are carried by similarly situated companies
operating similar facilities and equipment; and
(c) Other Insurance -- such other insurance, including comprehensive
---------------
motor vehicle, worker's compensation and business interruption insurance,
in each case as generally carried by owners of equipment similar to the
Collateral and properties in each jurisdiction where the Collateral is
located, in such amounts and against such risks as are then customary for
equipment and property similar in use.
Such insurance shall be written by reputable insurance companies reasonably
acceptable to the Required Lessors, that are financially sound and solvent,
rated in Best's Insurance Guide or any successor thereto (or if there be none,
an organization having a similar national reputation) with a general
policyholder rating of "A" and a financial rating of at least "X" or otherwise
acceptable to the Required Lessors. All such insurance shall name Agent and the
Lessors as additional insureds or as loss-payees, as their respective interests
may appear, and as sole loss payees to the extent such claims relate to the
Collateral. Each policy referred to in this Section 6.2 shall provide that (i)
-----------
it will not be canceled or its limits reduced, or allowed to lapse without
renewal, except after not less than 30 days' written notice to Agent, (ii) the
interests of Agent and the Lessors shall not be invalidated by any act or
negligence of, or breach of representation or warranty by, Lessee or any Person
having an interest in any Unit, (iii) such insurance is primary with respect to
any other insurance carried by or available to Agent and/or any Lessor, (iv) the
insurer shall waive any right of subrogation, setoff,
32
<PAGE>
counterclaim, or other deduction, whether by attachment or otherwise, against
Agent and the Lessors, (v) the insurer shall waive any right to claim any
premiums or commission against Agent or any Lessor, and (vi) such policy shall
contain a cross-liability clause providing for coverage of Agent and each Lessor
as if separate policies had been issued to each of them. Lessee will notify
Agent in writing promptly of any changes in the coverages required in Section
-------
6.2(a) which results in a (x) policy cancellation, (y) reduction in the policy
- ------
limits, or (z) material reduction in such coverages. Lessee shall, in any event,
bear all risk of loss with respect to the Collateral.
Section VI.3 Insurance Certificates. Prior to each Funding Date, and
----------------------
thereafter not less than 3 days prior to the expiration dates of the expiring
policies theretofore delivered pursuant to Section 6.2, Lessee shall deliver to
-----------
Agent certificates issued by the insurer(s) for the insurance maintained
pursuant to Section 6.2; provided, however, that if the delivery of any
----------- -------- -------
certificate is delayed, Lessee shall not be deemed to be in violation of the
obligation to deliver such certificate if, within such 3 day period, Lessee
delivers an executed binder with respect thereto and thereafter delivers the
certificate upon receipt thereof. Upon the request of Agent or the Required
Lessors, Lessee will furnish to Agent a certificate of an independent insurance
broker of recognized standing evidencing the maintenance of all insurance
required hereunder.
ARTICLE VII
INDEMNIFICATION
Section VII.1 General Indemnification. Whether or not the transactions
-----------------------
contemplated hereby are consummated, to the fullest extent permitted by
Applicable Laws, Lessee hereby
(x) waives and releases any Claims now or hereafter existing against any
Indemnitee on account of, and
(y) assumes liability for and shall indemnify, protect, defend, save and
keep harmless each Indemnitee on an after-tax basis (in accordance with
Section 7.3) from and against,
-----------
any and all Claims of every kind and nature whatsoever that may be imposed on,
incurred by, or asserted against any Indemnitee, which are not directly and
primarily caused by the gross negligence of or willful misconduct of or breach
of this Lease by the Indemnitee (provided that the indemnification provided
under this Section 7.1 shall specifically include matters based on or arising
-----------
from the negligence of any Indemnitee), whether or not such Indemnitee shall
also be indemnified as to any such Claim by any other Person and whether or not
such Claim arises or accrues prior to the Tranche I Funding Date or after the
Termination Date, and which relates in any way to or arises in any way out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby or any investigation, litigation or proceeding in
connection therewith, and any amendment, modification or waiver in respect
thereof;
33
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(b) the Collateral, any Unit or any Part thereof or interest therein;
(c) the acquisition, mortgaging, design, manufacture, re-manufacture,
construction, preparation, installation, inspection, delivery, non-
delivery, acceptance, rejection, purchase, ownership, possession, rental,
lease, sublease, repossession, maintenance, repair, alteration,
modification, addition or substitution, storage, titling or retitling,
transfer of title, registration or re-registration, redelivery, use,
operation, condition, financing, refinancing, sale or other disposition of
the Collateral or any Unit or Part thereof or the imposition of any Lien
(or incurring of any liability to refund or pay over any amount as a result
of any Lien) on any of the Collateral, including, without limitation, (i)
Claims or penalties arising from any violation of Applicable Laws or in
tort (strict liability or otherwise), (ii) loss of or damage to the
environment (including, without limitation, investigation costs, cleanup
costs, response costs, remediation and removal costs, costs of corrective
action, costs of financial assurance, and all other damages, costs, fees
and expenses, fines and penalties, including natural resource damages), or
death or injury to any Person, and any mitigative action required by or
under Environmental Laws, (iii) latent or other defects, whether or not
discoverable, and (iv) any Claim for patent, trademark or copyright
infringement;
(d) the sale or other disposition of any of the Collateral,
including, without limitation, any disposition as a result of the exercise
of remedies;
(e) the offer, issuance, sale or delivery of the Certificates;
(f) the breach or alleged breach by Lessee of any representation or
warranty made by it or deemed made by it in any Operative Document;
(g) the transactions contemplated hereby or by any other Operative
Document in respect of the application of Parts 4 and 5 of Subtitle B of
Title I of ERISA and any prohibited transaction described in Section
4975(c) of the Code;
(h) any Claims related to the Release from any Unit of any substance
into the environment, including (without limitation) Claims arising out of
the use of any Unit for the transportation or storage of any Hazardous
Material;
(i) any failure on the part of Lessee to perform or comply with any
of the terms of any Operative Document; or
(j) any other agreement entered into or assumed by Lessee in
connection with any Unit.
It is expressly understood and agreed that this Section 7.1 shall not apply to
-----------
Claims in respect of:
34
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(A) Taxes (such Claims being subject to Section 7.2), except with
----------- ------
respect to (1) taxes or penalties included in Claims described in clause
------
(g) above, and (2) any payment necessary to make payments under this
---
Section 7.1 in accordance with Section 7.3; and
----------- -----------
(B) as to an Indemnitee, Lessor Liens which such Indemnitee is
responsible for discharging under the Operative Documents.
Section VII.2 General Tax Indemnity. (a) Lessee shall pay, defend and
---------------------
indemnify and hold each Indemnitee harmless on an after-tax basis (in accordance
with Section 7.3) from any and all Federal, state, local and foreign Taxes
-----------
imposed on or with respect to or in connection with any Indemnitee, the
Collateral or any portion thereof, any Operative Document, Lessee or any
Sublessee or user of any Unit, howsoever imposed, whether levied or imposed upon
or asserted against any Indemnitee, any Unit, or any Part thereof, by any taxing
Authority (including any Federal, state or local government or taxing Authority
in the United States and any taxing Authority or governmental subdivision of a
foreign country), upon or with respect to:
(i) the acquisition, mortgaging, design, manufacture,
re-manufacture, construction, preparation, installation, inspection, delivery,
non-delivery, acceptance, rejection, purchase, ownership, possession, rental,
lease, sublease, repossession, maintenance, repair, alteration, modification,
addition or substitution, storage, titling or retitling, transfer of title,
registration or re-registration, redelivery, use, operation, condition,
financing, refinancing, sale, return or other application or disposition of the
Collateral or any Unit or Part thereof or the imposition of any Lien (or
incurrence of any liability to refund or pay over any amount as a result of any
Lien) thereon,
(ii) Basic Rent or Supplemental Rent or the receipts or earnings
arising from or received with respect to the Collateral or any Unit or any
Part thereof, or any interest therein or any applications or dispositions
thereof,
(iii) any other amount paid or payable pursuant to this Lease, the
Certificates or any other Operative Documents,
(iv) the Collateral or any Unit or any Part thereof or any interest
therein,
(v) all or any of the Operative Documents, any other documents
contemplated thereby and any amendments and supplements thereto, and
(vi) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents;
provided, however, that the indemnification obligation of this Section 7.2(a)
- -------- ------- --------------
shall not apply to (1) Taxes which are based upon or measured by the
Indemnitee's net income or which are expressly in
35
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substitution for, or relieve Indemnitee from, any actual Tax based upon or
measured by Indemnitee's net income (other than any such Taxes imposed by means
of withholding); (2) Taxes characterized under local law as franchise, net
worth, shareholder's capital, payroll or employment taxes (excluding, however,
any value-added, license, property or similar Taxes); and (3) if no Event of
Default exists, Taxes based upon the voluntary transfer, assignment or
disposition by Agent or any Lessor of any interest in any of the Collateral.
Notwithstanding the proviso of the preceding sentence of this Section 7.2(a),
--------------
Lessee shall pay or reimburse, and indemnify and hold harmless, any Indemnitee
which is not incorporated under the laws of the United States or a state thereof
and which has complied with Section 7.2(c)(i)(x) or would be able to comply with
--------------------
Section 7.2(c)(ii) but for a change in an applicable treaty, federal law or
- ------------------
federal regulation since the applicable Funding Date.
All of the indemnities contained in this Section 7.2 shall continue in full
-----------
force and effect notwithstanding the expiration or earlier termination of this
Lease in whole or in part, including the termination of this Lease with respect
to any Unit or all of the Collateral, and are expressly made for the benefit of,
and shall be enforceable by, each Indemnitee.
(b) Lessee will promptly notify Agent of all reports or returns
required to be made with respect to any Tax with respect to which Lessee is
required to indemnify hereunder, and will, if permitted by Applicable Laws, file
the same. If Lessee is not permitted to so file, Lessee shall prepare such
reports or returns for signature by Agent or the applicable Lessor and shall
forward the same, together with immediately available funds for payment of any
Tax due, to Agent, at least ten (10) days in advance of the date such payment is
to be made. Upon written request, Lessee shall furnish Agent with copies of all
paid receipts or other appropriate evidence of payment for all Taxes paid by
Lessee pursuant to this Section 7.2.
-----------
(c) (i) At least five (5) Business Days prior to the first date on
which any payment is due under this Lease for the account of any Lessor not
incorporated under the laws of the United States or a state thereof, such Lessor
agrees that it will have delivered to each of Lessee and Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Lessor is entitled to receive payments under
the Operative Documents (x) without deduction or withholding of any United
States Federal income Taxes, or (y) at a reduced rate, if applicable. (ii) Each
Lessor which so delivers a Form 1001 or 4224 further undertakes to deliver to
each of Lessee and Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by Lessee or Agent, in each case
certifying that such Lessor is entitled to receive payments under the Operative
Documents without deduction or withholding of any United States Federal income
Taxes, unless an event (including any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lessor from duly completing and delivering any such form with respect to it and
such Lessor advises Lessee
36
<PAGE>
and Agent that it is not capable of receiving payments without any withholding
of United States Federal income Tax.
Section VII.3 After-Tax Basis. If an Indemnitee shall not be entitled to
---------------
a corresponding and equal deduction with respect to any payment or Tax which
Lessee is required to pay or reimburse under any other provision of this Article
-------
VII (each such payment or reimbursement under this Article VII, an "original
- --- -----------
payment") and which original payment constitutes income to such Indemnitee, then
Lessee shall pay to such Indemnitee on demand the amount of such original
payment on an after-tax basis such that, after subtracting all Taxes imposed on
such Indemnitee with respect to such original payment by Lessee (including any
Taxes otherwise excluded from the indemnification provided under Section 7.2 and
-----------
assuming for this purpose that such Indemnitee was subject to taxation at the
highest Federal, state or local marginal rates applicable to widely held
corporations for the year in which such income is taxable), such payments shall
be equal to the original payment to be received (net of any credits, deductions
or other tax benefits then actually recognized that arise from the payment by
such Indemnitee of any amount, including taxes, for which the payment to be
received is made).
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section VIII.1 Events of Default. The following shall constitute events of
-----------------
default (each an "Event of Default") hereunder:
----------------
(a) any payment of Rent, Lease Balance, Administrative Charge or any
other payment payable by Lessee hereunder or under any other Operative
Document (including, without limitation, any amount payable pursuant to
Article VII) shall not be paid when due, and such payment shall be overdue
-----------
for a period of 3 Business Days;
(b) Any representation or warranty of Lessee contained herein or in
any document furnished to any Lessor or Agent in connection herewith is
incorrect, incomplete or misleading in any material respect when made,
deemed made or reaffirmed, as the case may be;
(c) Lessee shall default in the performance or observance of any
term, covenant, condition or agreement on its part to be performed or
observed under Section 5.1(b), Section 5.1(c), Section 6.2 or Article XI;
-------------- -------------- ----------- ----------
(d) Lessee shall default in any material respect in the performance
or observance of any other term, covenant, condition or agreement on its
part to be performed or observed hereunder or under any other Operative
Document (and not constituting an Event of Default under any other clause
of this Section 8.1), and such default shall continue unremedied or
-----------
unwaived for a period of 30 days after written notice thereof by Agent to
Lessee;
37
<PAGE>
(e) Lessee shall generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, or shall voluntarily
commence any case or proceeding or file any petition under any bankruptcy,
insolvency or similar law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, agent, custodian,
liquidator or similar Person for itself or a substantial portion of its
property, assets or business or to effect a plan or other arrangement with
its creditors, or shall file any answer admitting the jurisdiction of the
court and the material allegations of any involuntary petition filed
against it in any bankruptcy, insolvency or similar case or proceeding, or
shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the appointment
of, a receiver, agent, custodian, liquidator or similar Person for itself
or a substantial portion of its property, assets or business, or action
shall be taken by Lessee for the purpose of effectuating, authorizing or
furthering any of the foregoing;
(f) involuntary proceedings or an involuntary petition shall be
commenced or filed against Lessee under any bankruptcy, insolvency or
similar law or seeking the dissolution, liquidation or reorganization of
Lessee or the appointment of a receiver, agent, custodian, liquidator or
similar Person for Lessee or of a substantial part of the property, assets
or business of Lessee, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a
substantial part of the property, assets or business of Lessee, and such
proceedings or petition shall not be dismissed or stayed, or such writ,
judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded, within 60 days after commencement,
filing or levy, as the case may be; or
(g) there shall have occurred any event of default in any payment
obligation with respect to any amount or amounts of indebtedness owing by
or guaranteed by Lessee which is not cured within 10 days after notice from
Agent and as a result of which the creditor accelerates the maturity of
indebtedness having a principal amount in excess of $25,000,000
(individually or in the aggregate) prior to its expressed or stated
maturity or the beneficiary of any such guarantee of indebtedness having a
principal amount in excess of $25,000,000 (individually or in the
aggregate) makes demand for payment thereunder;
(h) any Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Pension Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee
is, in the reasonable opinion of the Required Lessors, likely to result in
the termination of the Pension Plan for purposes of Title IV of ERISA; or
the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Pension Plan or to appoint a trustee to administer any
Pension Plan; or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan; or Lessee or any
ERISA Affiliate shall fail to pay to any Pension Plan any contribution
which it is obligated to pay under the terms of such Plan or any agreement
or which is required to meet statutory
38
<PAGE>
minimum funding standards and which Lessee or any ERISA Affiliate does not
have sufficient unencumbered assets to pay in full such liability or
deficiency by the payment due date thereof;
(i) any Operative Document or the Security Interest granted under
this Lease shall (except in accordance with its terms), in whole or in
material part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of Lessee, or Lessee or any of
its Affiliates shall, directly or indirectly, contest in any manner in any
court the effectiveness, validity, binding nature or enforceability
thereof; or the Lien securing Lessee's obligations under the Operative
Documents shall, in whole or in part, cease to be a perfected first
priority security interest; and
(j) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against Lessee or
any of its Subsidiaries and such judgment or judgments remain undischarged,
unbonded or unstayed for a period (during which execution shall not be
effectively stayed) of 30 days; provided, that the aggregate of all such
--------
judgments exceeds $25,000,000.
Section VIII.2 Remedies. If any Event of Default exists, Agent, on behalf
--------
of Lessors, shall have the rights, options and remedies of a secured party under
the UCC, and, to the extent of a secured party under the UCC (regardless of
whether the UCC or a law similar thereto has been enacted in a jurisdiction
wherein the rights or remedies are asserted) and without limiting the foregoing,
Agent, on behalf of Lessors, also may exercise in any order one or more or all
of the following remedies (it being understood that no remedy herein conferred
is intended to be exclusive of any other remedy or remedies, but each and every
remedy shall be cumulative and shall be in addition to every other remedy given
herein or now or hereafter existing at law or in equity or by statute): (i)
terminate this Lease by notice in writing to Lessee, but Lessee shall remain
liable as hereinafter provided; (ii) declare the entire outstanding Lease
Balance to be due and payable, together with accrued unpaid Accrual Rent, any
Applicable Administrative Charge, and any other amounts payable under the
Operative Documents; (iii) enforce or cause the enforcement of the Lien given
hereunder pursuant to the UCC or any other law; (iv) enter upon the premises
where any of the Collateral may be and take possession of all or any of such
Collateral; and (v) proceed by appropriate court action or actions either at law
or in equity, to enforce or cause the performance by Lessee of the applicable
covenants of this Lease or to recover damages for the breach thereof.
Notwithstanding the foregoing,
(a) if any Event of Default described in Section 8.1(a) shall have
--------------
occurred and be continuing, the Required Lessors may, by notice to Lessee,
and if the Required Lessors do not provide such a notice within 90 days
after such Event of Default shall have occurred, the Agent shall, upon
written notice from any Lessor, declare the then outstanding Lease Balance
to be due and payable together with all Accrual Rent, any Applicable
Administrative Charge, and any other amounts due and payable under the
Operative Documents; and
39
<PAGE>
(b) if any Event of Default described in Section 8.1(e) or 8.1(f)
-------------- ------
shall have occurred and be continuing, then the entire outstanding Lease
Balance, any Applicable Administrative Charge, and all accrued Accrual Rent
and other amounts payable under the Operative Documents shall automatically
and immediately become due and payable, without presentment, demand,
notice, declaration, protest or other requirements of any kind, all of
which are hereby expressly waived.
Upon the indefeasible payment of all sums due from Lessee hereunder, including
the then outstanding Lease Balance due and payable, all Accrual Rent, any
Applicable Administrative Charge, and any other amounts due and payable under
the Operative Documents including all costs and expenses incurred by Agent or
Lessors in enforcing their rights hereunder and any loss or damage arising by
reason of Lessee's breach hereof or default hereunder, Agent, on behalf of the
Lessors, shall execute and deliver to Lessee such documents as may be reasonably
required to release the Collateral from the terms and scope of this Lease
(without representations or warranties, except that the Collateral is free and
clear of Lessor Liens), at Lessee's sole cost and expense.
Section VIII.3 Sale of Collateral. To the extent of a secured party under
------------------
the UCC, and in addition to the remedies set forth in Section 8.2, if any Event
-----------
of Default shall occur, Agent may, but is not required to, take possession of
and sell the Collateral in one or more sales. Any Lessor and Agent may purchase
all or any part of the Collateral at such sale. Lessee acknowledges that sales
for cash or on credit to a wholesaler, retailer or user of such Collateral, or
at public or private auction, are all commercially reasonable. Any notice
required by law of intended disposition by Agent shall be deemed reasonably and
properly given if given at least 10 days before such disposition.
Section VIII.4 Application of Proceeds. The proceeds of such sale or
-----------------------
exercise of other remedies shall be applied in the following order:
(a) First, to the payment of costs and expenses of each Lessor and
-----
Agent in exercising remedies, including expenses of foreclosure or suit, if
any, and of any sale, and of all other proper fees, expenses, liabilities
and advances (including reasonable legal expenses and attorneys' fees) of
each Lessor and Agent and of all taxes, assessments or liens superior to
the lien of these presents, except any taxes, assessments or superior lien
subject to which any sale of Collateral may have been made;
(b) Second, to the other amounts, except those specified in clause
------ ------
(c) below, which under the terms of this Lease have accrued;
---
(c) Third, to Lessors in accordance with Section 10.1 to the extent
----- ------------
of each Lessor's aggregate outstanding Lease Balance, plus any due but
unpaid Administrative Charge or Accrual Rent due each Lessor, plus any
unpaid interest accruing to each Lessor because of the late payment of the
Lease Balance or any Administrative Charge to the date of distribution, but
subject to the limitation in Section 10.1; and
------------
40
<PAGE>
(d) Fourth, to the payment of the surplus, if any, to whomsoever may
------
be lawfully entitled to receive the same (including Lessee), or, if no
other Person is lawfully entitled to such surplus, to Lessee.
If there is a deficiency in any amounts due hereunder after Agent has
exercised remedies in accordance with this Lease, Lessee will promptly pay the
same to Agent.
Section VIII.5 Right to Perform Obligations. If Lessee fails to perform
----------------------------
any of its agreements contained herein, then following an Event of Default and
during the continuance thereof, Agent may perform or cause the performance of
such agreement, and the fees and expenses incurred by Agent in connection with
such performance together with interest thereon shall be payable by Lessee upon
demand. Interest on fees and expenses so incurred by Agent shall accrue as
provided in Section 4.5 from the date such expense is incurred until paid in
-----------
full.
Section VIII.6 Power of Attorney. Lessee unconditionally and irrevocably
-----------------
appoints Agent as its true and lawful attorney-in-fact, with full power of
substitution, to the extent permitted by Applicable Law, in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery hereunder, if an Event of Default occurs, whether pursuant
to foreclosure or power of sale or otherwise, and in connection therewith to
execute and deliver all such deeds, bills of sale, assignments, releases
(including releases of this Lease on the records of any Authority) and other
proper instruments as Agent may reasonably consider necessary or appropriate.
Lessee ratifies and confirms all that such attorney or any substitute shall
lawfully do so by virtue hereof. If requested by Agent or any purchaser, Lessee
shall ratify and confirm any such lawful sale, assignment, transfer or delivery
by executing and delivering to Agent or such purchaser all deeds, bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
Section VIII.7 Remedies Cumulative; Consents. To the extent of a secured
-----------------------------
party under the UCC and as permitted by, and subject to the mandatory
requirements of, Applicable Law, each and every right, power and remedy herein
specifically given to Agent or any Lessor or otherwise in this Lease shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Agent or the Lessors, and the
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any right, power or remedy. Agent's or the Lessors' consent to any request made
by Lessee shall not be deemed to constitute or preclude the necessity for
obtaining Agent's or the Lessors' consent, in the future, to all similar
requests. To the extent permitted by Applicable Law, Lessee hereby waives any
rights now or hereafter conferred by statute or otherwise that may require Agent
or the Lessors to sell, lease or otherwise use the Collateral, any Unit or any
Part thereof in mitigation of Agent's or the Lessors'
41
<PAGE>
damages upon the occurrence of an Event of Default or that may otherwise limit
or modify any of Agent's or the Lessors' rights or remedies under this Article
-------
VIII.
- ----
ARTICLE IX
AGENT
Section IX.1 Appointment of Agent; Powers and Authorization to Take
------------------------------------------------------
Certain Actions.
- ---------------
(a) Each Lessor irrevocably appoints and authorizes Agent to act as
its agent hereunder, with such powers as are specifically delegated to Agent by
the terms hereof, together with such other powers as are reasonably incidental
thereto. Each Lessor authorizes and directs Agent to, and Agent agrees for the
benefit of the Lessors, that, on each Funding Date it will accept the documents
described in Article III of this Lease. Agent accepts the agency hereby created
-----------
applicable to it and agrees to receive all payments and proceeds pursuant to the
Operative Documents to which it is a party and disburse such payments or
proceeds in accordance with the Operative Documents to which it is a party.
Agent shall have no duties or responsibilities except those expressly set forth
in this Lease. Agent shall not be responsible to any Lessor (or to any other
Person) (i) for any recitals, statements, representations or warranties of any
party contained in this Lease, or in any certificate or other document referred
to or provided for in, or received by any of them under, the Operative
Documents, other than the representations and warranties made by Agent in
Section 12.3, or (ii) for the value, validity, effectiveness, genuineness,
- ------------
enforceability or sufficiency of the Collateral or the title thereto (subject to
Agent's duties and obligations under Section 13.2) or any other document
------------
referred to or provided for herein or (iii) for any failure by any Lessee,
Lessor or any other third party (other than Agent) to perform any of its
obligations under any Operative Document. Agent may employ agents, trustees or
attorneys-in-fact, may vest any of them with any property, title, right or power
deemed necessary for the purposes of such appointment and shall not be
responsible for the gross negligence or misconduct on the part of any of them
selected by it with reasonable care. Neither Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith,
except for (x) its or their own gross negligence or willful misconduct (y) any
inaccuracy of any representation or warranty given by Agent pursuant to Section
-------
12.3, or (z) any breach of any covenant of Agent set forth in Section 13.2.
- ---- ------------
(b) Agent shall not have any duty or obligation to manage, control,
use, operate, store, lease, sell, dispose of or otherwise deal with any Unit,
any other Collateral or this Lease, or to otherwise take or refrain from taking
any action under, or in connection with, this Lease or any related document to
which Agent is a party, except as expressly provided by the terms hereof, and no
implied duties of any kind shall be read into any Operative Document against
Agent. The permissive right of Agent to take actions enumerated in this Lease
or any other Operative Document to which it is a party shall never be construed
as a duty, unless Agent is instructed or directed to exercise, perform or
enforce one or more rights by the Required Lessors. Subject to Section 9.1(c)
--------------
below, no provision of the Operative Documents shall require Agent to expend or
risk its own funds
42
<PAGE>
or otherwise incur any financial liability in the performance of any of its
duties and obligations under the Operative Documents, or in the exercise of any
of its rights or powers thereunder. It is understood and agreed that the duties
of Agent are ministerial in nature.
(c) Except as specifically provided herein, Agent is acting hereunder
solely as agent and, except as specifically provided herein, is not responsible
to any party hereto in its individual capacity, except with respect to any claim
arising from Agent's gross negligence or willful misconduct, any breach of a
representation, warranty or covenant made in its individual capacity pursuant to
Section 12.3 or Section 13.2 or, in the case of Agent's handling of funds,
- ------------ ------------
failure to act with the same care as Agent uses in handling its own funds.
(d) Agent may accept deposits from, lend money to and otherwise deal
with Lessee or any of its Affiliates with the same rights as it would have if it
were not the named Agent hereunder.
Section IX.2 Reliance. Agent may conclusively rely upon, shall be fully
--------
protected in acting or refraining from acting upon, and shall not be bound or
obligated to make any investigation into the facts or matters stated in, any
certificate, notice or other communication (including any communication by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been made, signed, presented, or sent by or on
behalf of the proper Person or Persons. Agent may consult with legal counsel,
independent accountants, and other experts selected by Agent with due care and
may act or refrain from acting in good faith and in accordance with any advice
or opinion of such legal counsel, independent accountants, and other experts
(including any expert selected by Agent to aid Agent in any calculations
required in connection with its duties under the Operative Documents). Agent
may conclusively rely, as to the truth of the statements and the correctness of
the opinions, upon any certificates and opinions furnished to Agent which are
issued pursuant to and in accordance with the provisions of this Lease and which
conform to the requirements of this Lease.
Section IX.3 Action Upon Instructions Generally. Subject to Sections 9.4
---------------------------------- -------- ---
and 9.6, upon written instructions of the Required Lessors, Agent shall, on
---
behalf of the Lessors, give such notice or direction, exercise such right,
remedy or power hereunder or in respect of any of the Collateral, and give such
consent or enter into such amendment to any document to which it is a party as
Agent as may be specified in such instructions. Agent shall promptly deliver to
each Lessor a copy of each notice, report and certificate received by Agent
pursuant to the Operative Documents. Agent shall have no obligation to
investigate or determine whether there has been an Event of Default or an
Incipient Default. Agent shall not be deemed to have notice or knowledge of an
Event of Default or Incipient Default unless a Responsible Officer of Agent is
notified in writing of such Event of Default or Incipient Default, provided that
--------
Agent shall be deemed to have been notified in writing of any failure of Lessee
to pay Rent in the amounts and at the times set forth in Section 4.3. If Agent
-----------
receives notice of an Event of Default, Agent shall give prompt notice thereof,
at Lessee's expense, to each Lessor. Subject to Sections 9.4, 9.6 and 16.5,
-------- --- --- ----
Agent shall take action or refrain from taking action with respect to such Event
of Default as directed by the Required Lessors; provided that,
--------
43
<PAGE>
unless and until Agent receives such directions, Agent may refrain from taking
any action, or may act in its discretion, with respect to such Event of Default.
Prior to the date the Lease Balance shall have become due and payable by
acceleration pursuant to Section 8.2, the Required Lessors may deliver written
-----------
instructions to Agent to waive, and Agent shall waive pursuant thereto, any
Event of Default and its consequences; provided that in the absence of written
--------
instructions from all Lessors, Agent shall not waive any (i) Event of Default
described in Section 8.1(a) or (ii) covenant or provision which, under Section
-------------- ---- -------
16.5, cannot be modified or amended without the consent of all Lessors. As to
- ----
any matters not expressly provided for by this Lease or any other provision of
the Operative Documents, Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder in accordance with instructions signed
by the Required Lessors and such instructions of the Required Lessors and any
action taken or failure to act pursuant thereto shall be binding on each Lessor.
Section IX.4 Indemnification. Each Lessor shall reimburse and hold Agent
---------------
harmless, ratably in accordance with its Percentage Interest at the time the
indemnification is required to be given (but only to the extent that any such
indemnified amounts have not in fact been paid to Agent by, or on behalf of,
Lessee in accordance with Section 7.1 or any other provision of the Operative
-----------
Documents) from any and all claims, losses, damages, obligations, penalties,
liabilities, demands, suits, judgments, or causes of action, and all legal
proceedings, and any reasonable costs or expenses in connection therewith,
including allocated charges, costs and expenses of internal counsel of Agent and
all other reasonable attorneys' fees and expenses incurred by Agent in any way
relating to or arising in any manner out of (i) any Operative Document to which
it is a party, the enforcement hereof or thereof or the consummation of the
transactions contemplated thereby, or (ii) instructions from the Required
Lessors (including, without limitation, the costs and expenses that Lessee is
obligated to and does not pay hereunder, but excluding normal administrative
costs and expenses incident to the performance by Agent of its agency duties
hereunder other than materially increased administrative costs and expenses
incurred as a result of an Event of Default), provided that no Lessor shall be
--------
liable for any of the foregoing to the extent they arise from (a) the gross
negligence or willful misconduct of Agent, (b) the inaccuracy of any
representation or warranty or breach of any covenant given by Agent in Section
-------
12.3 or Section 13.2, (c) in the case of Agent's handling of funds or the
- ---- ------------
Collateral, the failure to act with the same care as Agent uses in handling its
own funds, or (d) any taxes, fees or other charges payable by Agent based on or
measured by any fees, commissions or compensation received by it for acting as
Agent in connection with the transactions contemplated by the Operative
Documents.
Section IX.5 Independent Credit Investigation. Each Lessor by entering
--------------------------------
into this Lease agrees that it has, independently and without reliance on Agent
or any other Lessor and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Lessee and its own decision to
enter into this Lease and each of the other Operative Documents to which it is a
party and that it will, independently and without reliance upon Agent or any
other Lessor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking action under this Lease and any related documents to which it is a party.
Agent shall not be required to keep itself informed as to the
44
<PAGE>
performance or observance by Lessee of any other document referred to (directly
or indirectly) or provided for herein or to inspect the properties or books of
Lessee. Except for notices or statements which Agent is expressly required to
give under this Lease and for notices, reports and other documents and
information expressly required to be furnished to Agent alone (and not also to
each Lessor, it being understood that Agent shall forward copies of same to each
Lessor) hereunder or under any other Operative Document, Agent shall not have
any duty or responsibility to provide any Lessor with copies of notices or with
any credit or other information concerning the affairs, financial condition or
business of Lessee (or any of its Affiliates) that may come into the possession
of Agent or any of its Affiliates.
Section IX.6 Refusal to Act. Except for notices and actions expressly
--------------
required of Agent hereunder and except for the performance of its covenants in
Section 13.2, Agent shall in all cases be fully justified in failing or refusing
- ------------
to act unless (a) it is indemnified to its reasonable satisfaction by Lessors
against any and all liability and reasonable expense which may be incurred by it
by reason of taking or continuing to take any such action (provided that such
--------
indemnity shall not be required to extend to liability or expense arising from
any matter described in clauses (a) through (d) of Section 9.4, it being
----------- --- -----------
understood that no action taken by Agent in accordance with the instructions of
the Required Lessors shall be deemed to constitute any such matter) and (b) it
is reasonably satisfied that such action is not contrary to any Operative
Document to which it is a party or to any applicable law.
Section IX.7 Resignation or Removal of Agent; Appointment of Successor.
---------------------------------------------------------
Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time by giving notice thereof to each Lessor and
Lessee or may be removed at any time by written notice from the Required
Lessors. Upon any such resignation or removal, the Required Lessors at the time
of the resignation or removal shall have the right to promptly appoint a
successor Agent which shall be a financial institution having a combined capital
and surplus of not less than $100,000,000. If, within 30 calendar days after
the retiring Agent's giving of notice of resignation or receipt of a written
notice of removal, a successor Agent is not so appointed and does not accept
such appointment, then the retiring or removed Agent may appoint a successor
Agent and transfer to such successor Agent all rights and obligations of the
retiring Agent. Such successor Agent shall be a financial institution having
combined capital and surplus of not less than $100,000,000. Upon the acceptance
of such appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent and the retiring or
removed Agent shall be discharged from its duties and obligations as Agent
thereafter arising hereunder and under any related document. If the retiring
Agent does not appoint a successor, any Lessor shall be entitled to apply to a
court of competent jurisdiction for such appointment, and such court may
thereupon appoint a successor Agent(s) to act until such time, if any, as a
successor Agent(s) shall have been appointed as above provided.
Section IX.8 Separate Agent. The Required Lessors may, and if they fail
--------------
to do so at any time when they are so required, Agent may, for the purpose of
meeting any legal requirements of any jurisdiction to which any Unit or
Collateral may be subject, appoint one or more individuals or corporations
either to act as co-agent jointly with Agent or to act as separate agent of all
or any part of the Collateral, and vest in such individuals or
45
<PAGE>
corporations, in such capacity, such title to such Collateral or any part
thereof, and such rights or duties, as Agent may consider necessary or
desirable. Agent shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified. Agent shall execute, acknowledge
and deliver all such instruments as may be required by any such co-agent or
separate agent more fully confirming such title, rights or duties to such co-
agent or separate agent. Upon the acceptance in writing of such appointment by
any such co-agent or separate agent, it, she or he shall be vested with such
interest in the Collateral or any part thereof, and with such rights and duties,
not inconsistent with the provisions of the Operative Documents, as shall be
specified in the instrument of appointment, jointly with Agent (except insofar
as local law makes it necessary for any such co-agent or separate agent to act
alone), subject to all terms of the Operative Documents. Any co-agent or
separate agent, to the fullest extent permitted by legal requirements of the
relevant jurisdiction, at any time, by an instrument in writing, shall
constitute Agent its attorney-in-fact and agent, with full power and authority
to do all acts and things and to exercise all discretion on its behalf and in
its name. If any co-agent or separate agent shall die, become incapable of
acting, resign or be removed, the interest in the Collateral and all rights and
duties of such co-agent or separate agent shall, so far as permitted by law,
vest in and be exercised by Agent, without the appointment of a successor to
such co-agent or separate agent.
Section IX.9 Termination of Agency. The agency created hereby shall
---------------------
terminate upon the final disposition by Agent of all Collateral at any time
subject hereto and the final distribution by Agent of all monies or other
property or proceeds received pursuant to the Operative Documents to which it is
a party in accordance with their terms, provided that at such time Lessee shall
--------
have complied fully with all the terms hereof.
Section IX.10 Compensation of Agency. Lessee shall pay Agent its
----------------------
reasonable fees, costs and expenses for the performance of Agent's obligations
hereunder as set forth in the letter agreement dated December 2, 1999.
Section IX.11 Limitations. It is expressly understood and agreed by and
-----------
among the parties hereto that, except as otherwise provided herein or in the
other Operative Documents: (a) this Lease and the other Operative Documents to
which Agent is a party are executed by Agent, not in its individual capacity
(except with respect to the representations and covenants of Agent in Sections
--------
12.3 and 13.2), but solely as Agent under the Operative Documents to which it is
- ---- ----
a party in the exercise of the power and authority conferred and vested in it as
such Agent; (b) each and all of the undertakings and agreements herein made on
the part of Agent are each and every one of them made and intended not as
personal undertakings and agreements by Agent, or for the purpose or with the
intention of binding Agent personally, but are made and intended for the purpose
of binding only the Collateral unless expressly provided otherwise; (c) actions
to be taken by Agent pursuant to its duties and obligations under the Operative
Documents may, in certain circumstances, be taken by Agent only upon specific
direction of the Lessors; (d) nothing contained in the Operative Documents shall
be construed as creating any liability on Agent, individually or personally, or
any incorporator or any past, present or future subscriber to the capital stock
of, or stockholder, officer or director,
46
<PAGE>
employee or agent of, Agent to perform any covenants either express or implied
contained herein, all such liability, if any, being expressly waived by the
other parties hereto and by any Person claiming by, through or under them; and
(e) so far as Agent, individually or personally, is concerned, the other parties
hereto and any Person claiming by, through or under them shall look solely to
the Collateral and Lessee for the performance of any obligation under any of the
instruments referred to herein; provided, however, that nothing in this Section
-------- ------- -------
9.11 shall be construed to limit in scope or substance the general corporate
- ----
liability of Agent in respect of its gross negligence or willful misconduct or a
breach of those representations, warranties and covenants of Agent in its
individual capacity set forth herein (including, without limitation, Sections
--------
12.3 and 13.2) or in any of the other agreements contemplated hereby.
- ---- ----
ARTICLE X
DISTRIBUTIONS TO LESSORS
All amounts of money received or realized by Agent pursuant to this Lease
which are to be distributed to any Lessor (as distinguished from Lessee or any
other Person) shall be distributed as follows:
Section X.1 Prorata Distribution. All distributions by Agent of amounts
--------------------
payable to Lessors pursuant to this Lease and the other Operative Documents
(including amounts distributable pursuant to Section 8.4(c)) shall be made to
--------------
the Lessors in accordance with the amounts due each such Lessor as set forth on
such Lessor's Payment Schedule, without preference or priority of any Lessor
over another, and in case moneys are insufficient to pay in full the whole
amount due, owing or unpaid to Lessors, then application shall be made first to
-----
any unpaid expenses and indemnification claims of Agent and all Lessors, second
------
pro rata to accrued interest due each Lessor pursuant to Section 4.5, third pro
----------- -----
rata to any unpaid Administrative Charge due each Lessor, fourth pro rata to all
------
Accrual Rent, fifth to each Lessor in accordance with its Percentage Interest up
-----
to its remaining Lease Balance, and sixth, to the person or persons legally
-----
entitled thereto.
Section X.2 Timing of Distributions. The amounts payable by Agent to
-----------------------
Lessors pursuant to this Lease will be payable upon Agent's receipt of such
amounts pursuant to this Lease as provided in Section 4.3, in immediately
-----------
available funds.
ARTICLE XI
LEASE TERMINATION
Section XI.1 Release of Collateral. On the last day of the Term, Lessee
---------------------
shall pay (the "Payment Obligation") the Lease Balance as of the last day of the
------------------
Term (the "Release Amount"), plus all accrued and unpaid Accrual Rent and other
--------------
amounts, including, without limitation, Supplemental Rent, due under the
Operative Documents as determined after payment of all Rent due
47
<PAGE>
on such date, and upon satisfaction by Lessee of the Payment Obligation, Agent
shall release the Collateral then subject to this Lease from the lien hereof.
Section XI.2 Early Termination Right for All of the Collateral. If no
-------------------------------------------------
Event of Default shall exist, Lessee may, at its option, upon at least 30 days'
advance written notice to Agent, require the Lessors to release all, but not
less than all, of the Collateral subject to this Lease upon payment of (i) all
unpaid Accrual Rent payable on or prior to such day, (ii) the Lease Balance,
(iii) the Applicable Administrative Charge, and (iv) all other fees and expenses
and other amounts then due and payable pursuant to this Lease and the other
Operative Documents. Upon the indefeasible payment of such sums by Lessee in
accordance with the provisions of Section 11.1 or this Section 11.2, the
------------ ------------
obligation of Lessee to pay Rent hereunder shall cease, the Term shall end on
the date of such payment and Agent, on behalf of the Lessors, shall execute and
deliver to Lessee such documents as may be reasonably required to release the
Collateral from the terms and scope of this Lease and the Security Interest
(without representations or warranties, except that the Collateral is free and
clear of Lessor Liens), in such form as may be reasonably requested by Lessee,
all at Lessee's sole cost and expense.
Section XI.3 Early Payment and Termination Rights for Less Than All of the
-------------------------------------------------------------
Collateral. If no Event of Default shall exist, Lessee may, at its option, upon
- ----------
at least 30 days' advance written notice to Agent, prepay any portion of the
Lease Balance in a minimum amount of $5,000,000, without the release of any of
the Collateral, provided that at the time of such prepayment Lessee pays to
Agent, on a prorated basis with respect to the portion of the Lease Balance
being prepaid, (i) all unpaid Accrual Rent payable on or prior to such day, (ii)
the Applicable Administrative Charge, and (iii) all other fees and expenses and
other amounts then due and payable pursuant to this Lease and the other
Operative Documents, provided that at any time, with the prior written consent
--------
of the Required Lessors with respect to a particular Unit, to be granted or
withheld in their sole and absolute discretion (including, without limitation,
the choice of the Unit to be released), Lessee may pay an amount equal to the
product of the Unit Value Fraction for such Unit and the Lease Balance, plus all
unpaid Accrual Rent applicable to the Lease Balance paid, the Applicable
Administrative Charge, and other fees and expenses payable hereunder and procure
the release of such Unit from the scope of this Lease and the Security Interest,
and in such event, upon the indefeasible payment of such sums by Lessee in
accordance with the provisions of this Section 11.3, then, with respect to the
------------
Unit so released, Agent, on behalf of the Lessors, shall execute and deliver to
Lessee such documents as may be reasonably required to so release such Unit
(without representations or warranties, except that such Unit is free and clear
of Lessor Liens), in such form as may be reasonably requested by Lessee, all at
Lessee's sole cost and expense, provided, further, that Lessee may elect to
-------- -------
remove no more than one Unit from the scope of this Lease and the Security
Interest during the Term.
Section XI.4 Right to Sell A Unit. If no Event of Default shall exist,
--------------------
Lessee may, at its option, upon at least 30 days' advance written notice to
Agent, but only once during the Term, effect a Sale of a Unit and have such Unit
released from this Lease and the Security Interest, upon payment of (i) all
unpaid Accrual Rent payable on or prior to such day, (ii) the Lease Balance
multiplied by
48
<PAGE>
the Unit Value Fraction for such Unit, (iii) the Applicable Administrative
Charge, and (iv) all other fees and expenses and other amounts then due and
payable pursuant to this Lease and the other Operative Documents. Upon the
indefeasible payment of such sum by Lessee in accordance with the provisions of
this Section 11.4, the obligation of Lessee to pay Rent hereunder shall be
------------
adjusted as necessary to account for the Sale of such Unit, the Term with
respect to such Unit shall end on the date of such payment, and Agent, on behalf
of the Lessors, shall execute and deliver to Lessee such documents as may be
reasonably required to release such Unit from the terms and scope of this Lease
and the Security Interest (without representations or warranties, except that
such Unit is free and clear of Lessor Liens), in such form as may be reasonably
requested by Lessee, all at Lessee's sole cost and expense.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
Section XII.1 Representations and Warranties of Lessee. As of the date
----------------------------------------
hereof and each Funding Date, Lessee makes the representations and warranties
set forth in this Section 12.1 to each of the other parties hereto.
------------
(a) Due Organization, etc. Lessee is a corporation duly organized, validly
----------------------
existing and in good standing under the laws of the State of Delaware; Lessee is
duly qualified as a foreign corporation authorized to do business and is in good
standing in every jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect (including each state or other jurisdiction in
which the Collateral or any thereof will be located); Lessee has full corporate
power and authority to conduct its business as presently and presently proposed
to be conducted, to own or hold under lease its properties, to enter into and
perform its obligations under the Operative Documents to which it is or is to be
a party and each other agreement, instrument and document to be executed and
delivered by it on or before each Funding Date in connection with or as
contemplated by each such Operative Document to which it is or is to be a party;
and the Operative Documents to which Lessee is a party, and to which Lessee is
to be a party, have been or will be duly executed and delivered by Lessee.
(b) Authorization; No Conflict. The execution and delivery by Lessee of
--------------------------
the Operative Documents to which it is or is to be a party, and the performance
by Lessee of its obligations under such Operative Documents, have been duly
authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not: (i) contravene any
Applicable Laws; (ii) violate any provision of its charter or by-laws; (iii)
result in a breach of or constitute a default under any indenture, loan or
credit agreement, or any other agreement or instrument to which Lessee is a
party or by which Lessee or its properties may be bound or affected; (iv) result
in, or require, the creation or imposition of any Lien of any nature upon or
with respect to any of the properties now owned or hereafter acquired by Lessee
(other than the Liens created pursuant to the Operative Documents); or (v)
require any Governmental Action by any Authority or any consent or approval of
any non-governmental Person, except for (A) the filings and recordings listed on
49
<PAGE>
Schedule 12.1(b) to perfect the rights of Agent (for the benefit of the Lessors)
- ----------------
intended to be created by the Operative Documents, and (B) those Governmental
Actions listed on Schedule 12.1(b) required with respect to Lessee or any of its
----------------
Affiliates, each of which have been duly effected and are, or on the Funding
Date will be, in full force and effect.
(c) Enforceability, etc. Each Operative Document to which Lessee is a
--------------------
party constitutes the legal, valid and binding obligation of Lessee, enforceable
against Lessee in accordance with the terms thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(d) Litigation. There is no action, proceeding or investigation pending or
----------
threatened which questions the validity of the Operative Documents to which
Lessee is a party or any action taken or to be taken pursuant to the Operative
Documents to which Lessee is a party, and there are no actions, proceedings or
investigations pending or threatened which, if adversely determined, would have,
individually or in the aggregate, a Material Adverse Effect.
(e) Title; Liens. Lessee has, and as of each Funding Date will have, good
------------
and marketable title to each Unit, free and clear of all Liens other than
Permitted Liens. Lessee has not granted, nor will it grant, any Lien on any
Unit, any other Collateral or this Lease, to any Person other than Agent or the
Lessors, and no Lien, other than the Security Interest granted to Agent and the
Lessors hereunder (and any Lien hereafter granted by Agent and the Lessors), has
attached to any Unit, any other Collateral or this Lease, or in any manner has
affected adversely Agent's and the Lessors' rights and Security Interest herein.
(f) Perfection of Security Interest. Upon the filing of appropriate UCC
-------------------------------
financing statements with the Secretary of State for each of the states of
Kentucky, Mississippi, Nevada and California, and the county clerks of Franklin
County and Boone County, Kentucky, and fixture filings in Boone County,
Kentucky, Madison County, Mississippi, and Clark County, Nevada, the payment of
any applicable fees and taxes relating to any of the foregoing, and the payment
of the Funded Amount by Agent to the Lessee, Agent will have an enforceable,
perfected first priority security interest of record in the Collateral as
against all Persons including Lessee and its creditors.
(g) ERISA.
-----
(i) Neither Lessee, nor any ERISA Affiliate, presently maintains,
participates in, or contributes to, an Employee Benefit Plan (A) that has
incurred any current liability or any "accumulated funding deficiency",
whether or not waived, as defined in Section 412 of the Code or Section 302
of ERISA, that remains unpaid as of the Funding Date for which Lessee or
any ERISA Affiliate does not have sufficient unencumbered assets to pay in
full such liability or deficiency by the payment due date thereof, (B) with
respect to which, as of the Funding Date, a Reportable Event has occurred
which could reasonably be expected to result in the termination of such
Employee Benefit Plan, (C) which is a Multiemployer Plan for
50
<PAGE>
which Lessee or any ERISA Affiliate has received notice that the plan is in
reorganization or insolvent, (D) for which penalties or taxes have been
imposed under Sections 502(i) and 502(l) of ERISA or Section 4975 of the
Code, (E) for which there has been, in the immediately preceding six-year
period, a complete or partial withdrawal from any Multiemployer Plan, or
(F) which is a Welfare Plan that does not reserve to Lessee the right to
modify or terminate such Welfare Plan at any time.
(ii) Assuming the accuracy of the representations of each Lessor and
the Agent contained in Sections 12.2 and 12.3, respectively, the
------------- ----
consummation of the transactions provided for in this Lease and compliance
by Lessee with the provisions hereof and the Certificates issued hereunder
will not involve any Prohibited Transaction.
(h) Taxes. Neither Lessee nor any Subsidiary is delinquent in payment of
-----
any federal, state or local income, property or other tax, except for any
delinquency which is the subject of a Permitted Contest. The Federal income Tax
liabilities of Lessee and each of its Subsidiaries have been determined by the
Internal Revenue Service and paid through the fiscal year ended November 30,
1985. Lessee believes that adequate provision has been made on its books in
accordance with GAAP for (i) any proposed additional Tax assessments against it,
(ii) any pending material controversy in respect of Federal or state income
Taxes, and (iii) Taxes of Lessee and each Subsidiary for all open years and for
the current fiscal year.
(i) No Transfer Taxes. To the best of Lessee's knowledge, no sales, use,
-----------------
excise, transfer or other Tax shall result from the transfer or creation of any
security interest in any Unit or any Certificate pursuant to Article II, except
----------
such Taxes that have been paid in full on or prior to the Tranche I Funding
Date.
(j) Rights in Respect of the Collateral. Lessee is not a party to any
-----------------------------------
contract or agreement with respect to the sale by Lessee of any interest in the
Collateral or any part thereof other than pursuant to this Lease and the other
Operative Documents.
(k) Patents, Trademarks. Except as set forth on Schedule 12.1(k) attached
------------------- ----------------
hereto, there are no patents, patent rights, trademarks, service marks, trade
names, copyrights, licenses or other intellectual property rights with respect
to the Collateral that are necessary for the operation of the Collateral to
which Lessee does not have rights.
(l) Defaults, Casualties, etc. As of the Funding Date, no Incipient
--------------------------
Default, Event of Default or Casualty has occurred and is continuing and there
is no action pending or, to the best of Lessee's knowledge, threatened by any
Authority to initiate a Casualty. To the best of Lessee's knowledge, as of the
Funding Date, no condition exists that constitutes, or with the giving of notice
or lapse of time or both would constitute an event of default by Lessee under
any material indenture, mortgage, chattel mortgage, deed of trust, lease,
conditional sales contract, loan or credit arrangement or other material
agreement or instrument to which Lessee is a party or by which it or any of its
properties may be bound.
51
<PAGE>
(m) Chief Executive Office of Lessee. The principal place of business and
--------------------------------
chief executive office, as such terms are used in Section 9-103(3) of the UCC,
of Lessee are each located at 1155 Battery Street, San Francisco, California
94111.
(n) Compliance With Law. The Collateral and the current use and operation
-------------------
thereof and thereon do not violate any Applicable Laws, including, without
limitation, any thereof relating to occupational safety and health or
Environmental Laws, which could have a Material Adverse Effect.
(o) Subjection to Government Regulation. Neither Agent nor any Lessor
-----------------------------------
will, solely by reason of entering into the Operative Documents or consummating
the transactions contemplated thereby, (i) become subject to ongoing regulation
of its operations by any Authority (other than upon exercise of remedies under
this Lease); or (ii) become subject to ongoing regulation of its operations by
any Authority upon exercise of remedies under this Lease or upon the expiration
hereof (except for regulation the applicability of which depends upon the
existence of facts in addition to the ownership of, or holding, the Collateral
or any interest therein); or (iii) be required to qualify to do business in any
jurisdiction.
(p) Investment Company Act. Lessee is not an "investment company" or a
----------------------
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(q) Public Utility Holding Company. Lessee is not subject to regulation as
------------------------------
a "holding company", an "affiliate" of a "holding company", or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(r) Licenses, Registrations and Permits. All material licenses, approvals,
-----------------------------------
authorizations, consents and permits required for the use and operation of each
Unit, including, without limitation, for all software used in connection with
each Unit, have been obtained from the appropriate Authorities having
jurisdiction or from private parties, as the case may be.
(s) Federal Reserve Regulations. Neither Lessee nor any Affiliate of
---------------------------
Lessee will, directly or indirectly, use any of the proceeds of the sale of the
Collateral or the Certificates for the purpose of purchasing or carrying any
"margin security" or "margin stock" within the meaning of Regulation T, U or X
of the Board of Governors of the Federal Reserve System, respectively, or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin security or margin stock or for any other
purpose which might cause any of the transactions contemplated by this Lease or
any other Operative Document to constitute a "purpose credit" within the meaning
of Regulation T, U or X of the Board of Governors of the Federal Reserve System,
or for the purpose of purchasing or carrying any security, and neither Lessee
nor any Affiliate of Lessee has taken or will otherwise take or permit any
action by Lessee or any of its Affiliates in connection with any of the
transactions contemplated by any of the Operative
52
<PAGE>
Documents which would involve violation of Regulation T, U or X, or any other
regulation of the Board of Governors of the Federal Reserve System.
(t) Financial Information.
---------------------
(i) The consolidated balance sheet of Lessee and its Subsidiaries as
of November 29, 1998, and the related consolidated statements of
operations, cash flows and common shareholders' equity for the fiscal year
then ended, reported on by Arthur Andersen, LLP, a copy of which has been
delivered to Agent, fairly present, in conformity with GAAP, the
consolidated financial position of Lessee and its Subsidiaries as of such
date and their consolidated results of operations and changes in financial
position for such fiscal year.
(ii) The consolidated balance sheet of Lessee and its Subsidiaries as
of August 29, 1999, and the related consolidated statements of operations
and cash flows for the portion of Lessee's fiscal year ended at the end of
such quarter, a copy of which has been delivered to Agent, fairly present,
in conformity with GAAP, the consolidated financial position of Lessee and
its Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such fiscal quarter,
subject to normal year-end auditing adjustments.
(iii) Since August 29, 1999, there has been no Material Adverse
Effect.
(u) Disclosure. The information disclosed in writing by Lessee or any of
----------
its Affiliates (or any Person authorized or employed by any such Person as agent
or otherwise) to Agent and the Lessors in connection with the negotiation of the
Operative Documents and the transactions contemplated thereby, when taken as a
whole with all other written disclosures to such parties, do not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein or therein not misleading. There is no particular
fact of which Lessee or any of its Affiliates has knowledge that has not been
disclosed by Lessee or any of its Affiliates (or by any Person authorized or
employed by Lessee or any of its Affiliates as agent or otherwise) in writing to
the Lessors that, as far as Lessee or any of its Affiliates can reasonably
foresee, could reasonably be expected to have a Material Adverse Effect.
(v) Appraisal Data. The written information provided by Lessee and its
--------------
Affiliates to the Appraiser and forming the basis for the conclusions set forth
in the Appraisal, taken as a whole, was true and correct in all material
respects and did not omit any information known and available to Lessee
necessary to make the information provided not misleading.
(w) Solvency. The consummation by Lessee of the transactions contemplated
--------
by the Operative Documents did not and will not render Lessee insolvent, nor was
it made in contemplation of Lessee's insolvency; the value of the assets and
properties of Lessee at fair valuation and at their then present fair salable
value is and, after such transactions, will be greater than Lessee's total
53
<PAGE>
liabilities, including contingent liabilities, as they become due; and the
property remaining in the hands of Lessee was not and will not be an
unreasonably small amount of capital.
(x) Private Offering. Lessee has not offered any interest in this Lease,
----------------
the Rent, the Certificates or the Collateral or any similar security for sale
to, or solicited offers to buy any thereof from, or otherwise directly or
indirectly approached or negotiated with respect thereto with, any prospective
purchaser other than Agent, the Lessors and not more than sixty (60) other
institutional investors, each of which was offered such interest at a private
sale for investment and each of which Lessee had reasonable grounds to believe,
and as to the Agent and the Lessors, after reasonable inquiry does believe, has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of such an investment; and, assuming
the truth and accuracy of the representations set forth in Section 12.2(b), the
---------------
issuance, sale and delivery of the Certificates and the interests in this Lease
represented thereby under the circumstances contemplated by this Lease do not
require the registration of such Certificates or interests under the Securities
Act or the qualification of any of the Operative Documents under the Trust
Indenture Act of 1939, as amended.
(y) The Equipment. The development of each Unit is complete and all Units
-------------
meet all applicable specifications therefore, are fully operational, and have
the capacity and functional ability to perform, on a continuing basis (subject
to normal interruption in the ordinary course of business for maintenance,
inspection, service, repair and testing) and in commercial operation, the
functions for which they were specifically designed. Schedule II lists all of
the Equipment.
(z) Software. All of Lessee's rights in the software described in subpart
--------
(e) of the definition of Collateral may be collaterally assigned to Agent and
may be further assigned in connection with any exercise any remedies under this
Lease and may be further assigned by any purchaser of any Unit, all without the
consent of any person party to, or any breach of, any agreement pursuant to
which Lessee's rights to use such software arise.
Section XII.2 Representations and Warranties of Lessors. Each Lessor
-----------------------------------------
represents and warrants, severally and only as to itself, to each of the other
parties hereto as follows:
(a) ERISA. Either (i) it is not and will not be purchasing any of its
----- ------
interest in the Collateral or the Certificates with the assets of an "employee
benefit plan" (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA, or a "plan" (as defined in Section 4975(e)(1) of the Code) or (ii) the
--
acquisition and holding of any Certificate will not result in a Prohibited
Transaction, or (iii) it (A) is an insurance company, (B) is acquiring its
--
Certificate with funds held in an insurance company general account (as defined
in Section V(e) of the proposed Prohibited Transaction Class Exemption published
on August 22, 1994 at 59 Federal Register 43134 (the "Proposed PTCE") and (C) is
-------------
acquiring its Certificate in reliance on the availability of, and its
qualification for, the exemptive relief contemplated in the Proposed PTCE.
54
<PAGE>
(b) Investment in Collateral and Certificates. It is acquiring its
-----------------------------------------
interest in the Collateral (as represented by the Certificates) for its own
account for investment, and if in the future it should decide to dispose of its
interest in the Collateral, it understands that it may do so only in compliance
with the Securities Act and the rules and regulations of the SEC thereunder and
any applicable state securities laws. Neither it nor anyone authorized to act
on its behalf has taken or will take any action which would subject the issuance
or sale of any Certificate or any interest in the Collateral or this Lease to
the registration requirements of Section 5 of the Securities Act. No
representation or warranty contained in this Section 12.2(b) shall include or
---------------
cover any action or inaction of Lessee or any Affiliate thereof whether or not
purportedly on behalf of any Lessor or any of their Affiliates. Subject to the
foregoing, and subject to the provisions of Article XIV hereof, it is understood
-----------
among the parties that the disposition of each Lessor's property shall be at all
times within its control.
Section XII.3 Representations and Warranties of Agent. Agent, in its
---------------------------------------
individual capacity, hereby represents and warrants to the other parties as set
forth in this Section 12.3.
------------
(a) Due Organization, etc. Agent is a national banking association duly
----------------------
organized, validly existing and in good standing under the laws of the United
States of America; Agent has full corporate power and authority to enter into
and perform its obligations under the Operative Documents to which it is or is
to be a party and each other agreement, instrument and document to be executed
and delivered by it on or before the Tranche I Funding Date in connection with
or as contemplated by each such Operative Document to which it is or is to be a
party; and the Operative Documents to which Agent is a party, and to which
Lessee is to be a party, have been or will be duly executed and delivered by
Agent.
(b) Authorization; No Conflict. The execution and delivery by Agent of the
--------------------------
Operative Documents to which it is or is to be a party, and the performance by
Agent of its obligations under such Operative Documents, have been duly
authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not: (i) contravene any
applicable laws, rules, regulations, orders, injunctions or decrees of any
Authority of the United States of America governing its banking or trust powers
or of the State of Utah where such contravention would be reasonably likely to
materially and adversely affect the ability of Agent, either in its individual
capacity, as Agent, or both, to perform its obligations under any Operative
Documents to which it is or will be a party; (ii) violate any provision of its
charter or by-laws; (iii) result in a breach of or constitute a default under
any indenture, loan or credit agreement, or any other agreement or instrument to
which Agent, either in its individual capacity, as Agent, or both, is a party or
by which it or its properties may be bound or affected, which breaches or
default would be reasonably likely to materially and adversely affect the
ability of Agent, either in its individual capacity, as Agent, or both, to
perform its obligations under any Operative Documents to which it is or will be
a party; or (iv) require any authorizations, consents, approvals, licenses or
formal exemptions from, nor any filings, declarations or registrations with, any
Authority of the United States of America governing its banking or trust powers
or of the State of Utah or any consent or approval of any non-governmental
Person.
55
<PAGE>
(c) Enforceability, etc. Each Operative Document to which Agent, either in
-------------------
its individual capacity, as Agent, or both, is a party constitutes the legal,
valid and binding obligation of Agent, either in its individual capacity, as
Agent, or both, enforceable against it in accordance with the terms thereof,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
(d) Litigation. There is no action, proceeding or investigation pending or
----------
to the best of Agent's knowledge, after due inquiry, threatened which questions
the validity of the Operative Documents to which Agent, in its individual
capacity, as Agent, or both, is a party, or any action taken or to be taken
pursuant to the Operative Documents to which Agent, in its individual capacity,
as Agent, or both, is a party.
ARTICLE XIII
COVENANTS
Section XIII.1 Covenants of Lessee. Lessee covenants to each of the other
-------------------
parties hereto as follows:
(a) Corporate Existence, etc. Subject to subsection (c) below, Lessee
-------------------------
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights, powers and franchises and its
power and authority to perform its obligations under the Operative Documents,
including, without limitation, any necessary qualification or licensing in any
foreign jurisdiction where a Unit is located and in any other foreign
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect.
(b) Compliance With Laws. Lessee shall comply with all Applicable Laws
--------------------
(including, without limitation, Environmental Laws), except for such instances
of non-compliance which would not have, individually or in the aggregate, a
Material Adverse Effect.
(c) Mergers, Transfers, etc. Lessee shall not (whether in one transaction
------------------------
or a series of transactions) (x) consolidate with or merge into any other Person
or (y) convey, transfer or lease all or substantially all of its assets to any
other Person, unless either (i) Lessee or a Subsidiary of Lessee is the
surviving entity or (ii) the surviving entity or the transferee assumes all of
the obligations of Lessee hereunder in writing, and, in either case, there is no
Material Adverse Effect.
(d) Change of Name or Location. Lessee shall furnish to Agent written
--------------------------
notice on or before the 30th day prior to any relocation of its chief executive
office or principal place of business, or change of its name.
(e) Financial Information. Lessee shall keep its books and records in
---------------------
accordance with GAAP. Lessee agrees to furnish Agent (and Agent shall
thereafter promptly furnish to each Lessor), (i) as soon as practicable, and in
any event within 45 days after the end of each fiscal quarter, the
56
<PAGE>
related consolidated statements of income and cash flows of Lessee and its
Subsidiaries for such fiscal quarter for the period from the beginning of the
current fiscal year to the end of such fiscal quarter, and a consolidated
balance sheet of Lessee and its Subsidiaries, as at the end of such fiscal
quarter, setting forth in each case in comparative form corresponding
consolidated figures from the corresponding fiscal quarter in the immediately
preceding fiscal year, all in reasonable detail and certified by an authorized
financial officer of Lessee, subject to changes resulting from year-end
adjustments, together with an officer's certificate that no Incipient Default or
Event of Default has occurred and is continuing hereunder; (ii) as soon as
practicable and in any event within 120 days after the end of each fiscal year,
audited consolidated statements of cash flows, income and shareholders' equity
of Lessee and its Subsidiaries for such year and a consolidated balance sheet of
Lessee and its Subsidiaries as at the end of such year, setting forth in each
case in comparative form corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and certified to Agent and each Lessor by
independent certified public accountants of recognized standing selected by
Lessee; (iii) as soon as practicable, copies of all such financial statements,
proxy statements, notices and reports as Lessee shall send to its public
stockholders, if any, and copies of any registration statements (without
exhibits) and any regular or periodic reports which it files with the SEC (or
any Authority succeeding to the function of the SEC); and (iv) with reasonable
promptness, such other data and information with respect to the business,
affairs and conditions of Lessee or its Subsidiaries as from time to time Agent
may request, at the reasonable request of the Required Lessors.
(f) Compliance Certificates. Concurrently with each delivery of financial
-----------------------
statements pursuant to the foregoing subsection (e) (and within the time periods
--------------
specified therein), Lessee shall deliver to Agent an Officer's Certificate
stating that such officer has reviewed the activities of Lessee during such
period and that during such period Lessee has performed and fulfilled each and
every covenant, obligation and condition contained in the Operative Documents,
and no Incipient Default, Event of Default or Casualty exists under any of the
Operative Documents, or if any such condition shall exist, specifying the nature
and status thereof.
(g) Notice of Defaults. Promptly upon, but in no event later than three
------------------
(3) Business Days after a Responsible Officer of Lessee shall have obtained
knowledge thereof, Lessee shall notify Agent in writing of the existence of an
Incipient Default, Event of Default, or any other matter which has resulted in a
Material Adverse Effect, which notice shall describe the nature of such
Incipient Default, Event of Default or other matter and the action Lessee is
taking with respect thereto.
(h) Inspection. Agent or any Lessor may visit and inspect the properties
----------
(including, without limitation, the Collateral) of Lessee, and to the extent
reasonable under the circumstances, examine its books of record and accounts
(including, without limitation, Lessee's records pertaining to the Collateral),
and discuss its affairs, finances and accounts with its officers, and, with
notice to Lessee so that it may have an officer present if it so reasonably
requests, the accountants of Lessee, all at such times as Agent or the
requesting Lessor, as the case may be, may reasonably request. Upon such
request, Lessee shall make such properties and such books of record and accounts
available to Agent or the requesting Lessor, as the case may be, for inspection.
So long as any
57
<PAGE>
Incipient Default or Event of Default shall exist hereunder, Lessee will pay the
reasonable expenses of Agent and the Lessors incurred in the exercise of the
rights granted pursuant to this Section 13.1(h).
---------------
(i) ERISA Events. Promptly upon Lessee's becoming aware of the occurrence
------------
of any matter or matters that are likely to constitute an Event of Default under
Article VIII, Lessee shall notify Agent in writing specifying the nature
- ------------
thereof, what action Lessee or any ERISA Affiliate is taking or proposes to take
with respect thereto.
(j) Rule 144A Information. At any time when Lessee is not subject to
---------------------
Section 13 or 15(d) of the Securities Exchange Act, if Agent or any Lessor shall
request that Lessee deliver to Agent, information with respect to Lessee that
meets the requirements of Rule 144A(d)(4)(i) of the Securities Exchange Act (or
any successor provision), then: (x) promptly following the receipt by Lessee of
that request, Lessee shall deliver such information to Agent, and (y) such
information shall, at the time of such delivery, be as of a date so as to be
entitled to the presumption that such information is "reasonably current" within
the meaning of Rule 144A(d)(4)(ii) of the Securities Exchange Act (or any
successor provision); provided that Lessee (i) shall not be so obligated to the
--------
extent that any amendment to Rule 144A after the date hereof expands or makes
more onerous the provisions of Rule 144A, and (ii) shall in no event be
obligated to provide more information pursuant to this Section 13.1(j) with
---------------
respect to the nature of its business and the products and services that it
offers than it is providing to its commercial lenders at such time.
(k) Further Assurances. Lessee will, at its expense, promptly and duly do
------------------
any further reasonable act and execute, acknowledge, deliver, file, register and
record any further documents (including, without limitation, amendments to this
Lease and UCC financing statements and continuation statements) as are required
or as Agent or the Required Lessors may from time to time reasonably request in
order to carry out more effectively the intent and purposes of this Lease and to
establish and protect the rights and remedies created or intended to be created
in favor of Agent and the Lessors, including the first priority security
interest in the Collateral of Agent, on behalf of the Lessors. Without limiting
the foregoing, on or prior to December 3, 2004, Lessee shall have executed and
filed continuation statements with respect to the financing statements
originally filed hereunder, or failing the same, Agent shall file such
continuation statements prior to December 3 in each such year pursuant to the
authority vested in Agent under Section 8.5.
-----------
(l) Environmental Matters. Lessee shall: (i) use and operate the
---------------------
Collateral in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect, and remain in material compliance
therewith, and handle all Hazardous Material in material compliance with all
applicable Environmental Laws; (ii) promptly notify Agent, and provide copies
upon receipt, of all written claims, complaints, notices or inquiries relating
to the condition or compliance of the Collateral in so far as they relate to
Environmental Laws, and promptly cure and have dismissed with prejudice to the
satisfaction of the Required Lessors any actions and proceedings (except for
those which would not have a Material Adverse Effect) relating to compliance
with Environmental Laws, provided, however, that Lessee may contest in good
-------- -------
faith by Permitted Contest any such actions or
58
<PAGE>
proceedings, provided, further that Agent, in its individual capacity and as
-------- -------
Agent, and the Lessors shall have received reasonably sufficient security from
Lessee prior to the institution of any such Permitted Contest by Lessee as any
of them shall have reasonably requested; and (iii) provide such information and
certifications which Agent or any Lessor may reasonably request from time to
time to evidence compliance with this Section 13.1(l).
---------------
(m) Securities. Lessee shall not, nor shall it permit anyone authorized to
----------
act on its behalf to, take any action which would subject the issuance or sale
of the Certificates, any of the Collateral or the Lease, or any security or
lease the offering of which, for purposes of the Securities Act or any state
securities laws, would be deemed to be part of the same offering as the offering
of the aforementioned items, to the registration requirements of Section 5 of
the Securities Act or any state securities laws.
(n) No Disposition of the Collateral. Lessee shall not sell, contract to
--------------------------------
sell, assign, lease, transfer, convey or otherwise dispose of, or permit to be
sold, assigned, leased, transferred, conveyed or otherwise disposed of, the
Collateral or any Part, except for subletting as expressly permitted pursuant to
Section 5.2.
- -----------
Section XIII.2 Covenants of Agent. Agent, in its individual capacity,
------------------
covenants with each of the other parties hereto as follows, it being understood
that the sole remedies for the breach of these covenants shall be to sue for
damages or for specific performance and that any such breach shall not modify or
terminate Lessee's obligations under Section 4.4 or any other provision of the
-----------
Operative Documents:
(a) so long as this Lease remains in effect or so long as the obligations
of Lessee arising hereunder have not been fully and finally discharged, Agent,
in its individual capacity, (i) will keep this Lease and all Collateral free and
clear of all Liens arising by, through or under Agent, in its individual
capacity, which are unrelated to the transactions contemplated by this Lease and
shall indemnify, reimburse and hold each Lessor and Lessee harmless from any and
all claims, losses, damages, obligations, penalties, liabilities, demands,
suits, or causes of action and all legal proceedings, and any costs or expenses
in connection therewith, including reasonable legal fees and expenses, of
whatever kind and nature, imposed on, incurred by or asserted against any Lessor
or Lessee in any way relating to, or arising in any manner out of, Agent's
failure to comply with this Section 13.2(a) and (ii) will not, provided that no
---------------
Incipient Default or Event of Default exists, through its own actions, interfere
with Lessee's (or any permitted Sublessee's or assignee's) rights hereunder with
respect to any Unit during the Term, except as permitted or required by the
terms of this Lease; and
(b) Agent shall apply funds held by it in its capacity as agent hereunder
as required by this Lease and shall otherwise perform all of its duties and
obligations under this Lease and the Operative Documents to which it is a party.
59
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Section XIII.3 Covenants of Lessors. Each Lessor, severally and not
--------------------
jointly, covenants to each of the other parties hereto as follows, it being
understood that the sole remedies for the breach of the foregoing covenants
shall be to sue for damages or for specific performance and that any such breach
shall not modify or terminate Lessee's obligations under Section 4.4 or any
-----------
other provision of the Operative Documents:
(a) provided that no Incipient Default or Event of Default exists, it will
not, through its own actions, interfere with Lessee's (or any permitted
sublessee's or assignee's) rights hereunder with respect to any Unit during the
Term;
(b) it will keep the Collateral free and clear from all Lessor Liens
attributable to it, provided that it may contest any such Lessor Lien pursuant
--------
to a Permitted Contest; and
(c) it will not, alone or in conjunction with one or more other Lessors,
deal directly with Lessee, it being acknowledged that Agent is the only party
representing Lessors which is authorized to deal with Lessee for any purpose in
connection with this Lease, the Collateral or the exercise of any remedies
hereunder.
ARTICLE XIV
REGISTRATION, TRANSFER, EXCHANGE,
REPLACEMENT AND ASSIGNMENT OF CERTIFICATES
Section XIV.1 Certificates Represent Lessor Interests. The interests of
---------------------------------------
each Lessor shall be evidenced by a certificate or certificates in the form of
Exhibit C hereto, with appropriate insertions, and indicating such Lessor's
- ---------
interest in this Lease (including, without limitation, the right to receive
rental and other payments hereunder) and the Collateral (each such certificate,
and any and all certificates issued in replacement or exchange therefor being a
"Certificate"). In addition to the agency established pursuant to Article IX,
----------- ----------
Agent is hereby appointed the agent of Lessee for the limited purpose of
transfer and exchange of the Certificates, and, as such, Lessee agrees that
Agent shall be entitled to, and Lessee shall be bound by, the provisions of
Article IX with respect to such agency. Agent shall, as agent for Lessee,
- ----------
maintain at its office a register for the purpose of registering the Certificate
or Certificates originally issued hereunder and all transfers and exchanges
thereof, which register shall include the address of each holder and the other
information of the type set out in Schedule I with respect to such holder. A
----------
Lessor intending to transfer any or all of its Certificates, or to exchange any
or all of its Certificates for Certificates evidencing a different interest,
shall surrender such Certificate or Certificates to Agent at its office set
forth on Schedule I, together with a written request from such Lessor for the
----------
issuance of a new Certificate or Certificates, specifying the interests to be
evidenced thereby and, in the case of a surrender for registration of transfer,
the name and address of the new Lessor. Promptly upon receipt of such documents
by Agent, Lessee shall execute and deliver, at no charge to Lessor, a new
Certificate or Certificates in the same form, evidencing the same aggregate
interest and dated the same date or dates as the Certificate or Certificates
surrendered. Agent, at no charge to Lessor, shall make a notation on each
60
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new Certificate of the amount of all payments previously made on the old
Certificate or Certificates with respect to which such new Certificate(s)
is(are) issued and the date to which payments with respect to the old
Certificate or Certificates have been paid. Such notations, and Attachment 1 to
each Certificate, shall be prepared by Agent, and shall be conclusive and
binding absent manifest error. Agent and Lessee may deem the owner of each
Certificate reflected in the register as the owner thereof for all purposes.
Agent shall not be responsible for determining if any transferee satisfies the
requirements of Section 14.3.
------------
Section XIV.2 Lost, Stolen or Damaged Certificates. If any Lessor's
------------------------------------
Certificate shall become mutilated, destroyed, lost or stolen, Lessee shall,
upon the written request of the appropriate Lessor, execute and deliver in
replacement thereof, with a copy to Agent, and at no charge to Lessor, a new
Certificate in the same form, evidencing the same interest and dated the same
date as the Certificate so mutilated, destroyed, lost or stolen. If the
Certificate being replaced has become mutilated, such Certificate shall be
surrendered to Agent and a photocopy thereof shall be furnished to Lessee by
Agent. If the Certificate being replaced has been destroyed, lost or stolen,
the Lessor requesting a replacement Certificate shall furnish to Lessee and
Agent such reasonable security or indemnity as may be required by each of them
to save them harmless if the Lessor has not furnished them satisfactory evidence
of the destruction, loss or theft of the Certificate; provided, that if the
--------
Certificate being replaced is registered in the name of an original Lessor then
the affidavit of an authorized officer of such Lessor in form reasonably
satisfactory to Agent, setting forth the fact of destruction, loss or theft and
of ownership of the Certificate at the time thereof, shall be satisfactory
evidence and no security or indemnity shall be required other than the written
agreement of such Person, in form reasonably satisfactory to Agent, to indemnify
and hold harmless Lessee and Agent from all risks resulting from the
authentication and delivery of a substitute Certificate. The Lessor requesting
replacement hereunder shall be responsible for all stamp taxes relating to such
replacement.
Section XIV.3 Lessor Assignments. All or any of the right, title or
------------------
interest and obligations of any Lessor in and to this Lease and the rights,
benefits, advantages and obligations of any Lessor hereunder, including the
rights to receive payment of rental or any other payment hereunder, and the
rights and security interests in and to the Collateral, may be assigned or
transferred by such Lessor at any time by transfer of the Certificate
representing such interest in accordance with the provisions of this Article
-------
XIV; provided that the minimum amount which any Lessor may assign pursuant to
- --- --------
this Section is the lesser of $5,000,000 or 100% of the face value of such
Lessor's Certificate; provided, further, that any assignee or transferee (i)
-------- -------
shall be subject to Lessee's written approval, not to be unreasonably withheld,
(ii) shall assume Lessor's obligations under this Lease, and (iii) must
represent and warrant in writing to Agent, the other Lessors and Lessee:
(a) that it is an accredited investor that is a financial institution, with
sufficient knowledge and experience in financial and business matters to enable
it to evaluate the merits and risks of acquiring a Certificate, and has the
requisite power and authority to enter into such assignment or transfer;
61
<PAGE>
(b) that the assignment or transfer is exempt from registration
requirements under any and all applicable federal and state statutes, laws,
rules, regulations and orders;
(c) that it is acquiring the Certificates for its own account for
investment purposes and not with a view toward, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling such Certificate, provided that, subject to the provisions of this Lease
--------
and applicable securities laws, the disposition of the transferee's Certificate
shall at all times remain within the transferee's control;
(d) as set forth in Section 12.2 with respect to such transferee;
------------
(e) that, and also covenants to such Persons that, it will not transfer
the Certificate unless the proposed transferee makes the foregoing
representations and covenants;
(f) that, and also covenants that, it will not take any action that would
by itself subject the transfer of the Certificate to the provisions of Section 5
of the Securities Act; and
(g) that, and also covenants that, it is aware of and will abide by the
provisions of Section 16.17.
-------------
ARTICLE XV
OWNERSHIP AND GRANT OF SECURITY INTEREST
Section XV.1 Grant of Security Interest. Title to the Collateral shall
--------------------------
remain in Lessee. As of the Tranche I Funding Date, Lessee hereby grants to
Agent a first priority perfected security interest for the benefit of Lessors in
the Collateral (the "Security Interest"), and the Security Interest shall be a
-----------------
continuing security interest in all of the Collateral to secure the payment of
all sums due hereunder and under the other Operative Documents to which Lessee
is a party, and the performance of all other obligations hereunder and under the
other Operative Documents to which Lessee is a party.
Section XV.2 Retention of Proceeds. If Lessee would be entitled to any
---------------------
amount (including any Casualty Recoveries) hereunder except for the existence of
any Event of Default or Incipient Default, Lessee shall deliver any such amounts
to Agent, and Agent shall hold such amounts as part of the Collateral and shall
be entitled to apply such amounts against any amounts due hereunder; provided,
--------
that Agent shall distribute such amounts, to the extent not theretofore applied
in accordance with the other terms of this Lease if and when no Event of Default
or Incipient Default exists.
ARTICLE XVI
MISCELLANEOUS
62
<PAGE>
Section XVI.1 Payment of Transaction Costs and Other Costs. If the
--------------------------------------------
transactions contemplated hereby are consummated, Lessee shall pay all
Transaction Costs in accordance with Section 3.1(f), and in the event the
--------------
transactions contemplated hereby do not close, Lessee shall pay such Transaction
Costs promptly upon receipt of invoices therefor. In addition, Lessee shall pay
or reimburse Agent and the Lessors for all other out-of-pocket costs and
expenses (including allocated fees of internal counsel) reasonably incurred in
connection with: (a) entering into, or the giving or withholding of, any future
amendments, supplements, waivers or consents with respect to the Operative
Documents (including without limitation any legal services rendered in
connection with or arising under Section 13.1); (b) any Casualty or termination
------------
of the Lease or any other Operative Document; (c) the negotiation and
documentation of any restructuring or "workout", whether or not consummated, of
any Operative Document; (d) the enforcement of the rights or remedies under the
Operative Documents; (e) further assurances requested pursuant to Section
-------
13.1(k) hereof or any similar provision in other Operative Documents; (f) any
- -------
transfer by Agent or a Lessor of any interest in the Operative Documents during
the continuance of and in connection with the exercise of remedies following an
Event of Default; (g) the ongoing fees and expenses of Agent under the Operative
Documents; and (h) any Funding Date.
Section XVI.2 Effect of Waiver. No delay or omission to exercise any
----------------
right, power or remedy accruing to Agent or any Lessor upon any breach or
default of Lessee hereunder shall impair any such right, power or remedy nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein or of or in any similar breach or default thereafter
occurring, nor shall any single or partial exercise of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy, nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of Lessors or Agent of any breach or default under this Lease must be
specifically set forth in writing and must satisfy the requirements set forth in
Section 16.5 with respect to approval by Lessors and Agent.
- ------------
Section XVI.3 Survival of Covenants. All representations, warranties and
---------------------
covenants of Lessee under Article IV, Article V, Article VII, Article XI,
---------- --------- ----------- ----------
Article XV, Sections 9.4 (with respect to each Lessor), 9.10, 12.1 and 13.1
- ---------- -------- --- ---- ---- ----
shall survive the expiration or termination of this Lease to the extent arising
prior to any such expiration or termination.
Section XVI.4 Applicable Law. THIS LEASE SHALL BE GOVERNED BY AND
--------------
CONSTRUED UNDER THE LAWS OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
Section XVI.5 Effect and Modification. This Lease exclusively and
-----------------------
completely states the rights of Agent, Lessors and Lessee with respect to the
granting of the Security Interest and all other transactions contemplated by
this Lease, and supersedes all prior agreements, oral or written, with respect
thereto, including, without limitation, any confidentiality agreements between
Lessee and any Lessor executed in connection with and contemplation of this
Lease. Except as otherwise
63
<PAGE>
provided in Section 3.2(c), no variation, modification, amendment or waiver of
--------------
this Lease or any other Operative Document shall be valid unless in writing and
signed by Agent with the written consent of the Required Lessors and by Lessee.
Except as otherwise provided in Section 3.2(c) and in the next sentence, no
--------------
variation, modification, amendment or waiver of this Lease or any other
Operative Document purporting to (i) postpone, reduce or forgive, in whole or in
part, any payment of Rent, Lease Balance, Administrative Charge, interest or
other amount payable hereunder, or modify the definition (including the
definition of any defined term used in any such definition), or method of
calculation, of any payment of Rent, Lease Balance, Administrative Charge,
interest or other amount payable hereunder, (ii) release any Collateral granted
hereunder (except as expressly provided in Sections 5.4, 6.1(a) or (b), 11.2,
------------ ------ --- ----
11.3, 11.4 and 15.2), or (iii) modify this sentence or the definition of
- ---- ---- -----
"Required Lessors" shall be valid unless in writing and signed by Agent with the
consent of all Lessors. No variation, modification, amendment or waiver of any
Certificate shall be valid unless in writing and signed by Agent with the
consent of the registered holder of such Certificate. No variation,
modification, amendment, waiver or other change to any of Section 2.9, 2.10,
----------- ----
10.1, or any applicable definitions in this Lease that may negatively impact any
- ----
of the Lessors shall be valid unless in writing and signed by Agent with the
consent of all of the Lessors.
Section XVI.6 Notices. All demands, notices and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or one Business Day after being sent by overnight delivery
service or three days after being deposited in the mail, certified mail, postage
prepaid, return receipt requested, or when sent by facsimile transmission, if
confirmed by mechanical confirmation and if a copy thereof is promptly
thereafter personally delivered, sent by overnight delivery service or so
deposited in the mail, addressed to: (A) Agent or Lessee at the address set
forth below the signature of such party on the signature page hereof, or at such
other, address as may hereafter be furnished in accordance with this Section
-------
16.6 by either party to the other and (B) each Lessor at its address set forth
- ----
in Schedule I hereto or in the register maintained pursuant to Section 14.1.
---------- ------------
Except as otherwise provided in Sections 3.1 and 3.2, Lessee's delivery of any
------------ ---
notice or any other deliverable hereunder to Agent shall satisfy any obligation
of Lessee hereunder to deliver the same to any Lessor.
Section XVI.7 Consideration for Consents to Waivers and Amendments.
----------------------------------------------------
Lessee hereby agrees that it will not, and that it will not permit any of its
Affiliates to, offer or give any consideration or benefit of any kind whatsoever
to any Lessor in connection with, in exchange for, or as an inducement to, such
Lessor's consent to any waiver in respect of, any modification or amendment of,
any supplement to, or any other consent or approval under, any Operative
Document unless such consideration or benefit is offered ratably to all Lessors.
Section XVI.8 Counterparts. This Lease has been executed in several
------------
numbered counterparts. Only the counterpart designated as "Counterpart No. 1"
shall evidence a monetary obligation of Lessee or shall be deemed to be an
original or to be chattel paper for purposes of the UCC, and such copy shall be
held by Agent.
64
<PAGE>
Section XVI.9 Severability. Whenever possible, each provision of this
------------
Lease shall be interpreted in such manner as to be effective and valid under
Applicable Law; but if any provision of this Lease shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Lease.
Section XVI.10 Successors and Assigns. This Lease shall be binding upon
----------------------
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
Section XVI.11 No Third-Party Beneficiaries. Nothing in this Lease or the
----------------------------
other Operative Documents shall be deemed to create any right in any Person not
a party hereto or thereto (other than the permitted successors and assigns of
Lessors, Agent and Lessee), and such agreements shall not be construed in any
respect to be a contract in whole or in part for the benefit of any third party
except as aforesaid.
Section XVI.12 Brokers. None of the parties has engaged or authorized any
-------
broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker, finder, investment banker, agent or any
other like capacity in connection with this Lease or the transactions
contemplated hereby, except that Lessee has engaged Bank of America, N. A.
and/or an Affiliate thereof.
Section XVI.13 Captions; Table of Contents. Section captions and the table
---------------------------
of contents used in this Lease (including the Schedules and Exhibits hereto) are
for convenience of reference only and shall not affect the construction of this
Lease.
Section XVI.14 Schedules and Exhibits. The Schedules, Annexes and Exhibits
----------------------
hereto, along with all attachments referenced in any of such items, are
incorporated herein by reference and made a part hereof.
Section XVI.15 Submission to Jurisdiction. Any suit by Agent or any Lessor
--------------------------
to enforce any claim arising out of the Operative Documents may be brought in
any state or Federal court located in New York having subject matter
jurisdiction, and with respect to any such claim, each party to this Lease
hereby irrevocably: (a) submits to the non-exclusive jurisdiction of such
courts; and (b) consents to the service of process out of said courts by mailing
a copy thereof, by registered mail, postage prepaid, return receipt requested,
to such party at its address specified in this Lease, and agrees that such
service, to the fullest extent permitted by law: (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding; and (ii) shall be taken and held to be valid personal service upon
and personal delivery to it. Lessee irrevocably waives, to the fullest extent
permitted by law: (A) any claim, or any objection, that it now or hereafter may
have, that venue is not proper with respect to any such suit, action or
proceeding brought in such a court located in New York including, without
limitation, any claim that any such suit, action or proceeding brought in such
court has been brought in an inconvenient forum; and (B) any claim that Lessee
is not subject to personal jurisdiction or service of process in such forum.
65
<PAGE>
Lessee agrees that any suit to enforce any claim arising out of the Operative
Documents or any course of conduct or dealing of Agent or any Lessor shall be
brought and maintained in any state or Federal court located in New York.
Nothing in this Section 16.15 shall affect the right of Agent or any Lessor to
-------------
bring any action or proceeding against Lessee or any Unit or other Collateral in
the courts of any other jurisdiction. Agent, each Lessor, and Lessee each
agrees that a final judgment in any action or proceeding in a state or Federal
court within the United States may be enforced in any other jurisdiction by suit
on the judgment or in any other manner provided by law.
Section XVI.16 Jury Trial. EACH OF LESSEE, EACH LESSOR AND AGENT WAIVES
----------
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS LEASE OR ANY OTHER OPERATIVE DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS LEASE OR ANY OTHER OPERATIVE
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
Section XVI.17 Confidentiality. Each Lessor and the Agent agrees, and
---------------
agrees to cause its Affiliates, to maintain the confidentiality of all
information provided to it by Lessee or any Subsidiary or Affiliate of Lessee,
or by the Agent, on Lessee's or such Subsidiary's or Affiliate's behalf, or
obtained by a Lessor pursuant to such Lessor's exercise of its rights under this
Lease or any other Operative Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with the enforcement of
this Lease and the other Operative Documents, except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Lessor or the Agent, or (ii) was or becomes
available on a non-confidential basis from a source other than Lessee or its
Subsidiary or Affiliates (but only to the extent applicable to such Subsidiary
or Affiliate), provided that such source is not bound by a confidentiality
agreement with the Lessee or such Subsidiary or Affiliate known to the Lessor or
the Agent; provided, however, that any Lessor or the Agent may disclose such
-------- -------
information (A) at the request or pursuant to any requirement of any Authority
to which the Lessor or the Agent is subject or in connection with an examination
of such Lessor or the Agent by any such authority; (B) pursuant to subpoena or
other court process; provided, however, that, if not prohibited by law, such
-------- -------
Lessor or the Agent shall use its best efforts to provide prompt notice to
Lessee of receipt of such subpoena prior to delivering such information in
response; (C) when required to do so in accordance with the provisions of any
Applicable Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent, any Lessor, or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Operative Document;
(F) to such Lessor's or the Agent's independent auditors and other professional
advisors; and (G) to any assignee (but not to any Competitor), provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Lessor hereunder.
66
<PAGE>
[remainder of page intentionally left blank]
67
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
LEVI STRAUSS & CO. FIRST SECURITY BANK
as Lessee as Agent (and in its individual
capacity where specifically indicated):
By:_________________________________
Name:_______________________________ By:__________________________________
Title:______________________________ Name:________________________________
Title:_______________________________
Address:
1155 Battery Street Address:
San Francisco, California 94111 _____________________________________
Attention:___________________________ _____________________________________
Attention:___________________________
_____________________________________
_____________________________________
Facsimile:___-___-____
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURE PAGE FOR LESSORS]
ORIX USA CORPORATION, HELLER FINANCIAL LEASING, INC.
a_________________________________, a________________________________,
as Lessor as Lessor
By:_______________________________ By:______________________________
Name:_____________________________ Name:____________________________
Title:____________________________ Title:__________________________
DIME COMMERCIAL CORP., GENERAL ELECTRIC CAPITAL
a_________________________________, BUSINESS ASSET FUNDING
as Lessor CORPORATION,
a________________________________,
By:_______________________________ as Lessor
Name:_____________________________
Title:____________________________ By:______________________________
Name:____________________________
Title:__________________________
<PAGE>
SCHEDULE I TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
LIST OF AGENT AND LESSORS; ADDRESSES FOR NOTICES AND PAYMENTS
-------------------------------------------------------------
1. Agent
-----
FIRST SECURITY BANK, NATIONAL ASSOCIATION
Address for all communications (except wire transfers):
FIRST SECURITY BANK, NATIONAL ASSOCIATION
Attention: Corporate Trust Services
79 South Main Street
Salt Lake City, Utah 84111
Facsimile: 801/246-5053
Address for wire transfers:
Account
Information:
ABA
Routing #: 124-0000-12
Account #: 051-092215
Levi Strauss Acct. #: 36088
2. Lessors
-------
ORIX USA CORPORATION
Address for all communications (except wire transfers):
Orix USA Corporation
550 South Hope Street, Suite 1600
Los Angeles, CA 90071
Attn: Leroy Onishi
Facsimile: 213/955-6530
3
<PAGE>
Address for wire transfers:
Bank: The Sanwa Bank of California
Los Angeles, California
ABA
Routing #: 122003516
Account #: 5106-0278
Reference: Levi Strauss & Co.
DIME COMMERCIAL CORP.
Address for all communications (except wire transfers):
Dime Commercial Corp.
1180 Avenue of the Americas, 5th Floor
New York, New York 10036
Attn: Michael E. Evans
Facsimile: 212/382-8349
Address for wire transfers:
Bank: Federal Reserve Bank of New York
New York, New York
ABA
Routing #: 226070296
Account #: 2062160000 977
Reference: Levi Strauss & Co.
HELLER FINANCIAL LEASING, INC.
Address for all communications (except wire transfers):
Heller Financial Leasing, Inc.
71 Stevenson Street, Suite 2000
San Francisco, California 94105
Attn: Kevin Donovan
Facsimile: 415/356-1335
4
<PAGE>
Address for wire transfers:
Bank: Bank of America
Chicago, Illinois
ABA
Routing #: 071-000-039
Account #: 8188801273
Reference: Levi Strauss & Co.
GENERAL ELECTRIC CAPITAL BUSINESS ASSET FUNDING CORPORATION
Address for all communications (except wire transfers):
General Electric Capital Business Asset Funding Corporation
10900 N.E. 4th Street, Suite 500
P.O. Box C-97550
Seattle, Washington 98004
Attn: Anne Bonn
Facsimile: 425/450-3584
Address for wire transfers:
Bank: Bankers Trust Company
New York, New York
ABA
Routing #: 21001033
Account #: 50-261-508
Reference: Levi Strauss & Co.
5
<PAGE>
SCHEDULE II TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
DESCRIPTION OF EQUIPMENT:
-------------------------
The "Equipment" means the personal property and fixtures described on Attachment
---------
1 to this Schedule II, wherever located from time to time, all of which is
currently located at the real property commonly known as (i) the Hebron Customer
Service Center, 3750 North Bend Road (Route 237 at Connor Road), Hebron,
Kentucky 41048, (ii) the Canton Customer Service Center, 501 Denim Way (I-55 at
Gluckstadt Rd.), Canton, Mississippi 39046, and (iii) the Sky Harbor Customer
Service Center, 501 Executive Airport Drive (just east of I-15, south of Las
Vegas), Henderson, Nevada 89012 (each of which is legally and more particularly
described below), to the extent any such personal property and fixtures comprise
the integrated, automated distribution warehouse storage and stock selection
system, consisting of, but not being limited to, conveyor systems, sorting
equipment, rotating storage structure units, inspection and work stations, and
bulk storage rack systems, used by Lessee to sort, package and ship its products
to its customers, together with any and all replacements or substitutions of
such personal property and fixtures made at any time pursuant to that certain
Lease Intended as Security dated as of December 3, 1999 (the "Lease") among
-----
Lessee, Secured Party (as Agent for the Lessors (as defined therein)), and the
Lessors thereunder, excluding, however, any items set forth on such Attachment 1
---------
which are also set forth on Attachment 2 to this Schedule II.
[legal descriptions to be attached]
1
<PAGE>
SCHEDULE III TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
PAYMENT SCHEDULES
-----------------
2
<PAGE>
SCHEDULE 2.10 TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
PRO-FORMA AMORTIZATION SCHEDULE
-------------------------------
<PAGE>
SCHEDULE 12.1(b) TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
RECORDINGS, FILINGS AND GOVERNMENTAL PERMITS
--------------------------------------------
1. Kentucky
a. Boone County Clerk
i. financing statement
ii. fixture filing
b. Franklin County Clerk - financing statement
c. Secretary of State - financing statement
2. Mississippi
a. Madison County Clerk - fixture filing
b. Secretary of State - financing statement
3. Nevada
a. Clark County Recorder - fixture filing
b. Secretary of State - financing statement
4. California - Secretary of State
<PAGE>
SCHEDULE 12.1(k) TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
LIST OF PATENTS, PATENT RIGHTS, TRADEMARKS, SERVICE MARKS,
----------------------------------------------------------
TRADE NAMES, COPYRIGHTS, LICENSES AND OTHER
-------------------------------------------
INTELLECTUAL PROPERTY RIGHTS
----------------------------
None
<PAGE>
EXHIBIT A TO LEASE INTENDED
AS SECURITY DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
FORM OF FUNDING DATE CERTIFICATE AND
CONDITION OF COLLATERAL CERTIFICATE
-----------------------------------
___________ __, 199_
TO: Agent and the Lessors, pursuant to that certain Lease Intended as
Security (the "Lease"), dated December 3, 1999 among: LEVI
-----
STRAUSS & CO., a Delaware corporation ("Lessee"); the
------
Persons identified on Schedule I thereto as the "Lessors";
-------
and FIRST SECURITY BANK, a national banking association, as
agent ("Agent"; all capitalized terms used herein without
-----
definition shall have the meaning assigned to such terms in
the Lease).
FROM: Lessee
REGARDING: Funding Date and Condition of Collateral
1. The Funding Date was ____________ __, 199_ at [THE OFFICES OF MAYER, BROWN
& PLATT, _________________________________________] at 9:00 a.m.
2. The Equipment in which the Security Interest was granted is identified on
Schedule I hereto.
----------
3. The aggregate Funded Amount to be advanced for the Security Interest in the
Collateral identified on Schedule I hereto is [$________________________],
----------
which Funded Amount is to be paid out of Funding.
4. The Collateral is leased by the Lessee for all purposes of the Lease in its
"as is," present condition as set forth in Section 2.6 of the Lease.
5. All of the Collateral is subject to and shall be governed by all of the
provisions of the Lease.
6. The Collateral is in good operating order, repair, condition and appearance
and Lessee has no knowledge of any material defect therein with respect to
design, manufacture, condition (reasonable wear and tear excepted) or in
any other respect.
The Funded Amount shall be sent by wire transfer to Lessee at the account
set forth on Schedule II hereto.
-----------
LEVI STRAUSS & CO.
By:_______________________________________
Name Printed:_____________________________
Title:____________________________________
1
<PAGE>
SCHEDULE I TO EXHIBIT A
TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
Description of Equipment:
- ------------------------
The "Equipment" means the personal property and fixtures described on Attachment
---------
1 to this Schedule II, wherever located from time to time, all of which is
currently located at the real property commonly known as (i) the Hebron Customer
Service Center, 3750 North Bend Road (Route 237 at Connor Road), Hebron,
Kentucky 41048, (ii) the Canton Customer Service Center, 501 Denim Way (I-55 at
Gluckstadt Rd.), Canton, Mississippi 39046, and (iii) the Sky Harbor Customer
Service Center, 501 Executive Airport Drive (just east of I-15, south of Las
Vegas), Henderson, Nevada 89012 (each of which is legally and more particularly
described below), to the extent any such personal property and fixtures comprise
the integrated, automated distribution warehouse storage and stock selection
system, consisting of, but not being limited to, conveyor systems, sorting
equipment, rotating storage structure units, inspection and work stations, and
bulk storage rack systems, used by Lessee to sort, package and ship its products
to its customers, together with any and all replacements or substitutions of
such personal property and fixtures made at any time pursuant to that certain
Lease Intended as Security dated as of December 3, 1999 (the "Lease") among
-----
Lessee, Secured Party, as Agent for the Lessors (as defined therein), and the
Lessors thereunder, excluding, however, any items set forth on such Attachment 1
---------
which are also set forth on Attachment 2 to this Schedule II.
[legal descriptions to be attached]
1
<PAGE>
SCHEDULE II TO EXHIBIT A
TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
Wire transfer instructions for payment of Funded Amount:
- -------------------------------------------------------
Citibank, N.A.
New York, NY
ABA Routing:0210-0008-9
Account: 0010-9292
Payee: Levi Strauss & Co.
<PAGE>
EXHIBIT B TO LEASE INTENDED AS SECURITY
DATED AS OF DECEMBER 3, 1999
FORM OF OPINION OF LESSEE'S COUNSEL
December 3, 1999
_________________
_________________
_________________
_________________
Re: Levi Strauss & Co. Lease Intended As Security
Gentlemen:
[I am General Counsel of / we are special counsel to] Levi Strauss & Co., a
Delaware corporation ("Lessee"). [I / we] have examined and are familiar with
------
originals of or copies identified to [my / our] satisfaction of the Lease
Intended as Security, dated as of December 3, 1999 (the "Lease"), among Lessee,
-----
First Security Bank, a national banking association ("Agent"), not in its
individual capacity except as specifically set forth in the Lease, but solely in
its capacity as Agent therein, the Persons listed in Schedule I thereto, as
lessors (each a "Lessor" and collectively the "Lessors"; provided that no such
------ ------- --------
reference shall be deemed to refer to any Person who is not a holder of a
Certificate at the date of determination, each of the other Operative Documents,
and such other documents and proceedings as [I / we] have considered necessary
for the purpose of rendering this opinion. In addition, [I / we] have examined
and are familiar with such other legal and factual matters as [I / we] have
deemed necessary for the purpose of rendering this opinion. Capitalized terms
used in this opinion and not otherwise defined herein shall have the respective
meanings specified in Article I of the Lease. This opinion is being furnished
to you at the request of Lessee pursuant to Sections 3.1(g) and 3.2(e) of the
Lease.
In rendering this opinion [I / we] have assumed: (a) the genuineness of
the signatures on all documents and instruments (other than the signatures of
officers of Lessee on the Operative Documents to which Lessee is a party), the
authenticity of all documents submitted as originals, and the conformity to
originals of all documents submitted as photostatic or certified copies; and (b)
that the Operative Documents constitute the legal, valid and binding obligations
of the respective parties thereto, if any, other than Lessee.
Based upon and subject to the foregoing, [I am / we are] of the opinion
that:
1
<PAGE>
1. Lessee is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to conduct its business as presently conducted, to own, grant or
hold under lease its properties, to enter into and perform its obligations under
the Operative Documents to which it is a party, and is duly qualified as a
foreign corporation authorized to do business and is in good standing in every
other jurisdiction in which its failure to be so qualified would have a Material
Adverse Effect or prevent the enforcement of contracts to which Lessee is a
party.
2. Lessee has all requisite corporate power and authority to execute,
deliver, and perform its obligations under each Operative Document to which it
is a party.
3. The execution and delivery by Lessee of, the consummation by Lessee of
the transactions provided for in, and the compliance by Lessee with all of the
provisions of, each Operative Document to which it is a party have been duly
authorized by all necessary corporate action on its part; and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby (including, without limitation, the granting of the
Security Interest to Agent and the operation of the Equipment), nor compliance
by Lessee with any of the terms and provisions thereof (i) requires any approval
of the stockholders of Lessee, or approval or consent of any trustee or holder
of any of Lessee's indebtedness or obligations; (ii) contravenes or will
contravene any Applicable Laws currently in effect applicable to or binding upon
Lessee or the Collateral; (iii) conflicts with, results in any breach of or
constitutes any default under, or results in the creation of any Lien (other
than the respective rights and interest of Lessee, Lessors or Agent as provided
in the Operative Documents) upon any of Lessee's property under, (A) any
indenture, mortgage, chattel mortgage, deed of trust, lease, conditional sales
contract, loan or credit arrangement or other material agreement or instrument
by which Lessee or any of its respective properties may be bound or by which the
Collateral may be materially adversely affected, (B) Lessee's corporate charter
or (C) Lessee's by-laws; or (iv) requires or will require any Governmental
Action to perfect the right of Lessors and Agent intended to be created by the
Operative Documents.
4. Each Operative Document to which Lessee is a party has been duly
executed and delivered by Lessee and constitutes its legal, valid and binding
obligation, enforceable against Lessee in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and by general equitable
principles.
5. There is no action, proceeding or investigation pending or, to the
best of [our / my] knowledge, threatened which questions the validity of the
Operative Documents to which Lessee is a party or any action taken or to be
taken pursuant thereto; nor is any action, proceeding or investigation pending
or, to the best of [my / our] knowledge, threatened which is reasonably likely
to result, either in any case or in the aggregate, in a Material Adverse Effect.
2
<PAGE>
6. No authorizations, consent, approval, license or formal exemption
from, nor any filing, declaration or registration with, any Authority (other
than approval of the Board of Directors of Lessee which has been obtained prior
to the date hereof) is or will be required in connection with the execution and
delivery by Lessee of the Operative Documents, or the performance by Lessee of
its obligations under such Operative Documents or the ownership, operation and
maintenance of the Collateral as contemplated by the Operative Documents.
7. Lessee is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The proceeds of the sale of the Collateral and the issuance of the
Certificates, if used in accordance with the terms of the Operative Documents,
will not result in a violation of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
8. Lessee is not subject to regulation as a "holding company," an
"affiliate" of a "holding company," or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
9. The registration of the Certificates or the interests of the Lessors
under the Securities Act of 1933, as amended, is not required under the
circumstances contemplated by the Lease, and no qualification of an indenture in
respect of such Certificates or interests under the Trust Indenture Act of 1939,
as amended, is required in connection therewith.
10. The Lease and other Operative Documents create valid security
interests under the UCC in favor of the Agent for the benefit of the Lessors, as
security for payment of each Lessee's obligations under the Lease, in all of
Lessee's right, title and interest in and to the Collateral.
11. Neither Agent nor any Lessor will become (i) solely by reason of
entering into the Lease or the consummation of the transactions contemplated
thereby (other than upon the exercise of remedies under the Lease or upon the
expiration thereof) subject to ongoing regulation of its operations by any
Authority; or (ii) except for regulation the applicability of which depends upon
the existence of facts in addition to the ownership of, or the holding of any
interest in, the Collateral or any interest therein upon the exercise of
remedies under the Lease or upon the expiration thereof, subject to ongoing
regulation of its operations by any Authority.
12. Neither Agent nor any Lessor is required under the laws of the State
of __________ (the "State") to qualify as a foreign corporation, foreign trust
-----
company or otherwise in the State solely as a result of its execution, delivery
and performance of the Lease. Agent is eligible to act as a fiduciary in the
State.
13. Each UCC financing statement is in proper form for filing, and upon
the filing of such financing statements with the offices listed on Schedule A
hereto, the security interest of Agent, on behalf of the Lessors, in all the
Collateral will be perfected to the extent that a security interest
3
<PAGE>
in such Collateral may be perfected by so filing, and the description of such
Collateral therein is adequate. No other filing, recordation or registration is
necessary in order to perfect Agent's security interest in such Collateral.
14. Except for statutory filing and recording fees payable in connection
with the registration of the Collateral or the filing of any lien on the
Collateral, no state or local recording tax, transfer tax, stamp tax or other
fee, tax or governmental charge, including, without limitation, sales tax, is
required to be paid by Lessee, Agent, or Lessors to any taxing Authority in
connection with the execution, delivery, filing or recording of any of the
Operative Documents or the transactions contemplated by the Operative Documents,
nor will Lessee, Agent or any Lessor be required to collect or withhold any such
fee, tax or governmental charge.
15. The payment by Lessee and the receipt by Agent, for the benefit of the
Lessors, of the Basic Rent, Supplemental Rent and all other amounts, fees or
interest due and payable under the Lease and the other Operative Documents and
any transactions described therein, and any interest rate cap fee paid or
payable to the Lessors or their Affiliates, are not usurious under or otherwise
in violation of the laws of the State of ___________.
16. No state or local recording tax, transfer tax, stamp tax or other
similar fee, tax or governmental charge, including, without limitation, sales
tax, is required to be paid to the State of ______________ or any political
subdivision thereof in connection with the execution, delivery, filing or
recording of the Operative Documents, other than statutory filing and recording
fees that are to be paid upon the filing and recording, as applicable, of the
UCC-1 Financing Statement and Fixture Filing filed in connection with the
transactions contemplated by the Operative Documents and transfer taxes that are
to be paid by Lessee upon the transfer of the Collateral on any Funding Date.
17. The express choice of law of the State of New York to govern the Lease
is enforceable and will be recognized by __________ courts.
This opinion is solely for your and your counsel's benefit and may not be
relied upon by, and copies may not be delivered to, any other person without our
prior approval.
Very truly yours,
4
<PAGE>
EXHIBIT C TO LEASE INTENDED
AS SECURITY DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
FORM OF CERTIFICATE
-------------------
THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES OR "BLUE SKY" LAW,
AND MAY NOT BE TRANSFERRED, SOLD OR OFFERED
FOR SALE EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR LAWS OR PURSUANT TO AN
AVAILABLE EXEMPTION. THIS CERTIFICATE MAY NOT BE
TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE SOLD OR
CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF
THE LEASE REFERRED TO BELOW.
Commitment: $___________________
Investment Percentage __%
R- ______ Date: ____________ __, 199_
To: _____________________
_____________________
_____________________
_____________________
This Certificate evidences the right of ____________________, a
_______________ ("Lessor"), and its registered assigns pursuant to Section 14.1
------------
of the Lease hereinafter referred to, to receive the amounts of rent and other
distributions described on Attachment 1 attached hereto and made a part hereof,
at the times set forth on Attachment 1, and Supplemental Rent, in the manner
specified in that certain Lease Intended as Security, dated as of December 3,
1999, among LEVI STRAUSS & CO., a Delaware corporation ("Lessee"), FIRST
SECURITY BANK, a national banking association, as Agent, and certain
institutions listed on Schedule I thereto, as Lessors (as from time to time
amended or supplemented, the "Lease"). This Certificate also evidences that
Lessor is a "Lessor" for all purposes of (and as defined in) the Lease, with all
rights attendant to such
<PAGE>
status, including the benefit of the representations, warranties and covenants
of Lessee under the Lease and with all obligations attendant to such status.
The Lessor holding this Certificate shall be entitled to receive a portion
of each payment of Rent, Lease Balance, Administrative Charge, and interest
payable by Lessee pursuant to the Lease as set forth in such Lessor's Payment
Schedule.
Any transfer of this Certificate is subject to the procedures set forth in
Article XIV of the Lease.
- -----------
This Certificate is one of the Certificates referred to in, and evidences
obligations of the Lessee under, the Lease, to which reference is made for a
statement of the terms and conditions hereof. Capitalized terms used herein
without definition shall have the meanings provided in the Lease.
THIS CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS
OF SUCH STATE.
LEVI STRAUSS & CO.
By:___________________________________________
Title:________________________________________
<PAGE>
ATTACHMENT 1
------------
Rental Rental Rental
Payment Payment Payment Lease
Number Date Amount Balance
- ------ ---- ------- -------
<PAGE>
EXHIBIT D TO LEASE INTENDED
AS SECURITY DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
FORM OF OFFICER'S CERTIFICATE OF LESSEE
---------------------------------------
Pursuant to the Lease Intended as Security, dated as of December 3, 1999 (the
"Lease"), among LEVI STRAUSS & CO., a Delaware corporation ("Lessee"), FIRST
SECURITY BANK, a national banking association, as Agent, and the several Lessors
listed on Schedule I thereto, I, _______________________, ______________________
of Lessee, do hereby certify as follows (capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Lease):
The representations and warranties of Lessee contained in the Lease are true on
and as of the date hereof with the same effect as if such representations and
warranties had been made on and as of the date hereof; Lessee has performed all
agreements on its part required to be performed under the Lease and the other
Operative Documents on or prior to the date hereof; and there exists on the date
hereof no Incipient Default or Event of Default.
IN WITNESS WHEREOF, I have signed my name this ___ day of December, 1999.
LEVI STRAUSS & CO.
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
<PAGE>
EXHIBIT E TO LEASE INTENDED
AS SECURITY DATED AS OF DECEMBER 3, 1999
(LEVI STRAUSS & CO.)
FORM OF SECRETARY'S CERTIFICATE OF LESSEE
-----------------------------------------
THE UNDERSIGNED ________________________________, [Assistant] Secretary
of Levi Strauss & Co., a Delaware corporation ("Lessee"), pursuant to that
certain Lease Intended as Security, dated as of December 3, 1999 (the "Lease"),
among Lessee, FIRST SECURITY BANK, a national banking association, as Agent, and
the Persons listed on Schedule I thereto, does hereby certify as follows
(capitalized terms used herein shall have the meanings ascribed thereto in the
Lease):
1. Attached hereto as Exhibit A is a true and complete copy of
Lessee's Certificate of Incorporation as amended and in effect on
the date hereof, certified by the Secretary of State of the State
of Delaware.
2. No proceeding for merger, consolidation, liquidation,
reorganization or dissolution of Lessee or the sale of all or
substantially all of its assets is pending or contemplated.
3. The copy of the By-laws of Lessee, attached hereto as Exhibit B,
is true and complete and such By-laws have been in full force and
effect since __________________ without modification or
amendment.
4. Attached hereto as Exhibit C are true and correct copies of all
resolutions adopted by the Board of Directors and stockholders of
Lessee relating to the Lease and the other Operative Documents,
which resolutions have not been amended or rescinded and are in
full force and effect on the date hereof.
5. The form of Lease (together with all Exhibits thereto), attached
hereto as Exhibit D, is substantially in the form approved by or
pursuant to authorization by the Board of Directors of Lessee.
6. The following persons are on the date hereof duly qualified and
acting officers of Lessee, duly elected or appointed to the
offices set forth beside their respective names and signatures,
and each such person who, as an officer of Lessee, signed the
Lease, the Certificates representing interests in the Lease, any
of the other Operative Documents or any other document delivered
prior hereto or on the date hereof in connection with such
agreements and documents and the transactions contemplated
therein was, at the respective times of such signing and delivery
and is now duly
2
<PAGE>
elected or appointed, qualified and acting as such officer, and
the signatures of such persons appearing on such documents are
their genuine signatures:
3
<PAGE>
NAME OFFICE SIGNATURE
- ---- ------ ---------
- ------------- --------------- ----------------
- ------------- --------------- ----------------
- ------------- --------------- ----------------
IN WITNESS WHEREOF, I have signed my name this ___ day of December, 1999.
LEVI STRAUSS & CO.
By:____________________________________________
Name Printed:__________________________________
Title: [Assistant] Secretary
-------------------------
I, ___________________________, _________________________ of Lessee,
hereby certify that _____________________________ is on the date hereof the duly
elected, qualified and acting [Assistant] Secretary of Lessee, and that the
signature set forth above is such person's true and correct signature.
Dated: December __, 1999.
LEVI STRAUSS & CO.
By:_______________________________________________
Name Printed:_____________________________________
Title:____________________________________________
3
<PAGE>
EXHIBIT 9
VOTING TRUST AGREEMENT
This VOTING TRUST AGREEMENT ("Agreement") is entered into as of April 15,
1996, by and among ROBERT D. HAAS, PETER E. HAAS, SR., PETER E. HAAS, JR. AND F.
WARREN HELLMAN, as the voting trustees (each of whom, in such capacity and with
his successor(s) being hereinafter referred to as a "Voting Trustee"), and the
stockholders of LSAI HOLDING CORP., a Delaware corporation (the "Company") who
are parties hereto (hereinafter referred to individually as a "Stockholder" and
collectively as the "Stockholders"), as identified and listed on a certificate
attested to by the Secretary of the Company and maintained with the permanent
records of the Company on behalf of the Voting Trustees (the "Certificate").
RECITALS
WHEREAS, upon the consummation (the "Closing") of the transactions
contemplated by the Stock Subscription Agreement dated as of January 25, 1996
between each of the Stockholders and the Company (each, a "Stock Subscription
Agreement" and collectively, the "Stock Subscription Agreements") the
Stockholders will be the record and beneficial owners of shares of common stock,
par value $0.01 per share, of the Company (the "Common Stock"), with the number
of shares of Common Stock held by each Stockholder being set forth on the
Certificate;
WHEREAS, LSAI Acquisition Corp., a Delaware corporation and a direct wholly
owned subsidiary of the Company ("Acquisition"), the Company, and Levi Strauss
Associates Inc., a Delaware corporation ("LSAI"), have entered into an Agreement
and Plan of Merger, dated as of February 8, 1996 (the "Merger Agreement"),
providing, among other things, for the merger (the "Merger") of Acquisition with
and into LSAI; and
WHEREAS, the Voting Trustees and the Stockholders believe it advisable, in
order to provide for the long-term, stable and consistent ownership and
governance of the Company, to deposit the shares of Common Stock to be issued to
the Stockholders under the Stock Subscription Agreements with the Voting
Trustees, creating a Voting Trust (the "Trust") on the terms and conditions
hereinafter set forth, and for the initial and successor Voting Trustees to
share a common vision of the Company, to represent and reflect the financial and
other interests of the Stockholders and to bring a balance of perspectives to
the Voting Trustees as a whole (the term "Shares", as used in this Agreement,
shall include, in addition to the shares of Common Stock originally deposited
with the Voting Trustees pursuant to Article II hereof, all additional shares of
Common Stock and other securities of the Company or any successor or successors
of the Company deposited with the Voting Trustees pursuant to Section 3.3 or
Article VIII hereof or retained by the Voting Trustees pursuant to Article X
hereof).
NOW THEREFORE, in consideration of the premises and of the representations,
warranties and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
FILING; INSPECTION
1.1. Filing of Agreement with the Company; Availability for Inspection by
Stockholders. Copies of counterparts of this Agreement, signed by each of the
Stockholders, and of every
<PAGE>
agreement supplemental to this Agreement or amending this Agreement, shall be
filed in the principal office of the Company, which immediately following the
effective time of the Merger shall be located at Levi's Plaza, 1155 Battery
Street, San Francisco, California 94111 and in the registered office of the
Company in the State of Delaware, and shall be open to reasonable inspection by
any Stockholder. The "Voting Trust Certificates" (as defined in Section 3.1)
issued as provided in this Agreement shall be issued, received and held subject
to all of the terms of this Agreement, the respective Stock Subscription
Agreements executed by the Stockholders pursuant to which such Stockholders
acquired their Shares and a Stockholders' Agreement dated of even date herewith
executed by the Company and the Stockholders (the "Stockholders' Agreement").
ARTICLE II
TRANSFER OF SHARES TO VOTING TRUST
2. 1. Transfer of Shares. Effective as of the Closing, each of the
Stockholders hereby directs Thomas J. Bauch and Nenita Sobejana, as their
agents, to deposit with the Voting Trustees (or with a national bank or other
bank with capital of at least $100,000,000 designated by the Voting Trustees
from time to time (the "Custodian")) such Stockholder's Shares, by causing the
Company to deliver to the Voting Trustees (or Custodian, if any) a certificate
(or certificates) representing the Shares purchased by, and issued in the name
of, such Stockholder under the applicable Stock Subscription Agreement, together
with appropriate stock powers transferring such certificate(s) to the Voting
Trustees, with any requisite stock transfer stamps annexed thereto. The
Stockholders and the Voting Trustees (or Custodian, if any) shall take (or shall
cause the Company to take) such action as is necessary to effect the transfer of
the Shares to, and in the name of, the Voting Trustees on the books of the
Company, including the immediate filing of this Agreement with the Secretary of
the Company. The certificate(s) for Shares so transferred and delivered to the
Voting Trustees pursuant to this Agreement shall be surrendered by the Voting
Trustees to the Company's Secretary or transfer agent, if any, and cancelled,
and a new certificate (or certificates) therefor shall be issued to and held by
the Voting Trustees in the names of "Robert D. Haas, Peter E. Haas, Sr., Peter
E. Haas, Jr. and F. Warren Hellman, as Voting Trustees". Upon receipt by the
Voting Trustees of the certificate(s) for Shares and upon the transfer of the
Shares into the name of the Voting Trustees, the Voting Trustees shall hold the
Shares, as stockholders of record, subject to the terms and conditions of this
Agreement.
2.2. Custodian May Administrate. The Voting Trustees may designate a
Custodian to assist the Voting Trustees in connection with the administration of
transfer and voting procedures for Shares and Voting Trust Certificates under
this Agreement. If a Custodian is designated by the Voting Trustees, such person
shall have no power to make voting or investment decisions with respect to the
Shares, but shall only be empowered, at the direction of the Voting Trustees, to
make necessary arrangements for the voting or transfer of Shares and Voting
Trust Certificates in a manner consistent with this Agreement.
ARTICLE III
ISSUANCE AND TRANSFER OF
VOTING TRUST CERTIFICATES
<PAGE>
3.1. Issuance of Certificates. Promptly after the Closing, the Voting
Trustees shall issue (or cause to be issued by the Custodian, if any) to each
Stockholder, in exchange for the Shares delivered by such Stockholder or such
Stockholder's agent on his or her behalf pursuant to this Agreement, a Voting
Trust Certificate(s) substantially in the form annexed as Exhibit A hereto (the
"Voting Trust Certificate(s)"), representing in the aggregate the number of
Shares purchased by the respective Stockholder pursuant to the applicable Stock
Subscription Agreement. Except as otherwise specifically provided in this
Agreement (including, without limitation, Articles IV, VIII and X), all options,
rights of purchase, and other powers, privileges and limitations thereof
affecting the Shares represented by the Voting Trust Certificates (including,
without limitation, those provided for in the Stockholders' Agreement relating
to, among other things, restrictions upon transfers of Shares) shall attach to
the Voting Trust Certificates.
3.2. Shares and Voting Trust Certificates Transferred as a Unit. Shares and
Voting Trust Certificates are necessarily linked and cannot be transferred
separately. Any transfer of Voting Trust Certificates shall be deemed to effect
a transfer of the underlying Shares, and any transfer of Shares with respect to
which Voting Trust Certificates have been issued shall be deemed to effect a
transfer of such Voting Trust Certificates.
3.3. Transfer Restrictions. No sale, assignment, gift, pledge or other
encumbrance, or other transfer or similar transaction (collectively "Transfer")
of Voting Trust Certificates or the related Shares, will be effective,
recognized by the Company or the Voting Trustees or recorded on the books and
records of the Company and on the Certificate unless (a) the intended transferee
in such Transfer first becomes a party to this Agreement and (b) the provisions
of the Stockholders' Agreement relating to Transfers are duly complied with. All
Stockholders agree to be bound by this Agreement with respect to any Voting
Trust Certificates or the related Shares acquired after the date hereof, and all
Stockholders further agree to transfer any shares of Common Stock acquired after
the date hereof to the Voting Trustees in exchange for Voting Trust Certificates
and to be bound by this Agreement with respect thereto. In the case of (i)
Transfers of Voting Trust Certificates or the related Shares by Stockholders or
(ii) issuances of shares of Common Stock by the Company, in each case to persons
who are not Stockholders (and hence at such time are not parties to this
Agreement), such Transfers or issuances will be recognized and recorded on the
books and records of the Company and on the Certificate only after appropriate
documentation in a form satisfactory to the Voting Trustees has been executed
and the transferee has thereby agreed to become bound by this Agreement (it
being understood that without such documentation the Company and the Voting
Trustees shall recognize only the original transferor as the beneficial owner
and/or record holder, as the case may be, of any Voting Trust Certificates and
related Shares affected by such purported Transfer). It is intention of the
Voting Trustees that the Company will issue no shares of Common Stock subsequent
to the Closing unless such shares are subject to this Agreement or this
Agreement is amended pursuant to Section 14.4 hereof by the vote of holders of
Voting Trust Certificates representing at least two-thirds of the then
outstanding Shares to accommodate the existence of shares of Common Stock
outside the Voting Trust Agreement.
ARTICLE IV
AUTHORITY OF VOTING TRUSTEES TO VOTE
THE SHARES; POWERS RESERVED FOR STOCKHOLDERS
<PAGE>
4.1. General. The Voting Trustees shall hold the Shares transferred to
them pursuant to Articles II, III, VIII and X and Section 14.1 of this Agreement
under the terms and conditions set forth in this Agreement. Except as expressly
provided by this Agreement (including Sections 4.2 and 4.3 hereof), for as long
as any of the Shares are subject to this Agreement, and until the actual
delivery by the Voting Trustees (or Custodian, if any), to the Stockholders
owning such Shares, of stock certificates in exchange for Voting Trust
Certificates pursuant to Section 13.3 of this Agreement, the Voting Trustees
shall have full power and authority, and are hereby fully and exclusively
empowered and authorized, to vote in person or by proxy the Shares deposited
pursuant to this Agreement and transferred to them (including any changed or
additional Shares, as provided in Article III, VIII or X hereof) at all meetings
of the stockholders of the Company or to give written consents in lieu of voting
such Shares in respect of any and all matters on which Shares are entitled to
vote.
4.2. Certain Powers Reserved for Holders of Voting Trust Certificates. (a)
Notwithstanding the provisions of Section 4.1 hereof, the holders of Voting
Trust Certificates, and not the Voting Trustees, shall have the exclusive right
to direct the Voting Trustees with respect to the voting of, and the exercise of
appraisal rights (if the Voting Trustees would, under applicable law, be
entitled as record holders to such appraisal rights in the event they were to
vote against the proposed matter) or rights to consent with respect to, the
Shares underlying such Voting Trust Certificates, on the following matters
("Pass-Through Voting Matters") and the Voting Trustees shall be absolutely
required to vote or not vote, such Shares in accordance with such instructions
on all such Pass-Through Voting Matters:
(i) any merger transaction in connection with which, in the absence
of this Agreement, the holders of shares of Common Stock, as the Company's
stockholders, would be entitled to vote under the Delaware General
Corporation Law as then in effect (it being understood that this provision
shall not require the Company or the Voting Trustees to structure any such
transaction in such a way that stockholders would be entitled to vote);
(ii) any sale by the Company of all or substantially all of its
assets in connection with which in the absence of this Agreement, the
holders of shares of Common Stock, as the Company's stockholders, would be
entitled to vote under the Delaware General Corporation Law as then in
effect (it being understood that this provision shall not require the
Company or the Voting Trustees to structure any such transaction in such a
way that stockholders would be entitled to vote);
(iii) any liquidation, dissolution or winding-up of the affairs of the
Company in connection with which in the absence of this Agreement, the
holders of shares of Common Stock, as the Company's stockholders, would be
entitled to vote under the Delaware General Corporation Law as then in
effect (it being understood that this provision shall not require the
Company or the Voting Trustees to structure any such transaction in such a
way that stockholders would be entitled to vote); and
(iv) any amendment to the Company's Certificate of Incorporation
which alters or changes the powers, preferences or rights of the shares of
Common Stock so as to affect the holders thereof adversely (it being
understood that the "holders" for this purpose shall include the holders of
Voting Trust Certificates).
<PAGE>
(b) In addition, notwithstanding the provisions of Section 4.1 hereof, the
holders of Voting Trust Certificates, and not the Voting Trustees, shall have
the exclusive right, in their capacity as such, to approve or disapprove the
following matters (the "Holder Approval Matters-): the matters specified in
Sections 6.1, 7.3, 13.1(c), 13.1(d), 13.2 and 14.4 hereof as matters requiring
the approval by the holders of Voting Trust Certificates representing at least
two-thirds of the outstanding Shares.
(c) The Stockholders, and not the Voting Trustees, shall, subject to the
provisions of the Stockholders' Agreement, the Company's Certificate of
Incorporation and Bylaws and any other applicable law, regulation or agreement,
have the sole power to Transfer their Shares, including, without limitation, to
the Company under the Company's estate tax policies or otherwise.
4.3. Procedures for Voting Directions, and Voting, by Holders of Voting
Trust Certificates.
(a) (i) The rights of holders of Voting Trust Certificates to direct the
Voting Trustees with respect to the voting of, and the exercise of
appraisal rights with respect to, the Shares underlying their Voting Trust
Certificates in connection with Pass-Through Voting Matters, shall be
exercised at a meeting of holders of Voting Trust Certificates called for
such purpose or by written consent in lieu of such a meeting. Such meeting
of, or action by written consent of, holders of Voting Trust Certificates,
shall also constitute a meeting of, or action by written consent of,
stockholders of the Company, as provided in this Section 4.3. At each
meeting at which a Pass-Through Voting Matter is to be acted upon, the
presence in person or by proxy of the holders of record of Voting Trust
Certificates shall be deemed to be the presence in person or by proxy of
the Voting Trustees with respect to the number of Shares represented by
such Voting Trust Certificates for purposes of holding a meeting of, and
conducting a vote of, stockholders of the Company. The quorum, meeting
conduct and voting requirements for action at a meeting of stockholders on
a Pass-Through Voting Matter shall be as specified in the Company's
Certificate of Incorporation and Bylaws, and as required by law for
meetings of stockholders generally, except as provided in Section
4.3(a)(iii) hereof. In the event such a vote occurs by written consent in
lieu of a meeting, consents of the Voting Trustees executed at the
direction of holders of Voting Trust Certificates representing the
percentage of the then outstanding shares of Common Stock necessary for the
taking of such action under applicable law and the Company's Certificate of
Incorporation and Bylaws shall be required.
(ii) The rights of holders of Voting Trust Certificates to approve or
disapprove the Holder Approval Matters shall be exercised at a meeting of
holders of Voting Trust Certificates called for such purpose or by written
consent in lieu of a meeting. In connection with any such meeting or action
by written consent, the presence in person or by proxy, or the written
consent of, holders of record of Voting Trust Certificates representing
two-thirds of the Shares then outstanding shall be necessary for approval
of such Holder Approval Matters.
(iii) Notwithstanding the foregoing, nothing in this Section 4.3 or
otherwise in this Agreement shall mean that there will be annual or other
periodic meetings of holders of Voting Trust Certificates. Any such
meetings shall be called (A) only when there is a Pass-Through Voting
Matter or a Holder Approval Matter which will not be acted upon by written
consent in lieu of a meeting and (B) only by the Voting Trustees unless, in
<PAGE>
accordance with Section 4.3(c) or 4.3(e) of this Agreement, the Voting
Trustees have failed to call a meeting and the holders of Voting Trust
Certificates have been specifically granted the right to request such a
meeting. The business to be conducted at any such meeting shall be limited
to one or more Pass-Through Voting Matters or Holder Approval Matters and
no holder of a Voting Trust Certificate shall have a right to raise other
business or submit other proposals for action by stockholders or by holders
of Voting Trust Certificates.
(b) For the taking of any action as provided in this Section 4.3 by the
holders of Voting Trust Certificates, whether with respect to Pass-Through
Voting Matters or Holder Approval Matters, each such holder shall have one vote
for each share of Common Stock represented by a Voting Trust Certificate
standing in his or her name in the Certificate as of any record date fixed by
the Board of Directors of the Company for such purpose or, if no such date be
fixed, at the close of business on the business day next preceding the day on
which notice of a meeting is given, or if notice is waived or no meeting is
held, at the close of business on the business day next preceding the day on
which the meeting is held or the consents are to become effective.
(c) In conjunction with any action to be taken by holders of Voting Trust
Certificates as provided in this Section 4.3, whether with respect to Pass-
Through Voting Matters or Holder Approval Matters (other than pursuant to
Section 13.1(d) which is covered by Section 4.3(e) hereof), the Voting Trustees
shall, as promptly as practicable, call a meeting or arrange for action by
written consent of the holders of Voting Trust Certificates. If no notice of
such meeting has been given, or no such arrangements are made, within 30 days of
the date of the event or circumstance giving rise to such action, any holder of
a Voting Trust Certificate may request, by written notice to the Voting
Trustees, that a meeting be called or arrangements be made for action by written
consent without a meeting. Upon receipt of such request, the Voting Trustees
shall promptly call a meeting or make such arrangements.
(d) (i) In conjunction with any action to be taken by holders of Voting
Trust Certificates as provided in this Section 4.3 with respect to Pass-
Through Voting Matters, the Voting Trustees shall use reasonable efforts to
cause the Company to deliver to each holder such notices and information as
would be furnished to such holders if they were the record holders of
Shares in respect of the exercise of voting rights, together with forms by
which the holder of record of a Voting Trust Certificate may instruct the
Voting Trustees, or revoke such instruction, with respect to the voting of
and, if applicable, the exercise of appraisal rights relating to, the
Shares represented by such Voting Trust Certificate. Upon timely receipt of
directions, the Voting Trustees shall (A) vote on each matter the number of
Shares as directed by the holder of the related Voting Trust Certificate or
not vote if so directed by a holder of a Voting Trust Certificate and (B)
exercise any applicable appraisal rights as directed by a holder of a
Voting Trust Certificate. The Voting Trustees shall vote, or not vote, all
Shares as to which no instructions have been received from the holder of
the related Voting Trust Certificate in the same proportion as those Shares
for which the Voting Trustees have received proper direction on such
matter.
(ii) In conjunction with any action to be taken by holders of Voting
Trust Certificates as provided in this Section 4.3 with respect to Holder
Approval Matters, the Voting Trustees shall use reasonable efforts to cause
the Company to deliver to each
<PAGE>
holder appropriate information relating to such matter, together with forms
by which the holder may indicate approval or disapproval of such matter.
(e) In the event there shall be no Voting Trustees in office as
contemplated by Section 13.1(d), any holder of a Voting Trust Certificate may
request, by written notice to the Company, that a meeting be called for purposes
of determining whether the holders of Voting Trust Certificates wish to continue
this Agreement and, if so, to designate one or more successor Voting Trustees.
The Company shall use reasonable efforts, within 30 days of receipt of such
written notice, to give written notice ("Company Notice") to all holders of
Voting Trust Certificates of a meeting to be held no later than 30 days after
such Company Notice for such purpose. Any holder or group of holders of record
of Voting Trust Certificates representing at least five percent of the then
outstanding Shares shall, by written notice to the Company within 10 days of the
Company Notice, be entitled to nominate one or more successor Voting Trustees.
If more than four potential successor Voting Trustees are nominated, each holder
of record of a Voting Trust Certificate shall be entitled to vote for up to four
successor Voting Trustees, but no more. Election of any given successor Voting
Trustee shall require the vote of holders of Voting Trust Certificates
representing at least two-thirds of the then outstanding Shares. In the event
that more than four potential successor Voting Trustees each receive the
affirmative vote of holders of Voting Trust Certificates representing at least
two-thirds of the then outstanding Shares, the four nominees who receive the
highest total number of votes shall be deemed elected. There shall be no
cumulative voting or similar practice in connection with any such vote. This
Agreement shall be continued only if (A) holders of Voting Trust Certificates
representing at least two-thirds of the then outstanding Shares vote in favor of
such continuance and (13) one or more successor Voting Trustees nominated in
accordance with the foregoing requirements are approved by the required vote. In
the event this Agreement is so continued, the Voting Trustee(s) so elected shall
have, as contemplated by Section 7.4, all of the rights, powers, and obligations
provided hereunder to Voting Trustees, including the right to elect additional
Voting Trustees, subject to the terms of this Agreement.
4.4. Trustees' Powers Irrevocable. Subject to Sections 4.2 and 4.3 hereof,
the Voting Trustees' power to vote the Shares held by them and give consents in
respect thereof pursuant to this Agreement shall be irrevocable for the term of
this Agreement. Subject to Sections 4.2 and 4.3 hereof, the Voting Trustees
shall have the right to waive notice of any meeting of stockholders of the
Company in respect of such Shares. The Voting Trustees may exercise any power or
perform any act pursuant to this Agreement by an agent or attorney duly
authorized and appointed by them.
<PAGE>
ARTICLE V
ELIGIBILITY OF TRUSTEES
5.1. Stock Ownership or Familial Relationship Not Required. Voting Trustees
need not be holders of the Company's capital stock or members of the families
descended from Levi Strauss or Daniel E. Koshland, Sr.
5.2. Permitted Activities. No Voting Trustee or successor Voting Trustee
shall be disqualified from serving as such if the Voting Trustee does any of the
following, nor shall anyone serving in such trustee capacity be incapacitated
from doing any of the following: (a) dealing or contracting with the Company or
any of its affiliates, either as a vendor, purchaser, advisor, or otherwise, nor
shall any transaction or contract be affected or invalidated by reason of the
fact that a Voting Trustee or any firm or corporation affiliated with a Voting
Trustee is in any way interested in such transaction or contract; nor shall a
Voting Trustee be liable to account to the Company or to any stockholder thereof
for any profits realized by, from or through any transaction or contract by
reason of the fact that a Voting Trustee or any firm or corporation affiliated
with a Voting Trustee is interested in such transaction or contract, or (b)
serving the Company or any of its affiliates as an officer or director, or
employee or in any other capacity, and receiving compensation therefor.
ARTICLE VI
NUMBER OF TRUSTEES; ACTION BY TRUSTEES
6.1. Increase or Decrease in Number of Trustees. The number of Voting
Trustees shall initially be set at four. Any increase or decrease in the number
of Voting Trustees specified under this Agreement shall require the approval of
the holders of Voting Trust Certificates representing at least two-thirds of the
outstanding Shares.
6.2. Quorum for Action Regarding Voting of Shares; Notice of Trustee
Meetings.
(a) Action by the Voting Trustees regarding the voting of Shares (or
regarding action by written consent with respect thereto) shall require (i) a
quorum of three Voting Trustees if there are four Voting Trustees then in
office, (ii) a quorum of two Voting Trustees if there are three Voting Trustees
then in office, (iii) a quorum of two Voting Trustees if there are two Voting
Trustees then in office and (iv) a quorum of one Voting Trustee if there is one
Voting Trustee then in office. On any such matter, each Voting Trustee shall
have one vote, regardless of the number of Shares legally or beneficially owned
by such Voting Trustee or by members of his or her family.
(b) Any Voting Trustee may call a meeting of the Voting Trustees by giving
written notice to the other Voting Trustees then in office. Any such notice must
be delivered at least five days before the date of any such meeting, and the
Voting Trustee calling such meeting shall make reasonable arrangements to ensure
that such meeting shall take place at a time and in a location where any Voting
Trustee desiring to participate in such meeting in person or by telephone may do
so. Voting Trustees shall have the right to waive notice of any meeting.
<PAGE>
6.3. Required Vote for Action Regarding Voting of Shares. Except as
expressly provided by this Agreement, all actions by the Voting Trustees
regarding the voting of Shares (or regarding action by written consent with
respect thereto) shall require the affirmative vote of a majority of a quorum of
the Voting Trustees.
6.4. Instructions From Stockholders. Voting Trustees shall have the right
(but shall not be required, except as expressly provided by this Agreement) to
seek and follow instructions from the holders of Voting Trust Certificates on
matters requiring a vote of the Voting Trustees which are not specifically
reserved for action by the holders of Voting Trust Certificates. The decision to
seek and/or follow such instructions shall require the affirmative vote of a
majority of a quorum of the Voting Trustees.
6.5. Deadlock on Actions Relating to the Voting of Shares.
(a) In the event that a majority of a quorum of the Voting Trustees are
unable to agree upon the voting of Shares (or action by written consent with
respect thereto) to elect or remove one or more members of the Company's Board
of Directors within 30 days of the date the Voting Trustees first hold a vote to
determine such matter, all votes of the Voting Trustees shall be deemed
automatically to have been cast in favor of voting the Shares for the incumbent
slate of directors, or against removal of directors, as the case may be.
(b) In the event that a majority of a quorum of the Voting Trustees are
unable to agree upon the voting of Shares (or action by written consent with
respect thereto) with respect to any matter subject to a vote of the
stockholders (other than the election or removal of directors) within 30 days of
the date the Voting Trustees first hold a vote to determine such matter, all
votes of the Voting Trustees will be deemed to have been cast to vote the Shares
against the matter.
6.6. Actions Requiring a Unanimous Vote. The unanimous vote of all Voting
Trustees then serving shall be required for trustee action not relating to the
voting of Shares (or action by written consent with respect thereto), as
follows: (a) the election of any successor Voting Trustee shall require a
unanimous vote of the Voting Trustees then in office, (b) the removal of any
Voting Trustee from his or her position as such shall require a unanimous vote
of three Voting Trustees other than the Voting Trustee to be removed (so that if
there are fewer than four Voting Trustees, any vacancy must be filled before
removal can occur) and (c) termination of the trust created by this Agreement
and of this Agreement shall require a unanimous vote of the Voting Trustees then
in office (it being understood that the holders of Voting Trust Certificates may
terminate the Voting Trust pursuant to Section 13.1(c) hereof without action by
the Voting Trustees).
ARTICLE VII
TERM OF TRUSTEES; VACANCIES;
REMOVAL; SUCCESSOR TRUSTEES
7.1. Term of Trustees. Voting Trustees shall serve until their death,
resignation or removal as Voting Trustees.
<PAGE>
7.2. Vacancies. Except for vacancies created by the departure of Robert D.
Haas or Peter E. Haas, Sr. as Voting Trustees, the remaining Voting Trustee or
Trustees shall fill all vacancies by a unanimous vote of the Voting Trustees
then in office. If Robert D. Haas ceases to be a Voting Trustee for any reason,
then, prior to the filling of the resulting vacancy by the remaining Voting
Trustees, the question of whether to continue the Voting Trust shall be put to a
vote of the holders of Voting Trust Certificates as set forth in Section 13.2 of
this Agreement. If Peter E. Haas, Sr. ceases to be a Voting Trustee for any
reason, and at such time is married to Miriam L. Haas, then his successor shall
be his wife, Miriam L. Haas. If Miriam L. Haas subsequently ceases to be a
Voting Trustee, or predeceases Peter E. Haas, Sr.'s departure from trusteeship,
then the successor to Peter E. Haas, Sr. shall be chosen in the manner described
above. In the event there are no Voting Trustees in office, the Voting Trust
will terminate in accordance with Section 13.1(d) hereof unless the holders of
Voting Trust Certificates representing at least two-thirds of the Shares vote to
continue the Voting Trust and designate new Trustees pursuant to Section 4.3(c)
hereof.
7.3. Removal. A Voting Trustee may be removed, with or without cause, under
either of the following circumstances: (a) if the other three Voting Trustees
unanimously vote for his or her removal (so that if there is a vacancy at the
time of the vote, it must be filled before removal can occur), or (b) if holders
of Voting Trust Certificates representing at least two-thirds of the outstanding
Shares (including all Shares beneficially owned by the subject Voting Trustee
and other Voting Trustees) vote for his or her removal. Voting Trustees shall
not be removable under any other circumstances.
7.4. Successor Trustees. All successors chosen to fill vacant Voting
Trustee positions shall be chosen in accordance with Section 7.2 or, as the case
may be, Section 4.3(e). The rights, powers, privileges and obligations of the
Voting Trustees acting as such pursuant to this Agreement shall be possessed by
any successor Voting Trustees with the same effect as though such successor had
originally been a party to this Agreement. The words "Voting Trustees" as used
in this Agreement mean the Voting Trustees or any successor Voting Trustees
acting under this Agreement.
ARTICLE VIII
EXTRAORDINARY TRANSACTIONS;
RECEIPT OF ADDITIONAL SECURITIES
8.1. Receipt of Additional Securities. If the Voting Trustees shall
receive any securities of the Company or any successor or successors of the
Company issued by way of dividend, split-up, recapitalization, reorganization,
merger, consolidation, or any other change or adjustment in respect of the
Shares held by them pursuant to this Agreement, the Voting Trustees (or
Custodian, if any) shall hold the certificates representing such additional or
changed securities, to the extent that such securities have voting rights
(including voting rights contingent upon the occurrence of specified events),
subject to the terms of this Agreement and shall issue, or cause to be issued by
the Custodian, if any, Voting Trust Certificates representing such changed or
additional securities to the respective holders of the then outstanding Voting
Trust Certificates entitled thereto. Any securities of the Company or any
successor or successors of the Company issued to the Voting Trustees with
respect to the then outstanding Shares which do not have any such voting rights
shall be delivered to the respective registered
<PAGE>
holders of the then outstanding Voting Trust Certificates in proportion to the
number of Shares represented by the Voting Trust Certificates.
ARTICLE IX
DIVIDENDS AND DISTRIBUTIONS
9.1. Distributions to be Paid to Beneficial Holders. Except as otherwise
provided in Article VIII, if the Company shall pay dividends or any distribution
on or in respect of the Shares, the Voting Trustees shall be deemed to have
directed the Company to distribute, and the Company shall promptly distribute,
or cause the distribution to be made by the Custodian (if any) of, the same,
proportionately among the holders of record of the then outstanding Voting Trust
Certificates in relation to the number of underlying Shares in respect of which
the dividends are paid, or distribution is made.
ARTICLE X
SUBSCRIPTION FOR SECURITIES OF THE COMPANY
10.1. Procedures for Subscription. In case any shares or other securities
of the Company are offered for subscription to the holders of the Shares, the
Voting Trustees (or Custodian, if any), promptly upon receipt of notice of such
offer. shall mail a copy thereof to each holder of Voting Trust Certificates.
Upon actual receipt (any deemed receipt in accordance with Section 14.2
notwithstanding) by the Voting Trustees, prior to the last day fixed by the
Company for subscription and payment, of a request so to subscribe from such
holder accompanied by the requisite sum of money or other consideration and
appropriate documentation required to subscribe for such shares or securities,
the Voting Trustees shall make, or cause to be made, such subscription and
payment. If the shares or other securities so subscribed for are voting
securities of the Company, the certificates therefor shall be issued and held by
the Voting Trustees (or Custodian, if any), as stockholder of record, subject to
the terms and conditions of this Agreement and the Voting Trustees shall issue
or cause to be issued by the Custodian, if any, to the subscribing holder a
Voting Trust Certificate in respect thereof. If the shares or other securities
so subscribed for are non-voting securities of the Company, the certificates
therefor shall be issued to the subscribing holder and the Voting Trustees shall
mail or deliver such certificates or, cause them to be mailed and delivered by
the Custodian, if any, to such holder.
ARTICLE XI
COMPENSATION; EXPENSES
11.1. Payment of Compensation and Reimbursement for Expenses. Voting
Trustees who are also beneficial owners of one percent or more of the
outstanding shares of Common Stock shall serve without compensation. Voting
Trustees who are beneficial owners of less than one percent of the outstanding
shares of Common Stock of the Company may receive compensation from the Trust,
upon approval of a majority of the other Voting Trustees then in office, for
performance of their duties as Voting Trustees. All Voting Trustees shall be
entitled to reimbursement from the Trust as set forth in this Agreement for
reasonable expenses and charges which may be incurred as Voting Trustees,
including, without limitation, the employment of the Custodian, if any, and such
agents, attorneys and counsel as the Voting Trustees may
<PAGE>
deem necessary and proper for the carrying out of this Agreement (it being
understood that each Voting Trustee shall be entitled to retain and be
reimbursed for the reasonable expenses and charges of separate counsel if such
Voting Trustee believes such separate representation to be advisable), and all
taxes or other governmental charges paid or incurred as a result of the transfer
or issuance of any Shares or Voting Trust Certificates or in respect of the
ownership of the Shares held as trustee or in respect of any dividends,
distributions or other rights in respect of such stock. Any such charges or
expenses incurred shall be promptly reimbursed to the Voting Trustees by the
Trust.
ARTICLE XII
INDEMNIFICATION
12.1. Exculpation; Indemnification of Voting Trustees. No Voting Trustee
shall be liable to the Company, to any holder of a Voting Trust Certificate or
to any other person, under this Agreement or applicable law, by reason of any
matter arising out of or in relation to this Agreement (including, without
limitation, any action taken, or omitted to be taken by him or her in reliance
upon and in conformity with, the advice of counsel, or by reason of any error of
judgment or mistake of law or other mistake, or any act or omission of any agent
or attorney, or any misconstruction of this Agreement, or any action of any sort
taken or omitted thereunder or believed by such Voting Trustee to be in
accordance with the provisions and intents hereof or otherwise), except, in each
case, for such loss or damage as the holders of Voting Trust Certificates may
suffer by reason of such Voting Trustee's willful misconduct. Each holder of
Voting Trust Certificates, by entering into this Agreement, hereby waives any
right to bring or pursue any action, directly or derivatively, on his or her own
behalf or on behalf of the Company, against the Voting Trustees, except with
respect to loss or damage caused by any such willful misconduct. Each Voting
Trustee shall be indemnified and held harmless by the Trust from and against any
and all of such Voting Trustee's actions pursuant to this Agreement, including
any expenses incurred by a Voting Trustee in defending any proceeding or action
brought against such Voting Trustee for actions taken in his or her capacity as
a Voting Trustee, except for such Voting Trustee's willful misconduct. No Voting
Trustee shall be required to give a bond or other security for the faithful
performance of his or her duties as such. Each Voting Trustee shall be entitled
to receive prompt payments in respect of the indemnification provided by this
Agreement in advance of the final adjudication of any disputes relating thereto.
The rights to indemnification and reimbursement of expenses set forth in this
Section 12.1 shall not be deemed exclusive and shall be in addition to any such
rights a Voting Trustee may have, including but not limited to rights of such
Voting Trustee, in his or her capacity as an officer, director, employee or
agent of the Company.
ARTICLE XIII
TERMINATION
13.1. Termination Events. The Voting Trust created by this Agreement and
this Agreement shall be effective and remain in force until the occurrence of
the earliest of the following events:
(a) the fifteenth anniversary of the date of this Agreement;
<PAGE>
(b) the unanimous vote by all of the Voting Trustees then in office to
terminate this Agreement, effected by written notice given to the holders of
Voting Trust Certificates, at any time after the date of this Agreement;
(c) the election by the holders of Voting Trust Certificates representing
at least two-thirds of the outstanding Shares to terminate this Agreement, at
any time after the date of this Agreement; or
(d) if there shall be no Voting Trustees in office, the failure of the
holders of Voting Trust Certificates representing at least two-thirds of the
outstanding Shares to vote to continue the Trust and to designate one or more
successor Voting Trustees within 90 days of the death, resignation or removal of
the last remaining Voting Trustee, as contemplated by Section 4.3(e) hereof.
13.2. Termination Upon Failure of Robert D. Haas to Continue Serving as
Voting Trustee. If Robert D. Haas ceases to be a Voting Trustee for any reason,
then the remaining Voting Trustees shall seek instructions from the holders of
Voting Trust Certificates with respect to the issue of continuing the Trust. The
vote shall be conducted in accordance with the procedures set forth in Sections
4.3(a)-(d) hereof. Unless holders of Voting Trust Certificates representing at
least two-thirds of the outstanding Shares vote against continuation of the
Voting Trust, the Voting Trust shall continue, and the vacancy shall be filled
by the Voting Trustees as described in Article VII hereof.
13.3. Surrender of Certificates. Upon the termination of the Voting Trust,
the Voting Trustees, or the Custodian, if any, shall in exchange for, and upon
the surrender of, the Voting Trust Certificates representing such Shares,
deliver or cause to be delivered stock certificates to the holders of such
Voting Trust Certificates representing the number of Shares set forth on the
Certificate. No person or entity purporting to be a holder of Voting Trust
Certificates shall receive any stock certificates pursuant to this provision
unless such holder is listed on the Certificate and, if not the original holder
thereof, receives Voting Trust Certificates in a Transfer made in accordance
with the provisions of Article III of this Agreement.
13.4. Consequences of Bankruptcy, Etc. If, in the event of the bankruptcy,
receivership, dissolution or total or partial liquidation of the Company,
whether voluntary or involuntary (each a "Bankruptcy Event"), the Voting
Trustees shall receive any monies, securities or property to which the
respective registered holders of the then outstanding Voting Trust Certificates
shall be entitled, the Voting Trustees shall distribute or cause the
distribution to be made by the Custodian, if any, of such monies, securities or
property to the respective registered holders of the then outstanding Voting
Trust Certificates, in proportion to the number of Shares respectively
represented by their Voting Trust Certificates. Such a Bankruptcy Event shall
not cause termination of or otherwise affect this Agreement.
13.5. No Termination Upon Death, Etc. The death, disability or incompetency
of any Voting Trustee or any holder of a Voting Trust Certificate during the
term of this Agreement shall in no way affect the validity or enforceability of
this Agreement or the Voting Trust Certificates issued pursuant to this
Agreement, which shall remain in full force and effect in accordance with its
terms.
<PAGE>
13.6. Certificates Held by Company. If the Company shall acquire any Voting
Trust Certificates, the Company may thereupon, at its option, deliver such
Voting Trust Certificates to the Voting Trustees (or Custodian, if any) and
shall receive in exchange the Shares or other securities represented by such
Voting Trust Certificates. Upon such exchange, the Voting Trust Certificates so
delivered shall be cancelled. Any Voting Trust Certificates held by the Company
shall not be deemed to be outstanding.
13.7. Exclusive Means of Termination. The circumstances set forth in this
Article XIII represent the only circumstances under which the Voting Trust
created by this Agreement may be terminated. It is the intention of the parties
hereto that no statute or regulation, no governmental, judicial or
administrative authority, no other provision of this Agreement or any other
agreement, and no event or other development affecting the Company, shall
operate or be effective to terminate the Voting Trust created hereby.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1. Additional Parties. If any person who is not, as of the date of this
Agreement, a Stockholder, shall acquire Shares or Voting Trust Certificates (or
other voting securities of the Company which by the terms of their issuance are
governed by this Agreement) from a Stockholder, or who otherwise is required as
a condition to the acquisition of shares of Common Stock to enter into and
become a party to this Agreement, such person, upon execution of a counterpart
to this Agreement, shall become a party to this Agreement and be deemed to be a
Stockholder for all purposes of this Agreement as if such person had originally
executed this Agreement, and the Voting Trust herein created shall continue to
remain in effect.
14.2. Notices. All notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if sent by registered or
certified mail, return receipt requested, by messenger or by a nationally
recognized overnight delivery company, to the party or parties to be given such
notice at the address set forth below. Notices to the holders of Voting Trust
Certificates shall be sent to the respective addresses specified by such parties
in the Certificate, or in such other manner as such holders may have
communicated in writing to the Company or the Voting Trustees. Notices to the
Voting Trustees shall be addressed to:
Robert D. Haas,
as Voting Trustee
c/o Levi Strauss & Co.
Levi's Plaza
1155 Battery Street
San Francisco, California 94111
or to such other address as the Voting Trustees may have communicated in writing
to the parties to this Agreement. If a Custodian has been appointed and is
serving, and the holders of Voting Trust Certificates have been so notified,
then a copy is to be sent to the Custodian at the address provided in such
notice. Notices to be sent to a successor Voting Trustees shall be sent to the
person and at the address designated by notice served in the manner herein
provided.
<PAGE>
14.3. Maintenance of Certificate. The Voting Trustees shall, or shall make
arrangements with the Company to, make such amendments from time to time to the
Certificate as shall be necessary by reason of share transfers, stock splits or
otherwise.
14.4. Amendment. This Agreement (including, without limitation, an
amendment extending the duration of the Voting Trust) may be amended at any time
upon the vote of the holders of Voting Trust Certificates representing two-
thirds of the outstanding Shares; no approval by the Voting Trustees shall be
required in order to effect such amendments. Notwithstanding the foregoing, this
Agreement may be amended solely for the purpose of effecting ministerial changes
hereto, without the vote of holders of Voting Trust Certificates, upon the
affirmative vote of a majority of a quorum of Voting Trustees as contemplated by
Article IV and Article VII. All amendments to this Agreement must be in writing,
and any such writing must recite that it is an amendment to this Agreement.
14.5. Voting: "Outstanding" Shares. On any matter requiring a vote of
holders of Voting Trust Certificates representing a specified number or
proportion of the "outstanding" Shares, the Voting Trust Certificates held by
Voting Trustees shall be included for the purposes of determining the result of
such vote.
14.6. Entire Agreement. This Agreement contains all of the terms and
conditions agreed upon by the parties relating to its subject matter, represents
the final, complete and exclusive statement of the parties, and supersedes any
and all prior agreements, negotiations, correspondence, understandings and
communications of the parties, whether oral or written, including the 1991 Class
L Stockholders' Agreement by and among LSAI and certain of its stockholders
which is terminated pursuant to the Stockholders' Agreement; provided that this
Agreement does not supersede, and should be enforced in conjunction with, the
Stockholders' Agreement, the Stock Subscription Agreements, the Merger Agreement
and the Voting Trust Support Agreement of even date herewith between the Voting
Trustees and the Company. No modification, amendment or waiver of any provision
of this Agreement shall be valid unless in writing and approved in the manner
set forth in Section 14.4.
14.7. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
heirs, executors, administrators and permitted successors and assigns. This
Agreement shall apply to, and all of the foregoing parties, heirs, executors,
administrators and permitted successors and assigns shall be bound by this
Agreement with respect to, any securities issued in respect of (or in exchange
for) Shares or Voting Trust Certificates in connection with any transaction to
the extent set forth in Article VIII. Without limiting the foregoing, the
parties intend for the rights and obligations under this Agreement to survive
the death of any party or other person, including any Voting Trustee or any
holder of a Voting Trust Certificate and the related Shares, and to be
specifically enforceable against any deceased party's heirs, executors,
administrators, representatives, successors or assigns to the fullest extent
permitted by law (including, without limitation, California Probate Code Section
9680).
14.8. Governing Law; Jurisdiction. This Agreement creates a voting trust
under Section 218 of the General Corporation Law of the State of Delaware
applicable to the shares of a Delaware corporation. Regardless of the place of
execution of this Agreement, the domicile or residence of any Stockholder or
Voting Trustee, the location of the principal executive office of the Company,
or any other fact or circumstance, this Agreement shall be governed by and
<PAGE>
construed in accordance with the laws of the State of Delaware (without regard
to conflicts of laws principles). EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE
STATE OF DELAWARE AND THE FEDERAL COURTS LOCATED IN THE STATE OF DELAWARE IN ANY
ACTION, SUIT OR PROCEEDING ARISING IN CONNECTION WITH THIS AGREEMENT, AND AGREES
THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURTS
(AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS OR ANY OTHER OBJECTION
TO VENUE THEREIN); PROVIDED, HOWEVER, THAT SUCH CONSENT TO JURISDICTION IS
SOLELY FOR THE PURPOSE REFERRED TO IN THIS PARAGRAPH AND SHALL NOT BE DEEMED TO
BE A GENERAL SUBMISSION TO THE JURISDICTION OF SUCH COURTS OR IN THE STATE OF
DELAWARE OTHER THAN FOR SUCH PURPOSE. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING.
Service of process on a Stockholder or Stockholders in any action arising out of
or relating to this Agreement shall be effective if delivered to such
Stockholder or Stockholders in accordance with Section 14.2. These provisions
reflect the overall objective of this Agreement to provide for the long-term,
stable and consistent ownership and governance of the Company.
14.9. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Any Voting Trustee may execute this
Agreement, any Voting Trust Certificate, and any amendment, waiver or consent
relating thereto by use of an appropriate facsimile signature, provided that
such Voting Trustee provides adequate assurances to the Company that such
facsimile signature is an accurate representation of such Voting Trustee's
actual signature.
14.10. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
VOTING TRUSTEES:
________________________________
ROBERT D. HAAS
________________________________
PETER E. HAAS, SR.
________________________________
PETER E. HAAS, JR.
________________________________
F. WARREN HELLMAN
STOCKHOLDERS:
<PAGE>
________________________________
(signature)
________________________________
(type or print name)
<PAGE>
EXHIBIT A
Voting Trust Certificate
FOR SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE,
OF
LSAI HOLDING CORP.,
a Delaware corporation
No. of Shares Certificate No.
THIS IS TO CERTIFY THAT, on 2011, or
upon the prior termination of a certain Voting Trust Agreement, dated April 15,
1996 (the "Voting Trust Agreement"), by and among Robert D. Haas, Peter E. Haas,
Sr., Peter E. Haas, Jr. and F. Warren Hellman, as Voting Trustees and certain
stockholders of LSAI Holding Corp. (the "Company"), pursuant to which agreement
this Certificate has been issued,
will be entitled to receive certificates for the number of fully-paid and non-
assessable shares hereinabove specified (the "Shares") and for the duration of
such Voting Trust Agreement, to receive distributions equal to the cash or
property or nonvoting security distributions, if any, collected by the Voting
Trustees (or Custodian, if any) upon a like number of the Shares standing in the
name of the Voting Trustees. Prior to the actual delivery of such certificates,
the Voting Trustees (or Custodian, if any), with respect to any and all of the
Shares shall possess and be entitled to exercise, in the manner and to the
extent provided in the aforesaid Voting Trust Agreement, all of the rights of
every kind of the holder of this Certificate, including the right to vote and
take part in, or to consent to any corporate or stockholders' action, it being
expressly stipulated that except as specifically provided in the Voting Trust
Agreement, no right to vote, or take part in, or to consent to any corporate or
stockholders' action, shall pass by, or under, this Certificate.
THE SALE, ASSIGNMENT, GIFT, PLEDGE OR OTHER ENCUMBRANCE, OR OTHER TRANSFER
("TRANSFER") OF THIS VOTING TRUST CERTIFICATE OR THE SHARES (OR ANY INTEREST
THEREIN) REPRESENTED HEREBY IS SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS
SET FORTH IN THE COMPANY'S CERTIFICATE OF INCORPORATION AND IN THE VOTING TRUST
AGREEMENT DESCRIBED IN THIS CERTIFICATE AND PURSUANT TO WHICH THIS CERTIFICATE
IS ISSUED, TO A STOCK SUBSCRIPTION AGREEMENT DATED AS OF JANUARY 25, 1996, AND
TO A STOCKHOLDERS' AGREEMENT AMONG THE COMPANY AND ITS STOCKHOLDERS DATED AS OF
APRIL 15, 1996. COPIES OF SUCH STOCKHOLDERS' AGREEMENT AND VOTING TRUST
AGREEMENT ARE ON FILE IN THE OFFICE OF THE SECRETARY OF THE COMPANY. NO TRANSFER
OF THIS CERTIFICATE, OR THE SHARES REPRESENTED BY THIS CERTIFICATE, MAY BE
EFFECTED, EXCEPT PURSUANT TO THE TERMS OF SUCH CERTIFICATE OF INCORPORATION,
VOTING TRUST AGREEMENT AND STOCKHOLDERS' AGREEMENT. NO SUCH TRANSFER SHALL BE
VALID UNLESS MADE TOGETHER WITH THE UNDERLYING SHARES.
IN ADDITION, THIS CERTIFICATE AND/OR THE SHARES REPRESENTED BY THIS
CERTIFICATE, AS THE CASE MAY BE, MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT (FOR THE INTEREST IN THE VOTING TRUST
REPRESENTED BY THIS CERTIFICATE AND SUCH SHARES REPRESENTED HEREBY, AS THE CASE
MAY BE) UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM REGISTRATION. IN CONNECTION WITH ANY PROPOSED SALE OR
TRANSFER OF THIS CERTIFICATE, OR THE SHARES REPRESENTED HEREBY, AS THE CASE MAY
BE, PURSUANT TO AN EXEMPTION FROM REGISTRATION, THE HOLDER OF THIS CERTIFICATE,
OR SHARES REPRESENTED BY THIS CERTIFICATE, AS THE CASE MAY BE, MAY BE REQUIRED
TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, OR
THE COMPANY MAY REQUIRE THAT IT SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL,
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. IN ADDITION, THE RIGHT TO VOTE
THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN THE MANNER PROVIDED
IN THE VOTING TRUST AGREEMENT.
This Certificate is not valid unless signed by the Voting Trustees or the
appointed Custodian. The holder hereof, by accepting this Certificate, manifests
his or her consent that the undersigned Voting
<PAGE>
Trustees may treat the registered holder hereof as the true owner for all
purposes, except the delivery of certificates for Shares which delivery shall
not be made without the surrender hereof.
IN WITNESS WHEREOF, the undersigned, the Voting Trustees, have caused this
Certificate to be signed as of the day of , .
VOTING TRUSTEES:
________________________________
ROBERT D. HAAS
________________________________
PETER E. HAAS, SR.
________________________________
PETER E. HAAS, JR.
________________________________
F. WARREN HELLMAN
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, does hereby sell, assign
and transfer unto all of the undersigned's right, title and interest in and to
this Voting Trust Certificate, and does hereby irrevocably constitute and
appoint to be the undersigned's
attorney to transfer this Voting Trust Certificate on the books of the within
named Voting Trustees, with full power of substitution in the premises.
Dated:
________________________________
Transferor's signature
IN PRESENCE OF__________________________________________________________________
Witness' signature
Print name of witness:
<PAGE>
FORM OF
VOTING TRUST SUPPORT AGREEMENT
THIS VOTING TRUST SUPPORT AGREEMENT (this "Agreement") dated as of
, 1996, is among LSAI HOLDING CORP., a Delaware corporation (the "Company"), and
the voting trust (the "Voting Trust) created pursuant to the Voting Trust
Agreement, (the "Voting Trust Agreement") by and among Robert D. haas, Peter E.
Haas, Sr., Peter E. Haas, Jr., and F. Warren Hellman, as voting trustees (the
"Voting Trustees), and the stockholders of the Company who are parties thereto
(the "Stockholders"). Capitalized terms used herein without definition shall
have the meanings assigned thereto in the Voting Trust Agreement.
RECITALS
WHEREAS, the Voting Trustees and the Stockholders have entered into the
Voting Trust Agreement; and
WHEREAS, the Company recognizes that the efficient administration of the
Voting Trust is beneficial to the long-term, stable and consistent ownership and
governance of the Company; and
WHEREAS, the Company and the Voting Trustees believe it to be in the best
interests of the Company and the Voting Trust to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and agreements contained herein, and as contemplated
by the Voting Trust Agreement, the parties hereto agree as follows:
1. Maintenance of Certificate. The Company shall maintain the Certificate
in its permanent records. The Company shall initially create the Certificate,
and thereafter shall revise the Certificate from time to time, in each case upon
instruction from, and in the manner requested by, any one or more of the Voting
Trustees, as contemplated by the Voting Trust Agreement. The Company shall make
no changes to the Certificate other than as directed by the Voting Trustees.
2. Transfer Restrictions. The Company shall recognize, and shall record
on the Certificate and/or the books and records of the Company, only those
Transfers made in accordance with Section 3.3 of the Voting Trust Agreement.
3. Calling of Meetings. In the event that the Company receives written
notice, pursuant to Section 4.3(e) of the Voting Trust Agreement, requesting
that a meeting be called for purposes of determining whether the holders of
Voting Trust Certificates wish to continue the Voting Trust Agreement and to
designate one or more successor Voting Trustees, the Company shall abide by the
provisions of such Section 4.3(e) as though it were a party to the Voting Trust
Agreement and bound thereby.
4. Reimbursement of Voting Trust. In the event that the Voting Trust is
required to pay any sums of money to any Voting Trustee pursuant to Sections
11.1 or 12.1 of the Voting Trust Agreement, the Company shall, upon receipt of
written notice from the Voting Trustees, promptly reimburse the Voting Trust for
the amounts so paid.
<PAGE>
5. Amendment. All amendments to this Agreement must be in writing and be
signed by the Company and by each Voting Trustee then in office, and any such
writing must recite that it is an amendment to this Agreement.
6. Third Party Beneficiaries. It is the express intention of the parties
hereto that each Voting Trustee shall be a third party beneficiary of the
agreements contained in Section 4 hereof, and that any Voting Trustee may
enforce the provisions of such Section 4 as though such Voting Trustee were a
party hereto.
7. Governing Law; Jurisdiction. Regardless of the place of execution of
this Agreement, the domicile or residence of any Stockholder or Voting Trustee,
the location of the principal executive office of the Company, or any other fact
or circumstance, this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware (without regard to conflicts of laws
principles). EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF DELAWARE AND THE
FEDERAL COURTS LOCATED IN THE STATE OF DELAWARE IN ANY ACTION, SUIT OR
PROCEEDING ARISING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURTS (AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR ANY OTHER OBJECTION TO VENUE
THEREIN); PROVIDED, HOWEVER, THAT SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE
PURPOSE REFERRED TO IN THIS PARAGRAPH AND SHALL NOT BE DEEMED TO BE A GENERAL
SUBMISSION TO THE JURISDICTION OF SUCH COURTS OR IN THE STATE OF DELAWARE OTHER
THAN FOR SUCH PURPOSE. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO A TRIAL BY
JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING. These provisions
reflect the overall objective of this Agreement to provide for the long-term,
stable and consistent ownership and governance of the Company.
8. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Any Voting Trustee may execute this
Agreement, any Voting Trust Certificate, and any amendment, waiver or consent
relating thereto by use of an appropriate facsimile signature, provided that
such Voting Trustee provides adequate assurances to the Company that such
facsimile signature is an accurate representation of such Voting Trustee's
actual signature.
9. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10. Further Assurance. Each of the parties hereto shall execute such
documents and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and of the other documents to be
executed by such person pursuant to the terms hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
LSAI HOLDING CORP:
By:________________________________
Robert D. Haas
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
Voting Trustees:
___________________________________
Robert D. Haas
___________________________________
Peter E. Haas, Sr.
___________________________________
Peter E. Haas, Jr.
___________________________________
F. Warren Hellman
<PAGE>
EXHIBIT 10.1
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement") dated as of April 15,1996
is among LSAI HOLDING CORP., a Delaware corporation (the "Company"), and those
parties listed as signatories hereto (together with such additional signatories
as may be deemed added from time to time pursuant to Section 2.4 hereof, the
"Stockholders").
RECITALS
WHEREAS, the Stockholders are all currently holders of shares of Class L
common stock, par value $0.10 (the "Class L Shares"), of Levi Strauss Associates
Inc., a Delaware corporation ("LSAI") and are parties to an agreement
restricting transfers of those Class L Shares;
WHEREAS, each Stockholder is a party to a Stock Subscription Agreement (a
"Stock Subscription Agreement"), in which such Stockholder has committed at the
closing of the transactions contemplated thereby (the "Closing") to purchase
(the "Purchase") shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock") in an amount specified in the Stock Subscription
Agreement and at a per share price of one Class L Share (all of the shares of
such Common Stock issued and outstanding immediately following the Closing,
together with any other shares of Common Stock or other capital stock entitling
the record owner thereof to vote in elections of directors generally which are
issued by the Company during the life of this Agreement to any holder who is, by
the terms of this Agreement or otherwise required to subject such shares to this
Agreement, the "Shares");
WHEREAS, each Stockholder is, concurrently with the delivery of this
Agreement, executing and delivering a voting trust agreement (the "Voting Trust
Agreement") to which all the shares of Common Stock outstanding immediately
following the Closing will be subject, and pursuant to which all such shares
together with certain additional shares of Common Stock and other securities
specified in the Voting Trust Agreement will be represented by Voting Trust
Certificates ("Voting Trust Certificates") for as long as the Voting Trust
Agreement is in effect;
WHEREAS, LSAI Acquisition Corp., a Delaware corporation and a direct wholly
owned subsidiary of the Company ("Acquisition"), the Company, and LSAI, have
entered into an Agreement and Plan of Merger, dated as of February 8, 1996,
providing, among other things, for the merger (the "Merger") of Acquisition with
and into LSAI;
WHEREAS, it is a condition precedent to the Purchase that all Stockholders
participating therein enter into this Agreement and the Voting Trust Agreement,
with the end result being that immediately following the Purchase all the
outstanding shares of Common Stock shall be subject to this Agreement and the
Voting Trust Agreement;
WHEREAS, the Stockholders and the Company believe that, in addition to the
rights, restrictions and obligations created by the Voting Trust Agreement with
respect to the voting of shares of Common Stock and the governance of the
Company, additional rights, restrictions and obligations regarding the Shares,
and the related Voting Trust Certificates, are reasonable and appropriate to
provide for the long-term, stable and consistent ownership and governance of the
Company, and are in the best interests of the Company and the Stockholders;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE VOTING TRUST AGREEMENT
1.1. Shares; Voting Trust Certificates. (a) So long as the Voting Trust
Agreement is in effect: (i) the trustees (the "Trustees") of the voting trust
(the "Voting Trust") shall be the owners of record of all the Shares; (ii) a
Stockholder's beneficial ownership of Shares shall be evidenced, not by
certificates of common stock, but by a Voting Trust Certificate; (iii) the
Voting Trust Certificates shall represent both the beneficial ownership of the
number of Shares specified thereon and the participation of such Shares in the
Voting Trust; and (iv) any transfer of Voting Trust
<PAGE>
Certificates shall be deemed to effect a transfer of the Shares represented
thereby, and any transfer of Shares shall be deemed to effect a transfer of any
Voting Trust Certificates so representing.
(b) It is understood that immediately following the Closing, all Shares
then outstanding will be subject to the Voting Trust Agreement (as well as this
Agreement). The Company shall have the right to issue shares of Common Stock,
whether treasury shares or newly issued shares, in any way and to any transferee
that the Board approves, subject to the Company's Certificate of Incorporation,
By-Laws, and to applicable law (a "Company Transfer"). Any transferee who is
already a Stockholder shall be bound by this Agreement with respect to the
shares received in such Company Transfer. All other transferees who receive
shares in such a Company Transfer shall sign a Confirming Document pursuant to
Section 2.4 hereof and thereby become Stockholders. Following the Closing, in
the event the Voting Trust Agreement is no longer in effect but this Agreement
remains in effect, it is possible that shares of Common Stock will be issued or
outstanding which are "Shares" for purposes of this Agreement but are not
subject to the Voting Trust Agreement and hence not represented by Voting Trust
Certificates.
ARTICLE II
RESTRICTIONS ON TRANSFER
2.1. No Transfers. Except as explicitly permitted by this Agreement, no
Stockholder shall, directly or indirectly, sell, assign, give, pledge or
encumber or otherwise transfer (each a "Transfer"), to any person or entity, any
Shares (or any related Voting Trust Certificates), during the term of this
Agreement.
2.2. Permitted Transfers; Permitted Transferees. (a) So long as a
Stockholder complies with the terms of this Agreement in its entirety, such
Stockholder may:
(i) Transfer Shares (together with any related Voting Trust
Certificates) to (A) the spouse (or ex-spouse if the Transfer is pursuant to a
marital dissolution order), any lineal ancestor, any lineal descendant or any
adopted child (or a spouse of any of the foregoing) of such Stockholder (each a
"Related Party"), or (B) if such Stockholder is a trust, to a Related Party of
such trust's grantor;
(ii) Transfer Shares (together with any related Voting Trust
Certificates) to (A) any lineal descendant or adopted child of, or (B) any
lineal descendent or adopted child of such lineal descendent or adopted child
of, any of such Stockholder's Related Parties (for example, a stepchild of a
Stockholder) (collectively, "Other Related Parties");
(iii) Transfer Shares (together with any related Voting Trust
Certificates) to a trust of which there are no beneficiaries other than (A) such
Stockholder (the grantor), (B) Related Parties of such Stockholder or(C) Other
Related Parties of such Stockholder, provided that the Stockholder or the
beneficiaries or the trustees of such a trust have the power to act with respect
to the trust's assets without obtaining court approval;
(iv) Transfer Shares (together with any related Voting Trust
Certificates) to any charitable organization which qualifies under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"),
including any transfer in trust for the benefit of such organization, provided
that such charitable organization (A) is controlled by either such Stockholder,
a Related Party of such Stockholder or an Other Related Party of such
Stockholder ("control" here meaning majority representation by such persons on
the board of directors, trustees or comparable governing body of such
organization) or (B) has been approved by a majority of the members of the board
of directors of the Company (the "Board") present at a meeting of the Board at
which a quorum is present;
(v) Transfer Shares (together with any related Voting Trust
Certificates) to (or in trust for the benefit of) The San Francisco Foundation,
The Marin Foundation, the Jewish Community Federation of San Francisco, the
Peninsula, Marin and Sonoma Counties, the University of California at Berkeley,
Stanford University and such other public charitable organizations which (A)
qualify under Section 501(c)(3) of the Code and (B) have been approved as
transferees prior to the time of Transfer by a majority of the members of the
Board present at a meeting at which a quorum is present;
<PAGE>
(vi) Transfer Shares (together with any related Voting Trust
Certificates) to such Stockholder's legal representative in the event such
Stockholder becomes incompetent;
(vii) Transfer Shares (together with any related Voting Trust
Certificates) to another Stockholder;
(viii) Transfer Shares (together with any related Voting Trust
Certificates) to a partnership in which the only persons or entities who are
permitted to be partners would otherwise be capable of receiving such Shares
directly in accordance with this Section 2.2(a);
(ix) Transfer Shares (together with any related Voting Trust
Certificates) to the Company or an entity owned or controlled by the Company;
and
(x) Transfer Shares (together with any related Voting Trust
Certificates) if such Transfer or transferee is approved prior to such Transfer
by two-thirds of the members of the Board present at a meeting at which a quorum
is present.
Any transfer made pursuant to this Section 2.2(a) is a "Permitted Transfer". Any
persons or entities who are capable of receiving Shares in accordance with this
Section 2.2(a) are referred to as "Permitted Transferees".
(b) Testamentary Transfers of Shares (together with any related -Voting
Trust Certificates) from a Stockholder's estate, and Transfers of Shares
(together with any related Voting Trust Certificates) made by the legal
representative of a deceased Stockholder, shall be Permitted Transfers only if
such Transfers would have been Permitted Transfers had they been made by such
Stockholder prior to his or her death.
(c) Notwithstanding Sections 2.2(a) and (b) hereof, a Transfer of Shares
(together with any related Voting Trust Certificates) shall only be a Permitted
Transfer if made in compliance with the terms of this Agreement in its entirety
and with all state and federal securities laws. Any Transfer of Shares (or any
related Voting Trust Certificates) made in violation of such laws shall also
constitute a violation of this Agreement.
2.3. Prior Notification. Any Transfer of Shares and any related Voting
Trust Certificates made pursuant to this Agreement, other than a Transfer made
pursuant to Section 2.8 hereof, shall require, at least five days prior to the
desired effective date of the Transfer, the delivery to the Company of evidence
reasonably satisfactory to the Company that the Transfer is a Permitted Transfer
and a Confirming Document (as hereinafter defined) executed by the proposed
transferee.
2.4. Transferee Bound. No Transfer of Shares or of any related Voting Trust
Certificates other than Transfers to the Company or to a Stockholder shall be
effective unless the person or entity receiving such Shares together with any
related Voting Trust Certificates) (the "Transferee"), executes an appropriate
document (a "Confirming Document"), substantially in the form attached to this
Agreement as Exhibit A, confirming that the Transferee takes those Shares and
any related Voting Trust Certificates subject to all the terms and conditions of
this Agreement (and, if related Voting Trust Certificates are transferred, the
Voting Trust Agreement), without limitation. The Confirming Document must be
delivered to and approved by the Company prior to the Transfer of Shares (and
any related Voting Trust Certificates) to that Transferee. So long as the
Transfer is otherwise made in accordance with the terms of this Agreement, the
Company shall not unreasonably withhold its approval of a proposed Confirming
Document. Upon approval of the Confirming Document (except for Confirming
Documents executed pursuant to Section 2.6 hereof) and assuming completion of
the underlying Transfer, the Transferee's signature on the Confirming Document
shall constitute an execution of a counterpart of this Agreement, and such
Transferee shall become a Stockholder signatory of this Agreement. Additionally,
if the Voting Trust Agreement is still in effect and Voting Trust Certificates
were so transferred, the Company shall, within ten days of such notification to
the Company, deliver to the Trustees a copy of the Confirming Document attesting
to the fact that the Transferee has become the Stockholder with respect to such
transferred Shares (and the related Voting Trust Certificates) and is so bound
by the Voting Trust Agreement.
2.5. Non-Conforming Transfers. The Company's Certificate of Incorporation
provides that any purported Transfer of Shares to a Transferee who is not or who
does not become a Stockholder pursuant to Section 2.4 hereof (a
<PAGE>
"Non-Conforming Transferee," and such transfer, a "Non-Conforming Transfer"),
shall be null and void. The Company shall not register, recognize or give effect
to any such Non-Conforming Transfer, and the Company shall continue to recognize
on its books and records the transferor of such Shares as the holder thereof.
2.6. Pledges of Stock. A Stockholder may pledge his or her Shares (together
with any related Voting Trust Certificates) to a commercial bank, savings and
loan institution, brokerage firm or any other lender as security for any
indebtedness of that Stockholder to that lender; provided, however, that prior
to the pledge becoming effective, the lender must first execute and deliver to
the Company an appropriate Confirming Document, pursuant to Section 2.4 hereof,
which Confirming Document shall be subject to the Company's approval as provided
in Section 2.4 hereof.
2.7. Stock Certificate Legends. Each outstanding certificate representing
Shares (the "Stock Certificates") shall bear legends reading substantially as
follows:
The shares represented by this certificate were acquired for investment
only and not for resale. They have not been registered for resale under the
Securities Act of 1933 or any state securities laws. These shares may not
be sold, transferred, pledged, or hypothecated unless first registered
under such laws, or unless the Corporation has received evidence
satisfactory to it that registration under such laws is not required.
The shares represented by this certificate are subject to restrictions on
transfer and certain rights of the Corporation to purchase the shares on
the terms set forth in a Stockholders' Agreement initially entered into as
of April 15, 1996 among the Corporation and its stockholders, a copy of
which may be obtained from the Corporation or from the holder of this
certificate. No transfer of such shares will be made on the books of the
Corporation unless accompanied by evidence of compliance with the terms of
such Stockholders' Agreement.
The Stock Certificates shall bear any additional legend which may be appropriate
for compliance with state securities or blue sky laws. However, to the extent
such Shares are subject to the Voting Trust Agreement, only the Trustees shall
hold such certificates. Stockholders shall hold Voting Trust Certificates
substantially in the form attached as Exhibit A to the Voting Trust Agreement
with respect to Shares which are subject to the Voting Trust Agreement. Upon
termination of the Voting Trust Agreement, the Trustees shall cause all Stock
Certificates held by them to be cancelled and the Stockholders shall exchange
with the Company any Voting Trust Certificates then held for Stock Certificates
representing that number of Shares formerly represented by the Voting Trust
Certificates held thereby and, as provided in the Voting Trust Agreement, will
deliver them to the appropriate holders.
2.8. Certain Involuntary Transfers. (a) If a Stockholder involuntarily
transfers, directly or indirectly, any Shares (or any related Voting Trust
Certificates) for any reason (other than to a former spouse pursuant to a court
order with respect to the dissolution of the marriage) and the transfer is not
to a Permitted Transferee, that transferor Stockholder (the "Transferor
Stockholder") shall give written notice within 30 days after the involuntary
transfer (a "Transferor's Notice") to the Company, with a copy to the
Transferee, stating the fact that the involuntary transfer occurred, the reason
therefor, the date of the transfer, the name and address of the Transferee, the
terms of the transfer and the number of Shares (and any related Voting Trust
Certificates) acquired by the Transferee (the "Offered Securities"). An
"involuntary transfer" includes a foreclosure upon or other seizure of Shares
(together with any related Voting Trust Certificates) by a creditor of a
Stockholder, but does not include action under a pledge arrangement permitted
under Section 2.6 of this Agreement.
(b) For a period of 60 days after the date of receipt of the Transferor's
Notice or, failing receipt of such notice, 60 days after the date the Company
sends written notice to the Transferee that the transfer is an "involuntary
Transfer" subject to repurchase under this Section 2.8, the Company shall have
the irrevocable and exclusive option to buy up to all of the Offered Securities
at the price provided for in subsection (d) of this Section 2.8; provided,
however, that the Company may not purchase any of the Offered Securities unless
either:(i) the Company purchases all of the Offered Securities; or (ii) the
Transferor Stockholder consents to the purchase of less than all of the Offered
Securities. The Company's option is exercisable by delivery of a written notice
to the Transferor Stockholder within 15 days after the date of the Transferor's
Notice. The Company's rights are assignable, in whole or in part, by action of
the Board.
<PAGE>
(c) If the Transferor's Notice is properly given, and if the Company does
not exercise its option to purchase the Offered Securities or does not purchase
all of the Offered Securities, then the involuntary transfer shall stand and the
Offered Securities shall not be subject to any further right of repurchase by
the Company, provided that the Transferee executes a Confirming Document which
is subsequently approved by the Company.
(d) The purchase price for the Offered Securities purchased under this
Section 2.8 shall be the appraised value of the Shares (with no separate value
being attributable to any Voting Trust Certificates relating to such Shares) as
of the most recent appraisal obtained by the Company if such appraisal is as of
a date not more than eighteen months prior to the involuntary transfer, and if
such an appraisal has not been obtained, the purchase price for the Offered
Securities shall be equal to the lower of the price which the involuntary
Transferee offered to pay for the Offered Securities (such price represented
either by consideration tendered or indebtedness repaid or cancelled) or the
book value of the Shares (with no separate value being attributable to any
Voting Trust Certificates relating to such Shares and with book value never to
be deemed less than the par value of the Shares, even if the Company has a
negative net worth) at the end of the preceding fiscal year of the Company, as
determined by the Chief Financial Officer of the Company.
2.9. Tag-Along Rights in Significant Transactions. For a five-year period
beginning on the Termination Date (as defined in Section 4.1), no Stockholder
may Transfer Shares (or any related Voting Trust Certificates) representing more
than 10% of the then outstanding Shares (such transferor Stockholder, the
"Selling Stockholder") to a third party other than a Permitted Transferee (a
"Third Party"), unless the Selling Stockholder shall give written notice to each
other Stockholder at least 20 days prior to such transaction and shall make all
such arrangements as are necessary such that each other Stockholder shall have
the right to participate (a "Tag-Along Right") in such sale by selling the same
percentage of such Stockholder's Shares to the Third Party as the percentage of
the aggregate number of Shares then owned by the Selling Stockholder to be sold
by the Selling Stockholder for the same consideration per Share (with no
separate consideration or value being attributable to any related Voting Trust
Certificate), and otherwise on the same terms as the Selling Stockholder sells
its Shares (with no separate consideration or value being attributable to any
related Voting Trust Certificates). Such arrangements shall include the time and
place of closing, closing deliveries and similar matters.
ARTICLE III
REGISTRATION; PURCHASE; REPRESENTATION
3.1. No Entitlements. Nothing in this Agreement (a) entitles any
Stockholder to obtain registration or qualification of any Shares (or any
related Voting Trust Certificates) under the Securities Act of 1933 (the
"Securities Act") or any state securities laws; (b) provides any Stockholder
with any right to have such Stockholder's Shares (or any related Voting Trust
Certificates) or any portion thereof purchased or redeemed by the Company or by
any other party, it being understood that any estate tax policy of the Company,
which may be in place from time to time, contemplating, among other things,
repurchase by the Company of Shares from estates of deceased Stockholders to
provide funds for payment of estate or similar taxes, will be a policy and will
not create a binding obligation on the part of the Company; or (c) entitles any
Stockholder or family group to a position on, or a representative on, the
Company's Board of Directors, or to be represented as or by a Trustee.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1. Term. The term of this Agreement shall commence at the moment the
Purchase is consummated (the "Effective Date") and shall terminate upon the
earlier of. (a) the execution and delivery of a written agreement to that effect
by the holders of record of at least two-thirds of the Shares then outstanding
(who shall, for this purpose, be deemed to be the holders of record of Shares to
the extent such Shares are not subject to the Voting Trust Agreement and shall
be the holders of record of Voting Trust Certificates relating to any Shares
which are then subject to the Voting Trust Agreement) or (b) unless extended by
agreement of the parties as contemplated by Section 4.5 hereof, the twentieth
anniversary of the Effective Date (the first occurrence of either (a) or (b)
being the "Termination Date"),
<PAGE>
provided that in either case Section 2.9 of this Agreement shall not terminate
until the fifth anniversary of the Termination Date.
4.2. Injunctive Relief. The parties acknowledge that it will be impossible
to measure in money the damages that would be suffered if the parties fail to
comply with any of the obligations imposed on them by this Agreement and that,
in the event of any such failure, an aggrieved person will be irreparably
damaged and will not have an adequate remedy at law. Any such person shall,
therefore, be entitled to injunctive relief, including specific performance, to
enforce those obligations, and if any action should be brought in equity to
enforce any of the provisions of this Agreement, none of the parties shall raise
the defense that there exists an adequate remedy at law.
4.3. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties to this Agreement and their respective heirs,
executors, administrators and permitted successors and assigns. This Agreement
shall apply to, and all of the foregoing parties, heirs, executors,
administrators and permitted successors and assigns shall be bound by this
Agreement with respect to, any securities issued in respect of (or in exchange
for) Shares or any related Voting Trust Certificates in connection with any
transaction to the extent such securities are of the type that would be
deposited with or retained by the Voting Trustees under Article VIII or Article
X of the Voting Trust Agreement as in effect on the date hereof (regardless of
whether the Voting Trust Agreement is terminated or amended). Without limiting
the foregoing, the parties intend for the obligations under this Agreement to
survive the death of any party or other person, including any Stockholder,
Trustee or other person, and to be specifically enforceable against any deceased
party's heirs, executors, administrators, representatives, successors or assigns
to the fullest extent permitted by law (including, without limitation,
California Probate Code Section 9680).
4.4. Governing Law. Regardless of the place of execution of this Agreement,
the domicile or residence of any Stockholder, the location of the principal
executive office of the Company, or any other fact or circumstance, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware (without regard to conflicts of laws principles). EACH PARTY
TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE STATE COURTS OF THE STATE OF DELAWARE AND THE FEDERAL COURTS LOCATED IN THE
STATE OF DELAWARE IN ANY ACTION, SUIT OR PROCEEDING ARISING IN CONNECTION WITH
THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
BROUGHT ONLY IN SUCH COURTS (AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS OR ANY OTHER OBJECTION TO VENUE THEREIN); PROVIDED, HOWEVER, THAT
SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS
PARAGRAPH AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE JURISDICTION
OF SUCH COURTS OR IN THE STATE OF DELAWARE OTHER THAN FOR SUCH PURPOSE. THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY
SUCH ACTION, SUIT OR PROCEEDING. Service of process on a Stockholder or
Stockholders in any action arising out of or relating to this Agreement shall be
effective if delivered to such Stockholder or Stockholders in accordance with
Section 4.8. These provisions reflect the overall objective of this Agreement to
provide for the long-term, stable and consistent ownership and governance of the
Company.
4.5. Amendment. This Agreement may be amended (including, without
limitation, an amendment extending its term generally or the duration of any of
its particular provisions) only by an instrument in writing reciting that it is
an amendment to this Agreement, and signed by the Company as approved by a
majority of the Board at a meeting at which a quorum is present and by the
holders of record of two-thirds of the outstanding Shares at the time of the
amendment (who shall, for this purpose, be deemed to be the holders of record of
Shares to the extent the Voting Trust Agreement is no longer in effect and shall
be the holders of record of Voting Trust Certificates to the extent the Voting
Trust Agreement is then in effect).
4.6. Filing; Inspection. The Company shall cause a copy of this Agreement
to be filed with the Secretary of the Company and kept with the records of the
Company. So long as this Agreement is in effect, the Company shall make this
Agreement available for inspection by any Stockholder at the principal offices
of the Company.
<PAGE>
4.7. No Third Party Beneficiaries. This Agreement is for the benefit of
its parties and their transferees who become bound by this Agreement, and is not
intended for the benefit of any other person. This Agreement may be amended
pursuant to Section 4.5 hereof in any manner without the consent of any other
person who is not a party.
4.8. Notices. All notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if sent by registered or
certified mail, return receipt requested, by messenger, or by a nationally
recognized overnight delivery company, to the party or parties to be given such
notice at the address set forth below. Notices to Stockholders shall be sent to
the respective addresses specified by such parties on the signature pages to
this Agreement, or in such other manner as such holders may have communicated in
writing to the Company. Notices to the Company shall be addressed to:
LSAI Holding Corp.
Levi's Plaza
1155 Battery Street
San Francisco, California 94111
Attn: Corporate Secretary
or to such other address as the Company may have communicated in writing to the
parties to this Agreement.
4.9. Entire Agreement. This Agreement contains all of the terms and
conditions agreed upon by the parties relating to its subject matter, represents
the final, complete and exclusive statement of the parties, and supersedes any
and all prior agreements, negotiations, correspondence, understandings and
communications of the parties, whether oral or written, including the 1991 Class
L Stockholders' Agreement by and among LSAI and certain of its stockholders
(which is hereby deemed amended by consent of the holders of Class L Shares as
evidenced by the execution of this Agreement so as to terminate upon the
effectiveness of this Agreement); provided that this Agreement does not
supersede, and should be enforced in conjunction with, the Voting Trust
Agreement and related Voting Trust Support Agreement, the Stock Subscription
Agreements, and the Merger Agreement.
4.10. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement. Additionally, the
execution of a Confirming Document (other than those Confirming Documents
executed pursuant to Section 2.6 hereof which shall not be deemed to constitute
execution of a counterpart to this Agreement until such time as the pledge
becomes effective), when approved, shall constitute the execution of a
counterpart to this Agreement, and the signatory thereof shall be benefited and
obligated to the same extent as an original signatory hereto. Notwithstanding
the foregoing, Robert D. Haas or any other duly authorized officer of the
Company may execute this Agreement by providing an appropriate facsimile
signature, and any counterpart or amendment hereto containing such facsimile
signature shall for all purposes be deemed an original instrument duly executed
by the Company. In the event that such a facsimile signature is used, Robert D.
Haas or such other duly authorized officer shall execute, in original, a
certificate attesting to the entry into this Agreement or any amendment hereto,
which certificate shall list the names of all of the parties to this Agreement
or amendment and shall be filed with the permanent records of the Company.
4.11. Validity of Provisions; Severability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
LSAI HOLDING CORP.
<PAGE>
By__________________________________________
ROBERT D. HAAS
Chairman of the Board and Chief Executive
Officer
STOCKHOLDERS:
___________________________________________
(signature)
___________________________________________
(type or print name)
ADDRESS:
___________________________________________
___________________________________________
___________________________________________
EXHIBIT A
CONFIRMING DOCUMENT
The undersigned acknowledges and confirms that he, she or it agrees to be a
party to and to be bound by, and hereby does become a party to and is bound by,
(I) the Stockholders' Agreement, dated as of April 15, 1996, among LSAI Holding
Corp. (the "Company") and stockholders of the Company and (ii) the Voting Trust
Agreement, dated as of April 15, 1996, among Robert D. Haas, Peter E. Haas, Sr.,
Peter E. Haas, Jr., and F. Warren Hellman, as voting trustees, and stockholders
of the Company, as each of those agreements may be amended from time to time.
The undersigned further acknowledges and confirms that any and all Shares which
he, she or it may hold at this time or acquire in the future shall be subject to
all of the terms and conditions of the Stockholders' Agreement and the Voting
Trust Agreement, including, without limitation, the transfer restrictions and
legend requirements contained in the Stockholders' Agreement and the Share
deposit and voting limitations contained in the Voting Trust Agreement. This
document is intended to be a "Confirming Document" within the meaning of Section
2.4 of the Stockholders' Agreement. Capitalized terms used without definition
have the meanings given to them in the Stockholders' Agreement.
__________________________________________________
[signature of record holder]
__________________________________________________
[print full name of record holder]
__________________________________________________
[date]
ACKNOWLEDGMENT BY THE COMPANY
The Company hereby acknowledges that this document satisfies all of the
requirements for a "Confirming Document" under the Stockholders' Agreement and
approves of this "Confirming Document" pursuant to Section 2.4 of the
Stockholders' Agreement.
LSAI HOLDING CORP.
<PAGE>
By:_____________________________________
________________________________________
[print name and title]
________________________________________
[date]
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
BRIDGE CREDIT AGREEMENT
among
LEVI STRAUSS & CO.
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Co-Syndication Agents
THE FINANCIAL INSTITUTION PARTY HERETO
as Documentation Agent
and
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Banks
and
BANK OF AMERICA, N.A.,
as Administrative Agent for Banks
and
BANK OF AMERICA, N.A.,
as Collateral Agent for Banks
dated as of January 31, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I
DEFINITIONS
1.1 Defined Terms.......................................................................................... 1
1.2 Other Interpretive Provisions..........................................................................26
1.3 Accounting Principles..................................................................................27
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments; the Credit...........................................................27
2.2 Notes; Loan Accounts...................................................................................28
2.3 Procedure for Borrowing................................................................................28
2.4 Conversion and Continuation Elections..................................................................29
2.5 Lender Bridge Letters of Credit........................................................................30
2.6 Derivative/FX Contracts................................................................................36
2.7 Voluntary Termination or Reduction of Aggregate Bridge Commitment; Voluntary Prepayments...............37
2.8 Mandatory Prepayments and Reductions of Aggregate Bridge Commitment....................................38
2.9 Repayment; Scheduled Reductions of Aggregate Bridge Commitment.........................................40
2.10 Interest...............................................................................................40
2.11 Fees...................................................................................................41
2.12 Computation of Fees and Interest.......................................................................42
2.13 Payments by Company....................................................................................43
2.14 Payments by the Banks to Administrative Agent..........................................................44
2.15 Sharing of Payments, etc...............................................................................44
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes..................................................................................................45
3.2 Illegality.............................................................................................46
3.3 Increased Costs and Reduction of Return................................................................47
3.4 Funding Losses.........................................................................................48
3.5 Inability to Determine Rates...........................................................................48
3.6 Reserves on Offshore Rate Loans........................................................................48
3.7 Certificates of Banks..................................................................................49
3.8 Substitution of Banks..................................................................................49
3.9 Survival...............................................................................................49
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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ARTICLE IV
CONDITIONS PRECEDENT
<S> <C>
4.1 Condition to Closing...................................................................................49
4.2 Conditions to Each Borrowing, Issuance of Lender Bridge Letter of Credit and execution of Lender
Derivative/FX Contract.................................................................................53
4.3 Conditions Subsequent..................................................................................53
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Good Standing, Business, Ownership of Subsidiaries and Capitalization............54
5.2 Authorization of Borrowing, etc........................................................................54
5.3 Financial Condition....................................................................................55
5.4 Title to Properties; Liens.............................................................................56
5.5 Litigation; Adverse Facts..............................................................................56
5.6 Payment of Taxes.......................................................................................56
5.7 Materially Adverse Agreements; Performance.............................................................56
5.8 Governmental Regulation................................................................................57
5.9 ERISA Compliance.......................................................................................57
5.10 Environmental Matters..................................................................................57
5.11 Compliance With Laws...................................................................................58
5.12 Regulation U...........................................................................................58
5.13 Disclosure.............................................................................................58
5.14 Matters Relating to Collateral.........................................................................58
5.15 Intangible Assets......................................................................................59
5.16 Insurance..............................................................................................59
5.17 Year 2000..............................................................................................59
5.18 Solvency...............................................................................................60
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements and Other Reports.................................................................60
6.2 Corporate Existence, etc...............................................................................63
6.3 Compliance With Laws, etc..............................................................................64
6.4 Compliance with Agreements.............................................................................64
6.5 Payment of Taxes and Claims............................................................................64
6.6 Maintenance of Properties; Insurance...................................................................64
6.7 Inspection.............................................................................................65
</TABLE>
ii
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
6.8 Use of Proceeds........................................................................................65
6.9 Execution of Guaranty and Collateral Documents by Additional Subsidiaries..............................66
6.10 Compliance with ERISA..................................................................................67
6.11 Post Closing Actions...................................................................................67
6.12 Transfer of Receivables................................................................................69
ARTICLE VII
NEGATIVE COVENANTS
7.1 Indebtedness; Derivative/FX Contracts..................................................................69
7.2 Limitation on Liens and Negative Pledges...............................................................72
7.3 Dispositions...........................................................................................74
7.4 Fundamental Changes....................................................................................75
7.5 Use of Proceeds........................................................................................75
7.6 Leverage Ratio.........................................................................................76
7.7 Interest Coverage Ratio................................................................................77
7.8 Minimum Consolidated EBITDA............................................................................78
7.9 Change in Business.....................................................................................78
7.10 ERISA..................................................................................................78
7.11 Investments............................................................................................79
7.12 Restricted Payments....................................................................................80
7.13 Operating Lease Obligations............................................................................80
7.14 Transactions with Affiliates...........................................................................80
7.15 Amendments of Documents Relating to Indebtedness and Receivables.......................................80
7.16 Consolidated Capital Expenditures......................................................................81
7.17 Materially Adverse Agreements..........................................................................81
7.18 Limitations on Upstreaming.............................................................................81
7.19 Change in Auditors.....................................................................................82
7.20 Restricted Subsidiaries................................................................................82
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default.......................................................................................82
8.2 Remedies...............................................................................................85
8.3 Rights Not Exclusive...................................................................................85
ARTICLE IX
ADMINISTRATIVE AGENT; COLLATERAL AGENT
9.1 Appointment and Authorization..........................................................................86
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iii
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TABLE OF CONTENTS
(continued)
<TABLE>
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<S> <C>
9.2 Delegation of Duties...................................................................................86
9.3 Liability of Administrative Agent or Collateral Agent..................................................86
9.4 Reliance by Administrative Agent and Collateral Agent..................................................87
9.5 Notice of Default......................................................................................87
9.6 Credit Decision; Disclosure of Information by Administrative Agent and Collateral Agent................88
9.7 Indemnification of Administrative Agent and Collateral Agent...........................................88
9.8 Administrative Agent in Individual Capacity............................................................89
9.9 Successor Administrative Agent.........................................................................89
9.10 Successor Collateral Agent.............................................................................90
9.11 Withholding Tax........................................................................................90
9.12 Co-Syndication Agents; Documentation Agent.............................................................92
9.13 Collateral Documents, Guaranties and Intercreditor Agreement...........................................92
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers.................................................................................93
10.2 Notices................................................................................................94
10.3 No Waiver; Cumulative Remedies.........................................................................94
10.4 Costs and Expenses.....................................................................................95
10.5 Company's Indemnification..............................................................................95
10.6 Payments Set Aside.....................................................................................96
10.7 Successors and Assigns.................................................................................96
10.8 Assignments, Participations, etc.......................................................................96
10.9 Confidentiality........................................................................................98
10.10 Set-off................................................................................................99
10.11 Notification of Addresses, Lending Offices, etc........................................................99
10.12 Counterparts...........................................................................................99
10.13 Severability...........................................................................................99
10.14 No Third Parties Benefited.............................................................................99
10.15 Change in Accounting Principles.......................................................................100
10.16 Governing Law and Jurisdiction........................................................................100
10.17 Interpretation........................................................................................100
10.18 Representation of Banks...............................................................................101
10.19 Waiver of Jury Trial..................................................................................101
</TABLE>
ARTICLE XI
GENERAL RELEASE
iv
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
<S> <C>
Exhibit I.......................................................[FORM OF] NOTICE OF BORROWING
Exhibit II.....................[FORM OF] NOTICE OF EXECUTION OF LENDER DERIVATIVE/FX CONTRACT
Exhibit III.......................................[FORM OF] NOTICE OF CONVERSION/CONTINUATION
Exhibit IV.....................................................................[FORM OF] NOTE
Exhibit V....................................................[FORM OF] COMPLIANCE CERTIFICATE
Exhibit VI......................................[FORM OF] CLOSING DATE CERTIFICATE OF COMPANY
Exhibit VII...........................................[FORM OF] PLEDGE AND SECURITY AGREEMENT
Exhibit VIII...............................................................[FORM OF] GUARANTY
Exhibit IX................................................[FORM OF] ASSIGNMENT AND ACCEPTANCE
Exhibit X......................................................................PRIVITY LETTER
</TABLE>
i
<PAGE>
BRIDGE CREDIT AGREEMENT
-----------------------
This BRIDGE CREDIT AGREEMENT is entered into as of January 31, 2000 among
Levi Strauss & Co., a Delaware corporation ("Company"); the several financial
-------
institutions from time to time party to this Agreement (collectively "Banks" and
-----
individually a "Bank"); the several financial institutions party to this
----
Agreement as Co-Syndication Agents; the financial institution party to this
Agreement as Documentation Agent; Bank of America, N.A. as Administrative Agent
for Banks; and Bank of America, N.A. as Collateral Agent for Banks.
WHEREAS, Banks have agreed to extend certain credit facilities to Company,
the proceeds of which will be used to (a) refinance Company's receivable
purchase program, refinance certain uncommitted foreign and domestic lines of
credit provided to Company and its Foreign Subsidiaries, and (b) provide
financing for working capital and other general corporate purposes of Company
and its Subsidiaries, letters of credit and back up credit for certain foreign
lines of credit and foreign exchange and other derivative contracts; and
WHEREAS, Company has agreed to secure its Obligations hereunder and under
the other Loan Documents by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of its personal property and certain of its real
property (other than Principal Property), including a pledge of 100% of the
Capital Stock of certain of its Domestic Subsidiaries and 65% of the Capital
Stock of certain of its Foreign Subsidiaries (other than Restricted
Subsidiaries); and
WHEREAS, certain of the Domestic Subsidiaries of Company have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of their respective personal property and certain of
their respective real property (other than Principal Property), including a
pledge of 100% of the Capital Stock of certain of their respective Domestic
Subsidiaries and 65% of the Capital Stock of certain of their respective Foreign
Subsidiaries (other than Restricted Subsidiaries);
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. In addition to the terms defined elsewhere in this
-------------
Agreement, the following terms have the following meanings:
"Administrative Agent" means Bank of America, in its capacity as agent
--------------------
for Banks hereunder, and any successor administrative agent pursuant to Section
9.9.
"Administrative Agent-Related Persons" means Administrative Agent and
------------------------------------
any successor administrative agent arising under Section 9.9, together with
their respective Affiliates (including, in the case of Bank of America, the
Arranger), and the officers, directors, employees, agents, counsel, and
attorneys-in-fact of such Persons and Affiliates.
1
<PAGE>
"Administrative Agent's Payment Office" means the address for payments
-------------------------------------
set forth on the signature page hereto in relation to Administrative Agent or
such other address as Administrative Agent may from time to time specify in
accordance with Section 10.2.
"Affected Bank" has the meaning specified in Section 3.8.
-------------
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, (a) power to vote 10% or
more of the Securities (on a fully diluted basis) of the other Person having
ordinary voting power for the election of directors or managing general
partners, or (b) to direct or cause the direction of the management and policies
of the other Person, whether through the ownership of voting Securities,
membership interests, by contract, or otherwise.
"Affiliated Fund" means, with respect to any Bank, a fund that invests
---------------
in commercial loans and is managed by the same investment advisor as such Bank,
an Affiliate of such Bank or by an Affiliate of the same investment advisor as
such Bank.
"Aggregate Bridge Commitment" means the combined Commitments of Banks.
---------------------------
The initial Aggregate Bridge Commitment is $450,000,000.
"Aggregate Non-Bridge Commitments" means the sum of (a) the Aggregate
--------------------------------
180 Day Commitment, (b) the Aggregate Commitment (as defined therein) under the
Amended and Restated 1997 364 Day Credit Agreement, and (c) the Aggregate
Commitment (as defined therein) under the 1997 Second Amended and Restated
Credit Agreement.
"Aggregate 180 Day Commitment" means the combined Commitments (as
----------------------------
defined therein) under the Amended and Restated 1999 180 Day Credit Agreement.
"Aggregate Term Commitments" means the sum of (a) the Aggregate
--------------------------
Commitment (as defined therein) under the Amended and Restated 1997 364 Day
Credit Agreement, and (b) the Aggregate Commitment (as defined therein) under
the 1997 Second Amended and Restated Credit Agreement.
"Aggregate Total Commitments" means the sum of (a) the Aggregate
---------------------------
Bridge Commitment and (b) the Aggregate 180 Day Commitment.
"Agreement" means this Bridge Credit Agreement, as amended,
---------
supplemented, or modified from time to time.
"Amended and Restated 1997 364 Day Credit Agreement" means the Amended
--------------------------------------------------
and Restated 1997 364 Day Credit Agreement dated as of January 31, 2000, between
Company, Bank of America, as agent, Bank of America, as collateral agent, and
the other lenders parties thereto.
"Amended and Restated 1999 180 Day Credit Agreement" means the Amended
--------------------------------------------------
and Restated 1999 180 Day Credit Agreement dated as of January 31, 2000, between
Company,
2
<PAGE>
Bank of America, as administrative agent, Bank of America, as collateral agent,
and the other lenders parties thereto.
"Applicable Margin" has the meaning specified in Section 2.10.
-----------------
"Arranger" means BancAmerica Securities, Inc., a Delaware corporation.
--------
"Asset Disposition" means the sale by Company or any of its
-----------------
Subsidiaries to any Person other than Company or any of its Subsidiaries of (a)
any of the stock of any of Company's Subsidiaries, (b) substantially all of the
assets of any division or line of business of Company or any of its
Subsidiaries, or (c) any other assets (whether tangible or intangible) of
Company or any of its Subsidiaries other than Dispositions permitted by Sections
7.3(a), 7.3(c), 7.3(e), 7.3(f), 7.3(g), 7.3(h), and 7.3(m).
"Assignee" has the meaning specified in Section 10.8(a).
--------
"Assignment and Acceptance" means an Assignment and Acceptance
-------------------------
substantially in the form of Exhibit IX.
----------
"Availability Period" means the period from the date of this Agreement
-------------------
to the close of business of Administrative Agent in San Francisco, California on
January 31, 2002.
"Bank" and "Banks" have the meanings specified in the introductory
---- -----
clause hereto; provided that for purposes of any determination made with respect
--------
to Citicorp U.S.A., Inc. under Section 3.2, 3.3, 3.4, 3.5 or 3.6, "Bank" shall
be deemed to include Citibank, N.A.
"Bank of America" means Bank of America, N.A.
---------------
"Bankruptcy Code" means Title 11 of the United States Code, entitled
---------------
"Bankruptcy" (11 U.S.C. (S)101, et seq.).
-------
"Base Rate" means, for any day, a fluctuating rate per annum equal to
---------
the higher of (a) the Federal Funds Rate plus 1/2 of 1%, and (b) the rate of
----
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." Such rate is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan that bears interest based on the Base
--------------
Rate.
"Borrower Party" means Company and any of its Material Domestic
--------------
Subsidiaries from time to time party to a Loan Document, and "Borrower Parties"
----------------
means all such Persons, collectively.
3
<PAGE>
"Borrowing" means a borrowing hereunder consisting of Loans made to
---------
Company on the same day and, other than in the case of Base Rate Loans, having
the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
--------------
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York or San Francisco,
California are authorized or required by law to close and with respect to
calculations, disbursements, and payments relating to Offshore Rate Loans, a day
on which dealings are carried on in the offshore Dollar interbank market in
London.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Lease", as applied to any Person, means any lease of any
-------------
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Markets Transaction" means (a) an issuance or sale of
---------------------------
Securities by Company, through a public offering or private placement, or (b) a
capital contribution to Company; provided, however, that in the case of debt
-------- --------
Securities, any such Securities (i) shall be unsecured, and (ii) shall not have
a stated maturity date or required principal payments earlier than five years
from the date of issuance thereof.
"Capital Stock" means (a) in the case of a corporation, corporate
-------------
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership, partnership interests
(whether general or limited), (d) in the case of a limited liability company,
membership interests, and (e) any other interest or participation that confers
on a Person the right to receive a share of the profits and losses of, or
distribution of assets of, the issuing Person.
"Cash Collateral Account" means a blocked deposit account at Bank of
-----------------------
America in which Company grants a security interest to Collateral Agent pursuant
to the Collateral Documents as security for Lender Bridge Letter of Credit Usage
and Lender Derivative/FX Usage and with respect to which Company agrees to
execute and deliver from time to time such documentation as Administrative Agent
or Collateral Agent may reasonably request to further assure and confirm such
security interest.
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 4.1 are satisfied or waived by all Banks, or in the case of
Section 4.1(d), waived by the Person entitled to obtain such payment.
"Code" means the Internal Revenue Code of 1986 as amended and any
----
regulations promulgated thereunder.
4
<PAGE>
"Collateral" means, collectively, all of the Property (including
----------
Capital Stock) in which Liens are purported to be granted pursuant to the
Collateral Documents as security for the Obligations.
"Collateral Agent" means Bank of America, in its capacity as
----------------
collateral agent for Banks hereunder, and any successor collateral agent.
"Collateral Agent-Related Person" means Collateral Agent and any
-------------------------------
successor collateral agent arising under Section 9.10, together with their
respective Affiliates (including, in the case of Bank of America, the Arranger),
and the officers, directors, employees, agents, counsel, and attorneys-in-fact
of such Persons and Affiliates.
"Collateral Documents" means the Pledge and Security Agreement, the
--------------------
Foreign Pledge Agreements, the Mortgages, and all other instruments or documents
delivered by any Borrower Party pursuant to this Agreement or any of the other
Loan Documents in order to grant to Collateral Agent, on behalf of Banks, a Lien
on any Property of that Borrower Party as security for the Obligations.
"Commitment" means, for each Bank, the amount set forth opposite such
----------
Bank's name on Schedule 2.1, as such amount may be reduced or adjusted from time
------------
to time in accordance with the terms of this Agreement.
"Commitment Percentage" means, as to any Bank, the percentage set
---------------------
forth opposite such Bank's name on Schedule 2.1, as adjusted as contemplated
------------
herein.
"Company" has the meaning specified in the introductory clause hereto.
-------
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit V properly completed and signed by a Responsible Officer of Company.
---------
"Consolidated Capital Expenditures" means, for any period, the sum of
---------------------------------
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries; provided, however, that Consolidated Capital Expenditures shall
-------- -------
not include software costs.
"Consolidated EBITDA" means, for any period, for Company and its
-------------------
Subsidiaries on a consolidated basis, an amount equal to (a) the sum, without
duplication, of (i) Consolidated Net Income, (ii) Consolidated Interest Charges,
(iii) the amount of taxes, based on or measured by income, used or included in
the determination of such Consolidated Net Income, (iv) the amount of
depreciation and amortization expense deducted in determining such Consolidated
Net Income, and (v) accruals for Company's Global Success Sharing Plan, Long
Term Performance Plan, Leadership Shares and Long Term Incentive Payment Plan
minus (b) Company's cash payments for Company's Global Success Sharing Plan,
- -----
Long Term Performance Plan, Leadership Shares and Long Term Incentive Payment
Plan.
5
<PAGE>
"Consolidated Excess Cash Flow" means, for any period, an amount (if
-----------------------------
positive) equal to (a) the sum, without duplication, of the amounts for such
period of (i) Consolidated EBITDA plus (or minus) (ii) loss (gain) on sales of
---- -----
assets plus (iii) to the extent not otherwise included, all noncash expenses
----
plus (iv) the first $50,000,000 of proceeds from the Pending IceHouse
- ----
Disposition plus (or minus) (v) the Consolidated Working Capital Adjustment
minus (b) the sum, without duplication, of the amounts for such period for (i)
- -----
scheduled repayments of Consolidated Funded Indebtedness (excluding repayments
of revolving loans except to the extent the corresponding commitments are
permanently reduced in connection with such repayments), (ii) Consolidated
Capital Expenditures (net of any proceeds of related financings with respect to
such expenditures), (iii) Consolidated Interest Charges paid in cash, (iv) taxes
based on income of Company and its Subsidiaries paid in cash, (v) the excess of
bank fees paid over bank fees amortized, and (vi) cash payments for long-term
employee benefits and other related liabilities (other than changes in accruals
under the Global Success Sharing Plan, Long Term Performance Plan, Leadership
Shares and Long Term Incentive Payment Plan).
"Consolidated Funded Indebtedness" means, as of any date of
--------------------------------
determination, for Company and its Subsidiaries on a consolidated basis, the
sum, without duplication, of (a) the outstanding principal amount of all
obligations and liabilities, whether current or long-term, for borrowed money
(including Obligations in respect of Loans hereunder), (b) that portion of
obligations with respect to Capital Leases that are capitalized in the
consolidated balance sheet of Company and its Subsidiaries, in each case to the
extent treated as debt in accordance with GAAP, and (c) the outstanding amount
of all obligations under any Receivables Purchase Facility.
"Consolidated Interest Charges" means, for any period, for Company and
-----------------------------
its Subsidiaries on a consolidated basis, all interest (net of all interest
income), premium payments, fees, charges and related expenses payable by Company
and its Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP.
"Consolidated Net Income" means, for any period, for Company and its
-----------------------
Subsidiaries on a consolidated basis, the net income (or loss) of Company and
its Subsidiaries determined in accordance with GAAP for that period.
"Consolidated Net Tangible Assets" means the aggregate amount of
--------------------------------
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any indebtedness for
money borrowed having a maturity of less than 12 months from the date of the
most recent consolidated balance sheet of Company but which by its terms is
renewable or extendable beyond 12 months from such date at the option of the
borrower), and (b) all goodwill, trade names, patents, unamortized debt discount
and expense and any other like intangibles, all as set forth on the most recent
consolidated balance sheet of Company and computed in accordance with generally
accepted accounting principles.
"Consolidated Working Capital Adjustment" means, for any period, for
---------------------------------------
Company and its Subsidiaries on a consolidated basis, an amount equal to (a) the
sum of the decrease (increase) during that period in current assets, excluding
changes in cash and cash equivalents, and changes in current tax assets plus (b)
----
the sum of the increase (decrease) during that period in
6
<PAGE>
current liabilities, excluding changes in short-term Indebtedness or current
maturities of long-term Indebtedness, changes in short-term tax liabilities and
changes in short-term interest liabilities.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which Company (a)
----------------------------
converts Base Rate Loans to Offshore Rate Loans, or (b) converts Offshore Rate
Loans to Base Rate Loans, or (c) continues Offshore Rate Loans having Interest
Periods expiring on such date as Offshore Rate Loans but with a new Interest
Period.
"Debtor Relief Laws" means the Bankruptcy Code, and all other
------------------
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect affecting the rights of creditors
generally.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Default Rate" means an interest rate equal to the Base Rate plus the
------------ ----
Applicable Margin, if any, applicable to Base Rate Loans plus 2% per annum;
- ----------------- ----
provided, however, that with respect to an Offshore Rate Loan, the Default Rate
- -------- -------
shall be an interest rate equal to the interest rate (including any Applicable
Margin) otherwise applicable to such Loan plus 2% per annum, in each case to the
----
fullest extent permitted by applicable laws; provided further that with respect
-------- -------
to an Offshore Rate Loan, upon the expiration of the Interest Period in effect
at the time any such increase in interest rate is effective, such Offshore Rate
Loan shall thereupon become a Base Rate Loan and shall thereafter bear interest
at the Default Rate applicable to Base Rate Loans.
"Derivative/FX Contract" means (a) any and all interest rate swaps,
----------------------
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or options
or forward bond or forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swaps, cross-currency rate
swaps, currency options, spot contracts or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., the International Foreign Exchange Master
Agreement, or any other master agreement, including any such obligations or
liabilities under any such agreement.
7
<PAGE>
"Derivative/FX Lender" means a Bank or any of its Affiliates.
--------------------
"Disposition" means the sale, transfer, license or other disposition
-----------
(including any sale and leaseback transaction) of any Property by any Person,
including any sale, assignment, transfer or other disposal with or without
recourse of any notes or accounts receivable or any rights and claims associated
therewith.
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
"Domestic Subsidiary" means any Subsidiary of Company that is
-------------------
incorporated or organized in the United States, any state thereof or in the
District of Columbia.
"Eligible Assignee" means (a) a financial institution organized under
-----------------
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
- --------
United States; (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of
a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a
Subsidiary; (d) another Bank, any Affiliate of a Bank and any Affiliated Fund of
any Bank; and (e) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act of 1933, as amended) which extends
credit or buys loans as one of its businesses, including but not limited to,
insurance companies, mutual funds and lease financing companies. No Borrower
Party or any Affiliate of a Borrower Party shall be an Eligible Assignee.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters, but excluding
routine zoning ordinances.
"Equipment Financing Transaction" means any financing arrangement with
-------------------------------
any Person of equipment pursuant to a lease intended as security which will be
treated as indebtedness under GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) under common control with Company within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
8
<PAGE>
"ERISA Event" means (a) a Reportable Event with respect to a Pension
-----------
Plan; (b) a withdrawal by Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by Company or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization, in each case which would reasonably be expected to result in a
liability to Company or any of its Subsidiaries of more than $10,000,000; (d)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon Company or any ERISA
Affiliate.
"Event of Default" means any of the events or circumstances specified
----------------
in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
------------
regulations promulgated thereunder.
"Existing Lender Letters of Credit" means the letters of credit listed
---------------------------------
on Schedule 1.1(a).
---------------
"Existing Receivables Purchase Agreement" means the Receivables
---------------------------------------
Purchase Agreement dated as of April 28, 1999 among LSFCC, Levi Strauss Funding
Corp., Ciesco L.P., Receivables Capital Corporation, the financial institutions
from time to time party thereto and Citicorp North America, Inc., as agent.
"Exposure Factor" means 125%.
---------------
"FDIC" means the Federal Deposit Insurance Corporation and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards to the nearest 1/100/th/ of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank on the Business Day next succeeding such day; provided
--------
that (a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System and any Governmental Authority succeeding to any of its principal
functions.
9
<PAGE>
"FinServ" means Levi Strauss & Co. Europe Financial Services, S.C.A.,
-------
a Belgian corporation.
"Flood Hazard Property" means real property located in an area
---------------------
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
"Foreign Credit Lines" means all unsecured committed or uncommitted
--------------------
lines of credit to which any Foreign Subsidiary is a party from time to time.
The Foreign Credit Lines as of November 28, 1999 are listed on Schedule 1.1(a).
---------------
"Foreign Pledge Agreement" means each pledge agreement or similar
------------------------
instrument governed by the laws of a country other than the United States,
executed and delivered pursuant to Section 6.11 or from time to time thereafter
in accordance with Section 6.9 by Company or any Material Domestic Subsidiary
that owns Capital Stock of one or more Foreign Subsidiaries organized in such
country, in form and substance satisfactory to Administrative Agent, as such
Foreign Pledge Agreement may thereafter be amended, supplemented, or modified
from time to time.
"Foreign Subsidiary" means any Subsidiary of Company, other than a
------------------
Domestic Subsidiary.
"Four Facility Commitment Reduction Fraction" means, as of any date of
-------------------------------------------
determination, a fraction, the numerator of which is the Aggregate Bridge
Commitment and the denominator of which is the sum of (a) the Aggregate Bridge
Commitment plus (b) the Aggregate 180 Day Commitment plus (c) the Aggregate
---- ----
Commitment (as defined therein) under the Amended and Restated 1997 364 Day
Credit Agreement plus (d) the Aggregate Commitment (as defined therein) under
----
the 1997 Second Amended and Restated Credit Agreement.
"Funded Current Liability Percentage" means "funded current liability
-----------------------------------
percentage" within the meaning of Section 412(1)(8)(B) of the Code.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 3.1.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative
10
<PAGE>
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guarantor" means any Material Domestic Subsidiary that executes and
---------
delivers a counterpart of the Guaranty on the Subsequent Closing Date or from
time to time thereafter pursuant to Section 6.9.
"Guaranty" means the Guaranty executed and delivered by existing
--------
Material Domestic Subsidiaries on the Subsequent Closing Date and to be executed
and delivered by additional Material Domestic Subsidiaries from time to time
thereafter in accordance with Section 6.9, substantially in the form of Exhibit
-------
VIII, as such Guaranty may thereafter be amended, supplemented, or modified from
- ----
time to time.
"Guaranty Obligation" means, as to any Person, any (a) guaranty by
-------------------
such Person of Indebtedness of, or other obligation payable or performable by,
any other Person, or (b) assurance, agreement, letter of responsibility, letter
of awareness, undertaking or arrangement given by such Person to an obligee of
any other Person with respect to the payment or performance of an obligation by,
or the financial condition of, such other Person, whether direct, indirect or
contingent, including any purchase or repurchase agreement covering such
obligation or any collateral security therefor, any agreement to provide funds
(by means of loans, capital contributions or otherwise) to such other Person,
any agreement to support the solvency or level of any balance sheet item of such
other Person or any "keep-well" or other arrangement of whatever nature given
for the purpose of assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided, however, that the term
-------- -------
Guaranty Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, covered by such
Guaranty Obligation or, if less, the amount to which such Guaranty Obligation is
specifically limited, or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the person in good
faith.
"Indebtedness" means, as to any Person at a particular time:
------------
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) any direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), banker's acceptances, bank
guaranties, surety bonds and similar instruments;
(c) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of property or
services (other than obligations under a long term supply contract), which
purchase price is (i) due more than 90 days from the date of incurrence of the
obligation in respect thereof, or (ii) evidenced by a note or similar written
instrument, and indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising
11
<PAGE>
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
(d) without duplication, lease payment obligations under Capital
Leases or Synthetic Lease Obligations; and
(e) without duplication, all Guaranty Obligations of such Person in
respect of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person except for customary exceptions
acceptable to Majority Banks.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
-----------------------
"Indemnified Person" has the meaning specified in Section 10.5.
------------------
"Indentures" means that certain Indenture dated as of November 6, 1996
----------
between Company and Citibank, N.A., as trustee, and that certain Fiscal Agency
Agreement dated as of November 22, 1996 between Company and Citibank, N.A., as
fiscal agent.
"Ineligible Securities" means securities which may not be underwritten
---------------------
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case covered by subsections (a) and (b) undertaken under
U.S. Federal, State or foreign law, including the Bankruptcy Code.
"Intellectual Property" means all patents, trademarks, tradenames,
---------------------
copyrights, technology, software, know-how and processes used in or necessary
for the conduct of the business of Company and its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise), business
or operations of Company and its Subsidiaries, taken as a whole.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
-----------------------
of January 31, 2000 between the respective lenders under this Agreement, the
Amended and Restated 1999 180 Day Credit Agreement, the Amended and Restated
1997 364 Day Credit Agreement and the 1997 Second Amended and Restated Credit
Agreement.
"Interest Coverage Ratio" means, as of any date of determination, the
-----------------------
ratio of (a) Consolidated EBITDA for the period specified to (b) Consolidated
Interest Charges during such period.
12
<PAGE>
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the last Business Day of each fiscal quarter; provided,
--------
however, that if any Interest Period for an Offshore Rate Loan exceeds three
- -------
months, interest shall also be paid on last day of each successive three-month
period (commencing with the beginning of such Interest Period) and each such day
will be an Interest Payment Date.
"Interest Period" means, with respect to any Offshore Rate Loan, the
---------------
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date of such Loan, as applicable, and ending on the date
one, two, three, or six months thereafter (and if consented to by Majority Banks
in the given instance, nine months), as selected by Company in its Notice of
Borrowing or Notice of Conversion/Continuation, as the case may be;
provided that:
--------
(a) if any Interest Period pertaining to an Offshore Rate Loan would
otherwise end on a day which is not a Business Day, that Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding Business
Day;
(b) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(c) no Interest Period shall extend beyond the Maturity Date; and
(d) unless Administrative Agent otherwise consents, there may not be
more than 24 Interest Periods for Offshore Rate Loans in effect at any time
under this Agreement, the Amended and Restated 1999 180 Day Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement.
"Investment" means, as to any Person, any acquisition or any
----------
investment by such Person, whether by means of the purchase or other acquisition
of stock or other Securities of any other Person or by means of a loan, creating
a debt, capital contribution, guaranty or other debt or equity participation or
interest in any other Person, including any partnership and joint venture
interests in such other Person. For purposes of covenant compliance, the amount
of any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"IP Collateral" means, collectively, the Intellectual Property owned
-------------
by Company or any of its Material Domestic Subsidiaries that constitutes
Collateral under the Pledge and Security Agreement.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
13
<PAGE>
"Issuing Bridge Lender" means, with respect to any Lender Bridge
---------------------
Letter of Credit, Bank of America, Citibank, N.A., Morgan Guaranty Trust Company
of New York or The Bank of Nova Scotia, as applicable, or any successor Issuing
Bridge Lender hereunder.
"Issuing 180 Day Lender" means, with respect to any Lender 180 Day
----------------------
Letter of Credit, the issuing lender thereof pursuant to the Amended and
Restated 1999 180 Day Credit Agreement.
"Lender Bridge Letter of Credit" means any letter of credit issued or
------------------------------
outstanding hereunder, including the Existing Lender Letters of Credit. A
Lender Bridge Letter of Credit may be a commercial letter of credit, a
performance letter of credit or a financial letter of credit.
"Lender Bridge Letter of Credit Usage" means, as of any date of
------------------------------------
determination, the aggregate undrawn face amount of outstanding Lender Bridge
Letters of Credit plus the aggregate amount of all drawings under the Lender
----
Bridge Letters of Credit not reimbursed by Company or converted into Loans.
"Lender Derivative/FX Contract" means any Ordinary Course
-----------------------------
Derivative/FX Contract entered into by Company or FinServ and a Derivative/FX
Lender that is subject to a legally enforceable netting agreement between
Company or FinServ, as the case may be, and such Derivative/FX Lender with
respect to all Ordinary Course Derivative FX/Contracts between such parties.
The Lender Derivative/FX Contracts as of the dates indicated are listed on
Schedule 1.1(a).
- ---------------
"Lender Derivative/FX Sublimit" means an amount equal to the lesser of
-----------------------------
the Aggregate Bridge Commitment and $75,000,000. The Lender Derivative/FX
Sublimit is part of, and not in addition to, the Aggregate Bridge Commitment.
"Lender Derivative/FX Usage" means, as of any date of determination,
--------------------------
(a) the sum of the Termination Values for all outstanding Lender Derivative/FX
Contracts times (b) the Exposure Factor.
-----
"Lender Letter of Credit Sublimit" means an amount equal to the lesser
--------------------------------
of (a) the sum of the Aggregate Bridge Commitment plus the Aggregate 180 Day
----
Commitment and (b) $250,000,000. The Lender Letter of Credit Sublimit is part
of, and not in addition to, the Aggregate Bridge Commitment.
"Lender 180 Day Letter of Credit" means any letter of credit issued or
-------------------------------
outstanding under the Amended and Restated 1999 180 Day Credit Agreement.
"Lender 180 Day Letter of Credit Usage" means, as of any date of
-------------------------------------
determination, the aggregate undrawn face amount of outstanding Lender 180 Day
Letters of Credit plus the aggregate amount of all drawings under the Lender 180
----
Day Letters of Credit not reimbursed by Company or converted into Loans under
(and as defined in) the Amended and Restated 1999 180 Day Credit Agreement.
"Lending Office" means, with respect to any Bank, the office or
--------------
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending
14
<PAGE>
Office", as the case may be, below its name on the signature pages hereto, or
such other office or offices of such Bank as it may from time to time specify to
Company and Administrative Agent.
"Letter of Credit Action" means the issuance, supplement, amendment,
-----------------------
renewal, extension, modification or other action relating to a Lender Bridge
Letter of Credit hereunder.
"Letter of Credit Application" means an application for a Letter of
----------------------------
Credit Action from time to time in use by an Issuing Bridge Lender.
"Letter of Credit Expiration Date" means the Maturity Date.
--------------------------------
"Leverage Ratio" means, as of any date of determination, for Company
--------------
and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) (i) as of the end of the first fiscal
quarter of fiscal year 2000, Consolidated EBITDA for such fiscal quarter times
-----
4; (ii) as of the end of the second fiscal quarter of fiscal year 2000,
Consolidated EBITDA for the first two fiscal quarters of fiscal year 2000 times
-----
2; (iii) as of the end of the third fiscal quarter of fiscal year 2000,
Consolidated EBITDA for the first three fiscal quarters of fiscal year 2000
times 1.333; and (iv) as of the end of any fiscal quarter thereafter,
- -----
Consolidated EBITDA for the four fiscal quarter period then ended.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease, any financing
lease having substantially the same economic effect as any of the foregoing, or
the filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the UCC of any jurisdiction or any comparable
law, or the interest of the Person other than Company or any of its Subsidiaries
in connection with any Equipment Financing Transaction) and any contingent or
other agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease or the interest of a purchaser of Permitted
Foreign Receivables under any Permitted Foreign Receivables Purchase Facility.
"Loan" means a loan by a Bank to Company under Section 2.1, and may be
----
an Offshore Rate Loan or a Base Rate Loan.
"Loan Documents" means this Agreement, any Notes, the Lender Bridge
--------------
Letters of Credit, the Letter of Credit Applications, the fee letters referred
to in Section 2.11, the Guaranty, the Collateral Documents, and all other
instruments, documents and agreements delivered to Administrative Agent or any
Bank in connection herewith.
"LOS/DOS Business" means the ownership and operation by Company or a
----------------
Subsidiary of Company, whether directly or through joint ventures with third
parties in partnership, corporate or other form, of businesses engaged solely in
selling apparel and accessories and related products including, without
limitation, selling through retail stores, outlet stores, telephone sales,
catalog or other mail orders, and electronic sales. LOS/DOS Business shall not
include any business engaging in manufacturing or in selling and in
manufacturing.
15
<PAGE>
"LSFCC" means Levi Strauss Financial Center Corporation, a California
-----
corporation, formerly Levi Strauss Credit Corp., a California corporation.
"LSFLLC" means Levi Strauss Funding, LLC, a Delaware limited liability
------
company.
"Majority Banks" means, at any time, (a) Banks holding more than 70%
--------------
of the Aggregate Bridge Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 70% of the then aggregate unpaid principal
amount of the Loans.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of any Loan Document, (b)
is or could reasonably be expected to be material and adverse to the condition
(financial or otherwise), business, assets, operations or prospects of Company
and its Subsidiaries, taken as a whole, or (c) materially impairs or could
reasonably be expected to materially impair the ability of any Borrower Party to
perform the Obligations.
"Material Domestic Subsidiary" means any Domestic Subsidiary that is a
----------------------------
Material Subsidiary.
"Material Foreign Subsidiary" means any Foreign Subsidiary that is a
---------------------------
Material Subsidiary.
"Material Subsidiary" means (a) any Subsidiary of Company, (i) the net
-------------------
book value of which is $5,000,000 or more or (ii) the annual gross revenue of
which is $15,000,000 or more and (b) any other Subsidiary of Company designated
by Company to be a "Material Subsidiary" for purposes of this Agreement.
"Maturity Date" means January 31, 2002.
-------------
"Mortgage" means a security instrument (whether designated as a deed
--------
of trust or a mortgage or by any similar title) containing standard and
customary terms and provisions executed and delivered by any Borrower Party, in
such form as may be approved by Majority Banks in their sole discretion after
consultation with Company, in each case with such changes thereto as may be
recommended by Administrative Agent's local counsel based on local laws or
customary local mortgage or deed of trust practices. "Mortgages" means all such
---------
instruments, collectively.
"Multiemployer Plan" means a "multiemployer plan", within the meaning
------------------
of Section 4001(a)(3) of ERISA, to which Company or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Negative Pledge" means a Contractual Obligation that restricts Liens
---------------
on property.
16
<PAGE>
"Net Asset Disposition Proceeds" means cash payments (including cash
------------------------------
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) received for an Asset
Disposition, net of any bona fide direct costs incurred in connection with such
Asset Disposition including (a) income taxes reasonably estimated to be actually
payable within one year of the date of such Asset Disposition as a result of any
gain recognized in connection with such Asset Disposition, (b) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans and Indebtedness under the Amended and
Restated 1999 180 Day Credit Agreement, the Amended and Restated 1997 364 Day
Credit Agreement, and the 1997 Second Amended and Restated Credit Agreement)
that is secured by a Lien on the stock or assets in question that is required to
be repaid under the terms thereof as a result of such Asset Disposition, and (c)
brokers' fees and legal fees incurred in connection with such Asset Disposition;
provided, however, that the first $50,000,000 of proceeds from the Pending
- -------- -------
IceHouse Disposition shall not constitute Net Asset Disposition Proceeds.
"Net Equipment Financing Proceeds" means any cash proceeds received in
--------------------------------
connection with an Equipment Financing Transaction, net of (a) all reasonable
costs payable to Persons not Affiliates of Company in connection with such
Equipment Financing Transaction and (b) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans and Indebtedness under the Amended and Restated 1999 180 Day
Credit Agreement, the Amended and Restated 1997 364 Day Credit Agreement, and
the 1997 Second Amended and Restated Credit Agreement) that is secured by a Lien
on the equipment in question that is required to be repaid under the terms
thereof as a result of such Equipment Financing Transaction.
"Net Insurance Proceeds" means any cash payments or proceeds received
----------------------
by Company or any of its Subsidiaries with respect to Collateral under (a) any
business interruption policy in respect of a covered loss thereunder, or (b)
under any property insurance policy in respect of a covered loss thereunder, in
each case, net of any actual and reasonable documented costs incurred by Company
or any of its Subsidiaries in connection with the adjustment or settlement of
any claims of Company or such Subsidiary in respect thereof.
"Net Real Estate Financing Proceeds" means any cash proceeds received
----------------------------------
in connection with a Real Estate Financing Transaction, net of all reasonable
costs payable to Persons not Affiliates of Company in connection with such Real
Estate Financing Transaction.
"Net Securities Proceeds" means (a) the cash proceeds (net of
-----------------------
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses) from the
issuance of Securities of Company or any of its Subsidiaries, or (b) any cash
capital contribution to Company.
"1997 Second Amended and Restated Credit Agreement" means the 1997
-------------------------------------------------
Second Amended and Restated Credit Agreement dated as of January 31, 2000,
between Company, Bank of America, as agent, Bank of America, as collateral
agent, and the other lenders parties thereto.
"Notes" has the meaning specified in Section 2.2.
-----
17
<PAGE>
"Notice of Borrowing" means a notice, signed by Company, and given to
-------------------
Administrative Agent pursuant to Section 2.3, in substantially the form of
Exhibit I.
- ---------
"Notice of Conversion/Continuation" means a notice, signed by Company,
---------------------------------
and given to Administrative Agent pursuant to Section 2.4, in substantially the
form of Exhibit III.
-----------
"Notice of Lender Derivative/FX Contract" means a notice, signed by
---------------------------------------
Company, and given to Administrative Agent pursuant to Section 2.6, in
substantially the form of Exhibit II.
------- --
"Obligations" means all advances to, and debts, liabilities,
-----------
obligations, covenants and duties of, any Borrower Party arising under any Loan
Document, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest that accrues after the commencement of any proceeding
under any Debtor Relief Laws by or against any Borrower Party or any Subsidiary
or Affiliate of any Borrower Party.
"Offshore Rate" means for any Interest Period with respect to any
-------------
Offshore Rate Loan, a rate per annum determined by Administrative Agent pursuant
to the following formula:
Offshore Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means, for such Interest Period:
------------------
(a) the rate per annum equal to the rate determined by
Administrative Agent to be the offered rate that appears on the page
of the Telerate Screen that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period, or
(b) in the event that the rate referenced in the preceding
subsection (a) does not appear on such page or service or such page or
service shall cease to be available, the rate per annum equal to the
rate determined by Administrative Agent to be the offered rate on such
other page or other service that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period, or
(c) in the event that the rates referenced in the preceding
subsections (a) and (b) are not available, the rate per annum
determined by Administrative Agent as the rate of interest at which
Dollar deposits (for delivery on the first day
18
<PAGE>
of such Interest Period) in same day funds in the approximate amount
of the applicable Offshore Rate Loan and with a term equivalent to
such Interest Period would be offered by Bank of America's London
Branch to major banks in the offshore Dollar market at their request
at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
-----------------------------
Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100/th/ of 1%) in effect on such day,
whether or not applicable to any Bank, under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Offshore Rate for each outstanding
Offshore Rate Loan shall be adjusted automatically as of the effective
date of any change in the Eurodollar Reserve Percentage.
The determination of the Eurodollar Reserve Percentage and the
Offshore Base Rate by Administrative Agent shall be conclusive in the
absence of manifest error.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including leases that may be terminated by the lessee at any time) of any
Property that is not a Capital Lease, other than any such lease under which that
Person is the lessor.
"Ordinary Course Derivative/FX Contracts" means any and all interest
---------------------------------------
rate swaps, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swaps, cross-currency rate
swaps, currency options, spot contracts or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, in each case that are (or were) entered into by any Person
in the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person, or changes in the value of securities
issued by such Person and not for purposes of speculation or taking a "market
view" and that do not contain any provision ("walk-away" provision) exonerating
the non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party.
"Organization Documents" means, (a) with respect to any corporation,
----------------------
the certificate or articles of incorporation and the bylaws; (b) with respect to
any limited liability company, the articles of formation and operating
agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership or joint venture agreement and
any agreement, instrument, filing or notice with respect thereto filed in
19
<PAGE>
connection with its formation with the secretary of state or other department in
the state of its formation, in each case as amended from time to time.
"Originator" has the meaning specified in Section 10.8(d).
----------
"Other Taxes" means any present or future stamp, court or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Outstanding Obligations" means, as of any date, and giving effect to
-----------------------
making any Loan or Lender Bridge Letter of Credit requested on such date and all
payments, repayments and prepayments made on such date, (a) when reference is
made to all Banks, the sum of (i) the aggregate outstanding principal amount of
all Loans, and (ii) all Lender Bridge Letter of Credit Usage, and (b) when
reference is made to one Bank, the sum of (i) the aggregate outstanding
principal amount of all Loans made by such Bank, and (ii) such Bank's ratable
risk participation in all Lender Bridge Letter of Credit Usage.
"Participant" has the meaning specified in Section 10.8(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Pending IceHouse Disposition" means the proposed sale of the property
----------------------------
located at 151 Union Street, San Francisco, California.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which Company or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five plan years.
"Permitted Foreign Receivables" means all obligations of any obligor
-----------------------------
(whether now existing or hereafter arising) under a contract for sale of goods
or services by Foreign Subsidiaries, which includes any obligation of such
obligor (whether now existing or hereafter arising) to pay interest, finance
charges or amounts with respect thereto, and, with respect to any of the
foregoing receivables or obligations, (a) all of the interest of Foreign
Subsidiaries in the goods (including returned goods) the sale of which gave rise
to such receivable or obligation after the passage of title thereto to any
obligor, (b) all other Liens and property subject thereto from time to time
purporting to secure payment of such receivables or obligations, (c) all
guaranties, insurance, letters of credit and other agreements or arrangements of
whatever character from time to time supporting or securing payment of any such
receivables or obligations, (d) all books and records relating to the foregoing,
lockbox accounts containing primarily proceeds of the foregoing, and other
similar related assets customarily transferred (or in which security interests
are customarily granted) to purchasers in receivables purchase transactions that
are treated as sales under GAAP, (e) all rights of Foreign Subsidiaries to
refunds on account of value added tax in respect of goods sold to an obligor,
any receivable from whom is or becomes a defaulted receivable, and (f) proceeds
of or judgments relating to any of the
20
<PAGE>
foregoing, any debts represented thereby and all rights of action against any
Person in connection therewith.
"Permitted Foreign Receivables Purchase Facility" means any agreement
-----------------------------------------------
of Foreign Subsidiaries providing for sales, transfers or conveyances of, or
granting of security interests in, Permitted Foreign Receivables that do not
provide, directly or indirectly, for recourse against the seller of such
Permitted Foreign Receivables (or against any of such seller's Affiliates) by
way of a guaranty or any other support arrangement, with respect to the amount
of such Permitted Foreign Receivables (based on the financial condition or
circumstances of the obligor thereunder), other than such limited recourse as is
reasonable given market standards for receivables purchase transactions that are
treated as sales under GAAP, taking into account such factors as historical bad
debt loss experience and obligor concentration levels.
"Permitted Transferees" has the meaning specified in the Stockholders
---------------------
Agreement dated as of April 15, 1996 between Company and the stockholders of
Company party thereto as in effect as of the Closing Date, except that
transferees pursuant to Section 2.2(a)(A) thereof shall not be deemed to be
Permitted Transferees for purposes of this Agreement.
"Person" means an individual, partnership, corporation, limited
------
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which Company or any of its Subsidiaries sponsors or maintains or to
which Company or any of its Subsidiaries makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Pledge and Security Agreement" means the Pledge and Security
-----------------------------
Agreement executed and delivered by Company on the Closing Date and existing
Material Domestic Subsidiaries on the Subsequent Closing Date and to be executed
and delivered by additional Material Domestic Subsidiaries from time to time
thereafter in accordance with Section 6.9, substantially in the form of Exhibit
-------
VII, as such Pledge and Security Agreement may thereafter be amended,
- ---
supplemented, or modified from time to time.
"Pledged Collateral" means the "Pledged Collateral" as defined in the
------------------
Pledge and Security Agreement.
"Pledged Foreign Subsidiary" means a Foreign Subsidiary no more than
--------------------------
65% of the Capital Stock of which is pledged to Collateral Agent.
"Principal Property" means any contiguous or proximate parcel of real
------------------
property owned by, or leased to, Company or any of its Restricted Subsidiaries,
and any equipment located at or comprising a part of any such property, having a
gross book value (without deduction of any depreciation reserves), as of the
date of determination, in excess of 1% of Consolidated Net Tangible Assets;
provided, however, that in the event that the Indentures, or the limitations
- -------- -------
regarding Liens granted by Company or Restricted Subsidiaries contained in the
Indentures, are no longer binding on Company, no Property shall be a Principal
Property.
21
<PAGE>
"Professional Costs" means and includes all reasonable fees and
------------------
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel and the
reasonable fees and costs of financial advisors, accountants, appraisers,
consultants, etc.
"Property" means any estate or interest in any kind of property or
--------
asset, whether real, personal or mixed, and whether tangible or intangible.
"Real Estate Financing Transaction" means any arrangement with any
---------------------------------
Person pursuant to which Company or any of its Subsidiaries incurs Indebtedness
secured by a Lien on real property of Company or any of its Subsidiaries and
related personal property.
"Receivables Purchase Facility" means any agreement providing for
-----------------------------
sales, transfers or conveyances of, or granting of security interests in,
accounts receivable that do not provide, directly or indirectly, for recourse
against the seller of such accounts receivable (or against any of such seller's
Affiliates) by way of a guaranty or any other support arrangement, with respect
to the amount of such accounts receivable (based on the financial condition or
circumstances of the obligor thereunder), other than such limited recourse as is
reasonable given market standards for receivables purchase transactions that are
treated as sales under GAAP, taking into account such factors as historical bad
debt loss experience and obligor concentration levels.
"Receivables Transfer Agreements" means that certain Receivables
-------------------------------
Purchase and Sale Agreement dated as of January 28, 2000 among Company, LSFCC,
Levi Strauss Funding Corp. and LSFLLC and that certain Third Amended and Fully
Restated Receivables Purchase and Sale Agreement between LSFCC and Company
effective January 28, 2000.
"Released Matters" has the meaning specified in Section 11.1.
----------------
"Releasees" has the meaning specified in Section 11.1.
---------
"Releasors" has the meaning specified in Section 11.1.
---------
"Replacement Bank" means an Eligible Assignee satisfactory to Company
----------------
and Issuing Bridge Lenders which acquires and assumes all or a ratable part of
all of a Bank's Loans and Commitment pursuant to Section 3.8. Each designation
of a Replacement Bank shall be subject to the prior written consent of
Administrative Agent (which consent shall not be unreasonably withheld).
"Reportable Event" means, any of the events set forth in Section
----------------
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
22
<PAGE>
"Requisite Banks" means, at any time, (a) Banks holding more than 90%
---------------
of the Aggregate Bridge Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 90% of the then aggregate unpaid principal
amount of the Loans.
"Responsible Officer" of Company means the chief executive officer,
-------------------
the president, the chief financial officer, or the treasurer of Company, or any
other officer having substantially the same authority and responsibility.
"Restricted Payment" means:
------------------
(a) the declaration or payment of any dividend or other distribution
by Company or any of its Subsidiaries, directly or indirectly, either in cash or
property, on any shares of the Capital Stock of any class of Company or any of
its Subsidiaries (except dividends or other distributions payable solely in
shares of Capital Stock of Company or any of its Subsidiaries or payable by any
Subsidiary to Company or to a wholly-owned Subsidiary of Company);
(b) the purchase, redemption or retirement by Company or any of its
Subsidiaries of any shares of its Capital Stock of any class or any warrants,
rights or options to purchase or acquire any shares of its Capital Stock,
whether directly or indirectly (except the purchase, redemption or retirement of
Capital Stock (or any such warrants, rights or options) held by Company or any
wholly-owned Subsidiary of Company); and
(c) the prepayment, repayment, redemption, defeasance or other
acquisition or retirement for value prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, of any Indebtedness not otherwise
permitted under any Loan Document to be so paid.
"Restricted Subsidiary" means any Subsidiary of Company which owns or
---------------------
leases a Principal Property; provided, however, that in the event that the
-------- -------
Indentures, or the limitations regarding Liens granted by or on the Capital
Stock or Indebtedness of Restricted Subsidiaries contained in the Indentures,
are no longer binding on Company, no Subsidiary of Company shall be a Restricted
Subsidiary.
"SEC" means the Securities and Exchange Commission, or any successor
---
thereto.
"Securities" means any stock, shares, partnership interests, voting
----------
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Solvent" means, with respect to any Person, that as of the date of
-------
determination both (a)(i) the then fair saleable value of the property of such
Person is (A) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (B) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts
23
<PAGE>
as they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (b) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Subsequent Closing Date" means the date on which all conditions
-----------------------
precedent set forth in Section 4.3 are satisfied or waived by all Banks.
"Subsidiary" of a Person means a corporation, partnership, joint
----------
venture, limited liability company or other business entity of which a majority
of the shares of Securities or other interests having ordinary voting power for
the election of directors or other governing body (other than Securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.
"Synthetic Lease Obligations" means all monetary obligations of a
---------------------------
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations which do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
Indebtedness of such Person (without regard to accounting treatment).
"Taxes" means any and all present or future taxes, levies,
-----
assessments, imposts, duties, deductions, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding, in the case of each Bank
and Administrative Agent, respectively, taxes imposed on or measured by its net
income by the jurisdiction (or any political subdivision thereof) under the laws
of which such Bank or Administrative Agent, as the case may be, is organized or
maintains a lending office.
"Termination Value" means, in respect of any Derivative/FX Contract,
-----------------
after taking into account the effect of any legally enforceable netting
agreement relating to such Derivative/FX Contract, the termination value,
expressed in Dollars, as determined by Company; provided, however, that in the
-------- -------
event that two Banks determine that the mark-to-market value, expressed in
Dollars, for any Derivative/FX Contract, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Derivative/FX Contract, is greater than the termination value for
such Derivative/FX Contract determined by Company, the Termination Value of such
Derivative/FX Contract shall be the amount determined by such Banks; provided
--------
further that any such determination shall have no evidentiary value for purposes
- -------
of determining the amount owed to the applicable Derivative/FX Lender.
24
<PAGE>
"Total Amount of Unsecured Debt" means, as of any date of
------------------------------
determination, the sum, without duplication, of (a) the Unsecured Derivative/FX
Usage, (b) the Unsecured Letter of Credit Usage, and (c) the aggregate amount of
all unsecured Indebtedness of Company and its Subsidiaries (other than
Indebtedness permitted under Sections 7.1(a), 7.1(b), 7.1(c), 7.1(d), 7.1(e),
7.1(f), 7.1(g), 7.1(h), 7.1(i), 7.1(j), 7.1(k), 7.1(l), 7.1(m), 7.1(n), 7.1(o),
7.1(p), 7.1(q), 7.1(s), and 7.1(t)).
"Total Letter of Credit Usage" means, as of any date of determination,
----------------------------
the sum of (a) the Lender Bridge Letter of Credit Usage plus (b) the Lender 180
----
Day Letter of Credit Usage.
"Total Utilization of Bridge Commitments" means, as of any date of
---------------------------------------
determination, the sum, without duplication, of (a) the aggregate principal
amount of all outstanding Loans (other than any such Loans made for the purpose
of reimbursing an Issuing Bridge Lender for any amount drawn under any Lender
Bridge Letter of Credit but not yet so applied) plus (b) the Lender Bridge
----
Letter of Credit Usage plus (c) the Lender Derivative/FX Usage.
----
"Total Utilization of Commitments" means, as of any date of
--------------------------------
determination, the sum, without duplication, of (a) the Total Utilization of
Bridge Commitments plus (b) the Total Utilization of 180 Day Commitments.
----
"Total Utilization of 180 Day Commitments" means, as of any date of
----------------------------------------
determination, the sum, without duplication, of (a) the aggregate principal
amount of all outstanding Loans (as defined in the Amended and Restated 1999 180
Day Credit Agreement), other than any such Loans made for the purpose of
reimbursing an Issuing 180 Day Lender for any amount drawn under any Lender 180
Day Letter of Credit but not yet so applied, plus (b) the Lender 180 Day Letter
----
of Credit Usage.
"Two Facility Commitment Reduction Fraction" means, as of any date of
------------------------------------------
determination, a fraction, the numerator of which is the Aggregate Bridge
Commitment and the denominator of which is the sum of (a) the Aggregate Bridge
Commitment plus (b) the Aggregate 180 Day Commitment.
----
"UCC" means the Uniform Commercial Code (or any similar or equivalent
---
legislation) as in effect in any applicable jurisdiction.
"United States" and "U.S." each means the United States of America.
------------- ----
"Unpledged Foreign Subsidiaries" means Foreign Subsidiaries none of
------------------------------
the Capital Stock of which is pledged to Collateral Agent.
"Unsecured Derivative/FX Usage" means, as of any date of
-----------------------------
determination, (a) the sum of the Termination Values for all outstanding
Derivative/FX Contracts to which Company and any of its Subsidiaries is a party
(other than Lender Derivative/FX Contracts and intercompany Derivative/FX
Contracts) minus (i) the Lender Bridge Letter of Credit Usage with respect to
-----
any Lender Bridge Letter of Credit issued to support any such outstanding
Derivative/FX Contract and (ii) the Lender 180 Day Letter of Credit Usage with
respect to any
25
<PAGE>
Lender 180 Day Letter of Credit issued to support any such outstanding
Derivative/FX Contract times (b) the Exposure Factor.
-----
"Unsecured Letter of Credit Usage" means, as of any date of
--------------------------------
determination, the aggregate undrawn face amount of outstanding letters of
credit issued for the benefit of Company or any of its Subsidiaries (other than
Lender Bridge Letters of Credit and Lender 180 Day Letters of Credit).
"Voting Trust Agreement" means the Voting Trust Agreement entered into
----------------------
as of April 15, 1996 by and among Robert D. Haas; Peter E. Haas, Sr.; Peter E.
Haas, Jr.; and F. Warren Hellman as the Voting Trustees and the stockholders of
LSAI Holding Corp. who are parties thereto.
"Voting Trustees" means the persons entitled to act as voting trustees
---------------
under the Voting Trust Agreement.
1.2 Other Interpretive Provisions.
-----------------------------
(a) Defined Terms. Except as provided in Section 1.1, unless
-------------
otherwise specified herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. Terms
(including uncapitalized terms) not otherwise defined herein and that are
defined in the UCC of California shall have the meanings therein described.
(b) The Agreement. The words "hereof", "herein", "hereunder" and
-------------
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section and exhibit references are to this Agreement unless otherwise specified.
(c) Certain Common Terms.
--------------------
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(d) Performance; Time. Whenever any performance obligation hereunder
-----------------
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including". If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
26
<PAGE>
(e) Contracts. Unless otherwise expressly provided herein, references
---------
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
(f) Laws. References to any statute or regulation are to be construed
----
as including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are for
--------
convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this
--------------------------
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
1.3 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed in accordance with GAAP,
consistently applied; except that, subject to Section 10.15, all financial
computations required under this Agreement shall be made in accordance with GAAP
as in effect on the Closing Date.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of Company. The fiscal quarters of Company end on the last
Sunday in February, May, August, and November of each year. Each fiscal year of
Company ends on the last Sunday in November of such year.
(c) References herein to "consolidated" and "consolidated basis" with
reference to Company are to Company and its Subsidiaries on a consolidated
basis.
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments; the Credit.
--------------------------------------------
(a) Each Bank severally agrees, on the terms and conditions set forth
herein, to make Loans to Company from time to time on any Business Day during
the Availability Period, in an aggregate principal amount which does not exceed
at any time outstanding, for the relevant period, the amount equal to the
product of the then Aggregate Bridge Commitment times the percentage set forth
-----
opposite such Bank's name on Schedule 2.1 under the heading "Commitment
------------
Percentage" (such amount, as the same may be reduced pursuant to the terms of
this Agreement or as a result of one or more assignments under Section 10.8, the
Bank's "Commitment"); provided, however, that (i) the sum of (A) the Total
---------- -------- -------
Utilization of Commitments plus (B) the Total Amount of Unsecured Debt shall not
----
exceed the Aggregate
27
<PAGE>
Total Commitments at any time and (ii) the Total Utilization of Bridge
Commitments shall not exceed the Aggregate Bridge Commitment at any time.
(b) Within the limits of each Bank's Commitment and the Aggregate
Bridge Commitment, and subject to the other terms and conditions hereof, Company
may borrow under this subsection, prepay under Section 2.7 or 2.8, and reborrow
under this Section.
(c) Loans shall be denominated in Dollars.
2.2 Notes; Loan Accounts.
--------------------
(a) The Loans made by each Bank shall be evidenced by one or more loan
accounts or records maintained by such Bank in the ordinary course of business.
The loan accounts or records maintained by Administrative Agent and each Bank
shall be conclusive evidence, absent manifest error, of the amount of the Loans
made by Banks to Company and the interest and payments thereon. Any failure so
to record or any error in doing so shall not, however, limit or otherwise affect
the obligation of Company hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of any Bank made through Administrative Agent,
the Loans made by such Bank may be evidenced by one or more notes, as applicable
("Notes"), instead of or in addition to loan accounts. Each such Note shall be
-----
in the form of Exhibit IV. Each such Bank shall endorse on the schedules
----------
annexed to its Note the date, amount, and maturity of each Loan made by it and
the amount of each payment of principal made by Company with respect thereto.
Each such Bank is irrevocably authorized by Company to endorse its Note and each
Bank's record shall be conclusive absent manifest error; provided, however, that
-------- -------
the failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of
Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing.
-----------------------
(a) Each Borrowing shall be made upon the irrevocable written notice
(including notice via facsimile transmission or telephone call confirmed
immediately by telephone call or facsimile transmission, respectively) of
Company in the form of a Notice of Borrowing, which notice must be received by
Administrative Agent not later than 9:00 a.m. San Francisco, California time:
(i) three Business Days prior to the requested Borrowing Date for
Offshore Rate Loans; and
(ii) on the requested Borrowing Date, in the case of Base Rate
Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of $10,000,000 or any integral
multiple of $5,000,000 in excess thereof;
28
<PAGE>
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) whether the Borrowing is to be comprised of Offshore
Rate Loans or Base Rate Loans; and
(D) the duration of the Interest Period applicable to the
Loans included in such notice which are Offshore Rate Loans. If the
Notice of Borrowing shall fail to specify the duration of the Interest
Period for any Borrowing comprised of Offshore Rate Loans, such
Interest Period shall be one month.
(b) Upon receipt of the Notice of Borrowing (or notice by telephone or
facsimile transmission followed by prompt confirmation by facsimile transmission
or telephone, respectively) Administrative Agent will promptly notify each Bank
thereof and of the amount of such Bank's Commitment Percentage of the Borrowing.
(i) Each Bank will make the amount of its Commitment Percentage
of the Borrowing available to Administrative Agent, in immediately
available funds for the account of Company at Administrative Agent's
Payment Office by 10:00 a.m. San Francisco, California time on the
Borrowing Date requested by Company.
(ii) The proceeds of all such Loans will then be made available
to Company by Administrative Agent at Administrative Agent's Payment Office
by crediting Company's concentration account #12335-02255 on the books of
Bank of America (or such other account with Bank of America as Company may
hereafter designate in a written notice to Administrative Agent) with the
aggregate of the amounts made available to Administrative Agent by Banks
not later than 11:00 a.m. San Francisco, California time on such Borrowing
Date; or will then be remitted by Administrative Agent to such other
financial institution or institutions for the account or accounts of such
designees as Company shall designate from time to time in accordance with
written instructions from Company delivered to Administrative Agent. To
the extent that Loans made by Banks mature on any Borrowing Date, each Bank
shall apply the proceeds of any Loans made on such Borrowing Date, to the
extent thereof, to the repayment of such maturing Loans, such Loans and
repayments intended to be a contemporaneous exchange.
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) Company may upon irrevocable notice to Administrative Agent in
accordance with Section 2.4(b):
(i) elect to convert on any Business Day, any Base Rate Loans (or
any part thereof in an amount not less than $10,000,000 or that is in an
integral multiple of $1,000,000 in excess thereof) into Offshore Rate
Loans; or
(ii) elect to convert on any Interest Payment Date any Offshore
Rate Loans maturing on such Interest Payment Date (or any part thereof in
an amount not less
29
<PAGE>
than $10,000,000 or that is in an integral multiple of $1,000,000 in excess
thereof) into Base Rate Loans; or
(iii) elect to renew on any Interest Payment Date any Offshore
Rate Loans maturing on such Interest Payment Date (or any part thereof in
an amount not less than $10,000,000 or that is in an integral multiple of
$1,000,000 in excess thereof);
provided that, if the Aggregate Bridge Commitment shall have been reduced to
- --------
less than $10,000,000, on and after such reduction the right of Company to elect
to continue such Loans as, and convert such Loans into, Offshore Rate Loans
shall terminate.
(b) Company shall deliver in writing (or by facsimile transmission
confirmed immediately by a telephone call or by a telephone call confirmed
immediately by a facsimile transmission), an irrevocable Notice of
Conversion/Continuation to be received by Administrative Agent not later than
9:00 a.m. San Francisco, California time, at least three Business Days in
advance of the Conversion/Continuation Date, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the nature of the proposed conversion or continuation; and
(iv) with respect to Offshore Rate Loans, the duration of the
requested Interest Period.
(c) (i) If upon the expiration of any Interest Period applicable
to Offshore Rate Loans, Company has failed to select a new Interest Period
to be applicable to such Offshore Rate Loans, and if no Event of Default
shall then exist, Company shall be deemed to have elected to continue such
Offshore Rate Loans as Offshore Rate Loans with an Interest Period of one
month.
(ii) If an Event of Default exists at the time any Interest
Period applicable to Offshore Rate Loans expires, Company shall be deemed
to have elected to convert Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/ Continuation (or
telephonic notice in lieu thereof), Administrative Agent will promptly notify
each Bank thereof, or, if no timely notice is provided, Administrative Agent
will promptly notify each Bank of the details of any automatic conversion. All
conversions and continuations shall be made pro rata according to the respective
outstanding principal amounts of the Loans with respect to which the notice was
given or which are subject to automatic conversion held by each Bank.
2.5 Lender Bridge Letters of Credit.
-------------------------------
(a) The Letter of Credit Commitment. Subject to the terms and
-------------------------------
conditions set forth in this Agreement, until the Maturity Date, each Issuing
Bridge Lender shall take such
30
<PAGE>
Letter of Credit Actions as Company may from time to time request of such
Issuing Bridge Lender; provided, however, that (i) the sum of (A) the Total
-------- -------
Utilization of Commitments plus (B) the Total Amount of Unsecured Debt shall not
----
exceed the Aggregate Total Commitments at any time, (ii) the Total Utilization
of Bridge Commitments shall not exceed the Aggregate Bridge Commitment at any
time, (iii) the sum of (A) the Total Letter of Credit Usage plus (B) the
----
Unsecured Letter of Credit Usage shall not exceed the Lender Letter of Credit
Sublimit at any time, and (iv) no Lender Bridge Letter of Credit shall be issued
denominated in a currency other than Dollars. Subject to subsection (f) below
and unless consented to by the applicable Issuing Bridge Lender and Majority
Banks, no Lender Bridge Letter of Credit may expire more than 12 months after
the date of its issuance or last renewal; provided, however, that no Lender
-------- -------
Bridge Letter of Credit shall expire after the Maturity Date. If any Lender
Bridge Letter of Credit Usage remains outstanding after such date, Company
shall, not later than such date, deposit cash in an amount equal to such Lender
Bridge Letter of Credit Usage in a Cash Collateral Account. On and after the
Closing Date, the Existing Lender Letters of Credit shall be automatically
deemed for all purposes to be outstanding under this Agreement and shall be
subject to all of the terms and conditions of this Agreement and the other Loan
Documents and Company's reimbursement obligations in respect of the Existing
Lender Letters of Credit shall automatically be deemed to have been satisfied by
the incurrence of its reimbursement obligations under this Agreement.
(b) Requesting Letter of Credit Actions. Company may irrevocably
-----------------------------------
request a Letter of Credit Action by delivering a Letter of Credit Application
therefor to the proposed Issuing Bridge Lender, with a copy to Administrative
Agent (who shall notify Banks), not later than 1:00 p.m. San Francisco,
California time, two Business Days prior to such Letter of Credit Action. Upon
receipt by a proposed Issuing Bridge Lender of a Letter of Credit Application
pursuant to Section 2.5(a) requesting such Issuing Bridge Lender to take a
Letter of Credit Action, (i) in the event Administrative Agent is the proposed
Issuing Bridge Lender, Administrative Agent shall be the Issuing Bridge Lender
with respect to such Lender Bridge Letter of Credit, notwithstanding the fact
that the Lender Bridge Letter of Credit Usage with respect to such Lender Bridge
Letter of Credit and with respect to all other Lender Bridge Letters of Credit
issued by Administrative Agent, when aggregated with Administrative Agent's
outstanding Loans, may exceed Administrative Agent's Commitment then in effect
and (ii) in the event any other Issuing Bridge Lender is the proposed Issuing
Bridge Lender, such Issuing Bridge Lender shall promptly notify Company and
Administrative Agent whether or not, in its sole discretion, it has elected to
issue such Lender Bridge Letter of Credit, and (A) if such Issuing Bridge Lender
so elects to issue such Lender Bridge Letter of Credit it shall be the Issuing
Bridge Lender with respect thereto and (B) if such Issuing Bridge Lender fails
to so promptly notify Company and Administrative Agent or declines to issue such
Lender Bridge Letter of Credit, Company may request Administrative Agent or
another Issuing Bridge Lender to be the Issuing Bridge Lender with respect to
such Lender Bridge Letter of Credit in accordance with the provisions of this
Section 2.5(b). Each Letter of Credit Action shall be in a form acceptable to
such Issuing Bridge Lender in its sole discretion. Unless Administrative Agent
notifies such Issuing Bridge Lender that such Letter of Credit Action is not
permitted hereunder, or such Issuing Bridge Lender notifies Administrative Agent
that it has determined that such Letter of Credit Action is contrary to any laws
or policies of such Issuing Bridge Lender, such Issuing Bridge Lender shall,
upon satisfaction of the applicable conditions set forth in Section 4.2, effect
such Letter of Credit Action. This Agreement shall control in the event of
31
<PAGE>
any conflict with any Letter of Credit Application. Upon the issuance of a
Lender Bridge Letter of Credit, each Bank shall be deemed to have purchased from
the applicable Issuing Bridge Lender a risk participation therein in an amount
equal to such Bank's Commitment Percentage times the amount of such Lender
-----
Bridge Letter of Credit.
(c) Reimbursement of Payments Under Lender Bridge Letters of Credit.
----------------------------------------------------------------
Company shall reimburse the applicable Issuing Bridge Lender through
Administrative Agent for any payment that such Issuing Bridge Lender makes under
a Lender Bridge Letter of Credit on or before the date of such payment;
provided, however, that if the conditions precedent set forth in Section 4.2 can
- -------- -------
be satisfied, Company may request a Borrowing of Loans to reimburse such Issuing
Bridge Lender for such payment pursuant to Section 2.3, or, failing to make such
request, Company shall be deemed to have requested a Borrowing of Base Rate
Loans on such payment date pursuant to subsection (e) below.
(d) Funding by Lenders When Issuing Bridge Lender Not Reimbursed.
--------------------------------------------------------------
Upon any drawing under a Lender Bridge Letter of Credit, the applicable Issuing
Bridge Lender shall notify Administrative Agent and Company. If Company fails
to timely make the payment required pursuant to subsection (c) above, such
Issuing Bridge Lender shall notify Administrative Agent of such fact and the
amount of such unreimbursed payment. Administrative Agent shall promptly notify
each Bank of its Commitment Percentage of such amount. Each Bank shall make
funds in an amount equal to its Commitment Percentage of such amount available
to Administrative Agent at Administrative Agent's Payment Office not later than
1:00 p.m. San Francisco, California time, on the Business Day specified by
Administrative Agent. Administrative Agent shall remit the funds so received to
such Issuing Bridge Lender. The obligation of each Bank to so reimburse such
Issuing Bridge Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default or Event of Default or any other
occurrence or event (including the sum of (A) the Total Utilization of
Commitments plus (B) the Total Amount of Unsecured Debt exceeding the Aggregate
----
Total Commitments or the Total Utilization of Bridge Commitments exceeding the
Aggregate Bridge Commitment). Any such reimbursement shall not relieve or
otherwise impair the obligation of Company to reimburse such Issuing Bridge
Lender for the amount of any payment made by such Issuing Bridge Lender under
any Lender Bridge Letter of Credit, together with interest as provided herein.
(e) Nature of Banks' Funding. If the conditions precedent set forth
------------------------
in Section 4.2 can be satisfied (except for the giving of a Notice of Borrowing)
on any date Company is obligated to, but fails to, reimburse any Issuing Bridge
Lender for a drawing under a Lender Bridge Letter of Credit, the funding by
Banks pursuant to the previous subsection shall be deemed to be a Borrowing of
Base Rate Loans deemed requested by Company. If the conditions precedent set
forth in Section 4.2 cannot be satisfied on the date Company is obligated to,
but fails to, reimburse any Issuing Bridge Lender for a drawing under a Lender
Bridge Letter of Credit, the funding by Banks pursuant to the previous
subsection shall be deemed to be a funding by each Bank of its risk
participation in such Lender Bridge Letter of Credit, and each Bank making such
funding shall thereupon acquire a pro rata participation, to the extent of its
reimbursement, in the claim of such Issuing Bridge Lender against Company in
respect of such payment and shall share, in accordance with that pro rata
participation, in any payment made by Company with respect to such claim. Any
amounts made available by a Bank under its risk
32
<PAGE>
participation shall be payable by Company upon demand of Administrative Agent,
and shall bear interest at a rate per annum equal to the Default Rate.
(f) Special Provisions Relating to Evergreen Lender Bridge Letters of
-----------------------------------------------------------------
Credit. Company may request Lender Bridge Letters of Credit that have automatic
- ------
extension or renewal provisions ("evergreen" Lender Bridge Letters of Credit) so
long as the applicable Issuing Bridge Lender consents in its sole and absolute
discretion thereto and has the right to not permit any such extension or renewal
at least annually within a notice period to be agreed upon at the time each such
Lender Bridge Letter of Credit is issued. Once an evergreen Lender Bridge
Letter of Credit is issued, unless Administrative Agent has notified the
applicable Issuing Bridge Lender that Majority Banks have elected not to permit
such extension or renewal, Borrower Parties, Administrative Agent and Banks
shall be deemed to have authorized (but may not require) such Issuing Bridge
Lender to, in its sole and absolute discretion, permit the renewal of such
evergreen Lender Bridge Letter of Credit at any time to a date not later than
the Letter of Credit Expiration Date, and, unless directed by such Issuing
Bridge Lender, Company shall not be required to request such extension or
renewal. The applicable Issuing Bridge Lender may, in its sole and absolute
discretion elect not to permit an evergreen Lender Bridge Letter of Credit to be
extended or renewed at any time.
(g) Obligations Absolute. The obligation of Company to pay to each
--------------------
Issuing Bridge Lender the amount of any payment made by such Issuing Bridge
Lender under any Lender Bridge Letter of Credit shall be absolute,
unconditional, and irrevocable. Without limiting the foregoing, Company's
obligation shall not be affected by any of the following circumstances:
(i) any lack of validity or enforceability of such Lender Bridge
Letter of Credit, this Agreement, or any other agreement or instrument
relating thereto;
(ii) any amendment or waiver of or any consent to departure from
such Lender Bridge Letter of Credit, this Agreement, or any other agreement
or instrument relating hereto or thereto;
(iii) the existence of any claim, setoff, defense, or other
rights which Company may have at any time against such Issuing Bridge
Lender, Administrative Agent, Collateral Agent or any Bank, any beneficiary
of such Lender Bridge Letter of Credit (or any persons or entities for whom
any such beneficiary may be acting) or any other Person, whether in
connection with such Lender Bridge Letter of Credit, this Agreement, or any
other agreement or instrument relating thereto, or any unrelated
transactions;
(iv) any demand, statement, or any other document presented under
such Lender Bridge Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever so long as any such document
appeared to comply with the terms of the Lender Bridge Letter of Credit;
33
<PAGE>
(v) payment by such Issuing Bridge Lender in good faith under
such Lender Bridge Letter of Credit against presentation of a draft or any
accompanying document which does not strictly comply with the terms of such
Lender Bridge Letter of Credit; or any payment made by such Issuing Bridge
Lender under such Lender Bridge Letter of Credit to any Person purporting
to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Lender Bridge Letter
of Credit, including any arising in connection with any proceeding under
any Debtor Relief Laws;
(vi) the existence, character, quality, quantity, condition,
packing, value or delivery of any property purported to be represented by
documents presented in connection with such Lender Bridge Letter of Credit
or for any difference between any such property and the character, quality,
quantity, condition, or value of such property as described in such
documents;
(vii) the time, place, manner, order or contents of shipments
or deliveries of property as described in documents presented in connection
with such Lender Bridge Letter of Credit or the existence, nature and
extent of any insurance relative thereto;
(viii) the solvency or financial responsibility of any party
issuing any documents in connection with such Lender Bridge Letter of
Credit;
(ix) any failure or delay in notice of shipments or arrival of
any property;
(x) any error in the transmission of any message relating to
such Lender Bridge Letter of Credit not caused by such Issuing Bridge
Lender, or any delay or interruption in any such message;
(xi) any error, neglect or default of any correspondent of
such Issuing Bridge Lender in connection with such Lender Bridge Letter of
Credit;
(xii) any consequence arising from acts of God, wars,
insurrections, civil unrest, disturbances, labor disputes, emergency
conditions or other causes beyond the control of such Issuing Bridge
Lender;
(xiii) so long as such Issuing Bridge Lender in good faith
determines that the document appears to comply with the terms of the Lender
Bridge Letter of Credit, the form, accuracy, genuineness or legal effect of
any contract or document referred to in any document submitted to such
Issuing Bridge Lender in connection with such Lender Bridge Letter of
Credit;
(xiv) the sum of (A) the Total Utilization of Commitments plus
----
(B) the Total Amount of Unsecured Debt exceeding the Aggregate Total
Commitments or the Total Utilization of Bridge Commitments exceeding the
Aggregate Bridge Commitment; and
34
<PAGE>
(xv) any other circumstances whatsoever where such Issuing
Bridge Lender has acted in good faith.
In addition, Company will promptly examine a copy of each Lender
Bridge Letter of Credit and amendments thereto delivered to them and, in the
event of any claim of noncompliance with Company's instructions or other
irregularity, Company will immediately notify the applicable Issuing Bridge
Lender in writing. Company shall be conclusively deemed to have waived any such
claim against such Issuing Bridge Lender and its correspondents unless such
notice is given as aforesaid.
(h) Role of Issuing Bridge Lender. Each Bank and Borrower Party agree
-----------------------------
that, in paying any drawing under a Lender Bridge Letter of Credit, the
applicable Issuing Bridge Lender shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly
required by the Lender Bridge Letter of Credit) or to ascertain or inquire as to
the validity or accuracy of any such document or the authority of the Person
executing or delivering any such document. No Administrative Agent-Related
Person nor any of the respective correspondents, participants or assignees of
the applicable Issuing Bridge Lender shall be liable to any Bank for any action
taken or omitted in connection herewith at the request or with the approval of
Banks or Majority Banks, as applicable; any action taken or omitted in the
absence of gross negligence or willful misconduct; or the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Lender Bridge Letter of Credit. Company hereby assumes all risks of the
acts or omissions of any beneficiary or transferee with respect to its use of
any Lender Bridge Letter of Credit; provided, however, that this assumption is
-------- -------
not intended to, and shall not, preclude Company's pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. No Administrative Agent-Related Person, nor any of the
respective correspondents, participants or assignees of any Issuing Bridge
Lender, shall be liable or responsible for any of the matters described in
subsection (g) above. In furtherance and not in limitation of the foregoing,
any Issuing Bridge Lender may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and such Issuing Bridge Lender shall not
be responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Lender Bridge Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.
(i) Applicability of ISP98 and UCP. Unless otherwise expressly agreed
------------------------------
by any Issuing Bridge Lender and Company when a Lender Bridge Letter of Credit
is issued and subject to applicable laws, performance under Lender Bridge
Letters of Credit by such Issuing Bridge Lender, its correspondents, and
beneficiaries will be governed by (i) with respect to standby Lender Bridge
Letters of Credit, the rules of the "International Standby Practices 1998"
("ISP98") or such later revision as may be published by the Institute of
- -------
International Banking Law & Practice, subject to applicable laws, and (ii) with
respect to commercial Lender Bridge Letters of Credit, the rules of the Uniform
Customs and Practice for Documentary Credits, as published in its most recent
version by the International Chamber of Commerce (the "ICC") on the date any
---
commercial Lender Bridge Letter of Credit is issued, and including the ICC
decision published by the Commission on Banking Technique and Practice on April
6, 1998 regarding the European single currency (euro).
35
<PAGE>
(j) Letter of Credit Fee. Company shall pay to Administrative Agent
--------------------
in arrears, on the fifth Business Day after the last day of each fiscal quarter
for the account of each Bank in accordance with its Commitment Percentage, a
Letter of Credit fee equal to the Applicable Margin with respect to Offshore
Rate Loans times the actual daily maximum amount available to be drawn under
-----
each Lender Bridge Letter of Credit (including each Existing Lender Letter of
Credit) since the later of the Closing Date and the previous payment date.
(k) Fronting Fee and Documentary and Processing Charges Payable to
--------------------------------------------------------------
Issuing Bridge Lender. On the date of issuance, Company shall pay directly to
- ---------------------
the applicable Issuing Bridge Lender for its sole account a fronting fee with
respect to any financial or performance Lender Bridge Letter of Credit (other
than any Existing Lender Letter of Credit) in an amount equal to 1/8 of 1%. On
the date of issuance, Company shall pay directly to the applicable Issuing
Bridge Lender for its sole account a fronting fee with respect to any commercial
Lender Bridge Letter of Credit (other than any Existing Lender Letter of Credit)
in an amount equal to its customary issuance fee for commercial Lender Bridge
Letters of Credit issued for the account of its most creditworthy customers. In
addition, Company shall pay directly to the applicable Issuing Bridge Lender,
upon demand, for its sole account its customary documentary and processing
charges in accordance with its standard schedule, as from time to time in
effect, for any Lender Bridge Letter of Credit Action or other occurrence
relating to a Lender Bridge Letter of Credit (including any Existing Lender
Letter of Credit) for which such charges are customarily made.
2.6 Derivative/FX Contracts.
-----------------------
(a) Commitment. Until the Maturity Date, Derivative/FX Lenders may
----------
enter into Lender Derivative/FX Contracts with Company or FinServ; provided,
--------
however, that (i) the sum of (A) the Total Utilization of Commitments plus (B)
- ------- ----
the Total Amount of Unsecured Debt shall not exceed the Aggregate Total
Commitments at any time, (ii) the Total Utilization of Bridge Commitments shall
not exceed the Aggregate Bridge Commitment at any time, and (iii) the sum of (A)
the Lender Derivative/FX Usage plus (B) Unsecured Derivative/FX Usage shall not
----
exceed the Lender Derivative/FX Sublimit at any time.
(b) Requesting Lender Derivative/FX Contracts. Two Business Days
-----------------------------------------
following the execution of a confirmation with respect to a Lender Derivative/FX
Contract, Company shall give written notice in the form of a Notice of Lender
Derivative/FX Contract to Administrative Agent. On and after the Closing Date,
the Ordinary Course Derivative/FX Contracts listed on Schedule 1.1(a) shall be
---------------
automatically deemed for all purposes to be Lender Derivative/FX Contracts.
(c) Payments. Company shall pay each Derivative/FX Lender directly
--------
for any payment due under a Lender Derivative/FX Contract; provided, however,
-------- -------
that if the conditions precedent set forth in Section 4.2 can be satisfied,
Company may request a Borrowing of Loans to pay any Derivative/FX Lender for
such payment pursuant to Section 2.3.
(d) Nature of Banks' Funding. Upon the due date of any payment by
------------------------
Company under any Lender Derivative/FX Contract, the applicable Derivative/FX
Lender shall notify Administrative Agent and Company. If Company fails to
timely make the payment
36
<PAGE>
required pursuant to subsection (c) above, such Derivative/FX Lender shall
notify Administrative Agent of such fact and the amount of such payment. If the
conditions precedent set forth in Section 4.2 can be satisfied on any date
Company is obligated to, but fails to, pay any Derivative/FX Lender, Company
shall be deemed to have requested a Borrowing of Base Rate Loans on such payment
date and Administrative Agent shall promptly notify each Bank of its Commitment
Percentage of such deemed requested Loans. Each Bank shall make funds in an
amount equal to its Commitment Percentage of such amount available to
Administrative Agent at Administrative Agent's Payment Office not later than
1:00 p.m. San Francisco, California time, on the Business Day specified by
Administrative Agent. Administrative Agent shall remit the funds so received to
such Derivative/FX Lender. If the conditions precedent set forth in Section 4.2
cannot be satisfied on the date Company is obligated to, but fails to, pay such
Derivative/FX Lender, no Borrowing shall occur and no Bank shall have any
obligation to reimburse such Derivative/FX Lender.
2.7 Voluntary Termination or Reduction of Aggregate Bridge Commitment;
------------------------------------------------------------------
Voluntary Prepayments.
- ---------------------
(a) Company may, upon not less than three Business Days' prior
irrevocable notice to Administrative Agent, terminate the Aggregate Bridge
Commitment or permanently reduce the Aggregate Bridge Commitment by $25,000,000
and, if in a greater amount, by any integral multiple of $5,000,000; provided
--------
that no such reduction or termination shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date thereof,
(i) the sum of (A) the Total Utilization of Commitments plus (B) the Total
----
Amount of Unsecured Debt would exceed the Aggregate Total Commitments then in
effect or (ii) the Total Utilization of Bridge Commitments would exceed the
Aggregate Bridge Commitment; provided further that once reduced in accordance
-------- -------
with this Section, the Aggregate Bridge Commitment may not be increased. Any
reduction of the Aggregate Bridge Commitment shall be applied to each Bank's
Commitment in accordance with such Bank's Commitment Percentage. If the
Aggregate Bridge Commitment is terminated in its entirety, all accrued facility
fees to, but not including, the effective date of such termination shall be
payable on the effective date of such termination without any premium or
penalty.
(b) Subject to Section 3.4, Company may (from time to time) ratably
prepay Loans in whole or in part in the minimum amount of $10,000,000 or any
integral multiple of $1,000,000 in excess thereof, upon notice to Administrative
Agent given not later than 9:00 a.m. San Francisco, California time:
(i) at least three Business Days' prior to the proposed date of
prepayment for Offshore Rate Loans; and
(ii) on the Business Day prior to the proposed date of prepayment
for Base Rate Loans.
Each such notice of prepayment shall specify the date and amount of
such prepayment and whether such prepayment is of Base Rate Loans or Offshore
Rate Loans, or any combination thereof. In the event that Company fails to so
specify, any voluntary prepayments of the Loans pursuant to this Section 2.7
shall be applied first to Base Rate Loans to the full
37
<PAGE>
amount thereof before application to Offshore Rate Loans. Such notice shall not
thereafter be revocable by Company and Administrative Agent will promptly notify
each Bank thereof and the amount of such Bank's Commitment Percentage of such
prepayment. If such notice is given by Company, Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and the amounts required pursuant to Section
3.4.
Notice to Administrative Agent under this Section shall be in writing,
signed by Company or may be by telephone notice promptly confirmed by notice
sent by facsimile transmission.
2.8 Mandatory Prepayments and Reductions of Aggregate Bridge Commitment.
-------------------------------------------------------------------
The Loans shall be prepaid and the Aggregate Bridge Commitment shall be
permanently reduced in the amounts and under the circumstances set forth below,
all such payments to be applied as set forth below or as more specifically
provided in Section 2.8(k). Each prepayment required under this Section shall be
subject to Section 3.4.
(a) Commitment Reductions. If for any reason the Total Utilization of
---------------------
Bridge Commitments exceeds the Aggregate Bridge Commitment as in effect or as
reduced or because of any limitation set forth in this Agreement or otherwise,
Company shall immediately prepay Loans and/or deposit cash in a Cash Collateral
Account in an aggregate amount equal to such excess. If for any reason the sum
of (i) the Total Utilization of Commitments plus (ii) the Total Amount of
----
Unsecured Debt exceeds the Aggregate Total Commitments as in effect, Company
shall immediately prepay Loans and/or Loans under (and as defined in) the
Amended and Restated 1999 180 Day Credit Agreement and/or deposit cash in a Cash
Collateral Account in an aggregate amount equal to such excess.
(b) Permitted Foreign Receivables Purchase Facility. No later than
-----------------------------------------------
five Business Days following the receipt by Company or any of its Subsidiaries
of any proceeds in respect of a Permitted Foreign Receivables Purchase Facility,
Company shall prepay the Loans and the Aggregate Bridge Commitment shall be
permanently reduced in an aggregate amount equal to the product of the net
proceeds received by Company or any of its Subsidiaries from such Permitted
Foreign Receivables Purchase Facility times (A) until the Aggregate Term
-----
Commitments have been terminated, zero (0)% and (B) thereafter, the Two Facility
Commitment Reduction Fraction.
(c) Equipment Financing Transactions. No later than (i) five Business
--------------------------------
Days following the receipt by Company or any of its Subsidiaries of any Net
Equipment Financing Proceeds in respect of any equipment not constituting
Collateral and (ii) the date of receipt by Company or any of its Subsidiaries of
any other Net Equipment Financing Proceeds, Company shall prepay the Loans and
the Aggregate Bridge Commitment shall be permanently reduced in an aggregate
amount equal to the product of such Net Equipment Financing Proceeds times (A)
-----
until the Aggregate Non-Bridge Commitments have been terminated, zero (0) % and
(B) thereafter, 100% of such Net Equipment Financing Proceeds.
(d) Real Estate Financing Transactions. No later than (i) five
----------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
Net Real Estate Financing
38
<PAGE>
Proceeds in respect of any real property not constituting Collateral and (ii)
the date of receipt by Company or any of its Subsidiaries of any other Net Real
Estate Financing Proceeds, Company shall prepay the Loans and the Aggregate
Bridge Commitment shall be permanently reduced in an aggregate amount equal to
the product of such Net Real Estate Financing Proceeds times (A) until the
-----
Aggregate Non-Bridge Commitments have been terminated, zero (0) % and (B)
thereafter, 100% of such Net Real Estate Financing Proceeds.
(e) Asset Dispositions. No later than (i) five Business Days
------------------
following the receipt by Company or any of its Subsidiaries of any Net Asset
Disposition Proceeds in respect to Asset Dispositions not involving Collateral
and (ii) the date of receipt by Company or any of its Subsidiaries of any Net
Asset Disposition Proceeds from the Pending IceHouse Disposition in excess of
$50,000,000 or any other Net Asset Disposition Proceeds, Company shall prepay
the Loans and the Aggregate Bridge Commitment shall be permanently reduced in an
aggregate amount equal to the product of such Net Asset Disposition Proceeds
times the Four Facility Commitment Reduction Fraction.
- -----
(f) Insurance. No later than two Business Days following the receipt
---------
by Company or any of its Subsidiaries of any Net Insurance Proceeds that are
required to be applied to prepay the Loans and reduce the Aggregate Bridge
Commitment pursuant to Section 6.6, Company shall prepay the Loans and the
Aggregate Bridge Commitment shall be permanently reduced in an aggregate amount
equal to the product of such Net Insurance Proceeds times the Four Facility
-----
Commitment Reduction Fraction.
(g) Excess Cash Flow. In the event that there shall be Consolidated
----------------
Excess Cash Flow for fiscal year 2000, Company shall, no later than 60 days
after the end of such fiscal year, prepay the Loans and the Aggregate Bridge
Commitment shall be permanently reduced in an aggregate amount equal to (i) 60%
of such Consolidated Excess Cash Flow minus voluntary commitment reductions
-----
under this Agreement, the Amended and Restated 1999 180 Day Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement made during such fiscal year times (ii)
-----
the Four Facility Commitment Reduction Fraction.
(h) Tax Refunds. No later than five Business Days following the
-----------
receipt by Company or any of its Subsidiaries of any proceeds in respect of any
federal tax refunds in respect of the 1999 fiscal year in excess of $70,000,000
in the aggregate, Company shall prepay the Loans and the Aggregate Bridge
Commitment shall be permanently reduced in an aggregate amount equal to the
product of the excess proceeds received times the Four Facility Commitment
-----
Reduction Fraction.
(i) Capital Markets Transactions. No later than two Business Days
----------------------------
following the receipt by Company or any of its Subsidiaries of any Net
Securities Proceeds, Company shall prepay the Loans and the Aggregate Bridge
Commitment shall be permanently reduced in an aggregate amount equal to the
product of such Net Securities Proceeds times (i) until Net Securities Proceeds
-----
in an amount equal to $300,000,000 in the aggregate have been applied to reduce
the Aggregate Bridge Commitment, 100% and (ii) thereafter, the Four Facility
Commitment Reduction Fraction.
39
<PAGE>
(j) Calculations of Net Proceeds Amounts; Additional Prepayments and
----------------------------------------------------------------
Reductions Based on Subsequent Calculations. Concurrently with any prepayment
- -------------------------------------------
of the Loans pursuant to this Section 2.8, Company shall deliver to
Administrative Agent an officer's certificate demonstrating the calculation of
the amount of the applicable proceeds or Consolidated Excess Cash Flow, as the
case may be, that gave rise to such prepayment. In the event that Company shall
subsequently determine that the actual amount was greater than the amount set
forth in such officer's certificate, Company shall promptly make an additional
prepayment of the Loans (and the Aggregate Bridge Commitment shall be
permanently reduced in accordance with the applicable subsection of this Section
2.8) in an amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an officer's certificate
demonstrating the derivation of the additional amount resulting in such excess.
(k) Application of Prepayments. Any mandatory prepayments of the
--------------------------
Loans pursuant to this Section 2.8 shall be applied first to Base Rate Loans to
the full extent thereof before application to Offshore Rate Loans and shall be
in addition to, and shall not be applied to reduce, the scheduled Commitment
reductions set forth in Section 2.9.
2.9 Repayment; Scheduled Reductions of Aggregate Bridge Commitment.
--------------------------------------------------------------
(a) Company shall repay the principal amount of the outstanding Loans
on the last day of the Availability Period together with interest thereon.
(b) The Commitments shall be permanently reduced on the dates set
forth below in an amount equal to the product of the correlative amount
indicated times (A) until the Aggregate Non-Bridge Commitments have been
-----
terminated, zero (0)% and (B) thereafter, 100%:
Date Scheduled Reduction
---- -------------------
May 25, 2000 $ 50,000,000
August 24, 2000 $ 50,000,000
November 22, 2000 $100,000,000
February 22, 2001 $ 50,000,000
May 24, 2001 $ 50,000,000
August 23, 2001 $100,000,000
2.10 Interest.
--------
(a) Subject to Section 2.10(c), each Loan shall bear interest on the
outstanding principal amount thereof (before and after default, before and after
maturity, before and after judgment, and before and after the commencement of
any proceeding under any Debtor Relief
40
<PAGE>
Laws) from the Closing Date until it becomes due at a rate per annum equal to
the Offshore Rate or the Base Rate, as the case may be, plus the Applicable
----
Margin (the "Applicable Margin"). The initial Applicable Margin, subject to
adjustment as provided below, shall be a rate per annum equal to 3.00% for
Offshore Rate Loans and 1.75% for Base Rate Loans. If Company has not completed
(after the date hereof) one or more Capital Markets Transactions and applied at
least $300,000,000 of Net Securities Proceeds therefrom in the aggregate to
reduce the Aggregate Bridge Commitment on or prior to January 31, 2001, then
effective February 1, 2001, the Applicable Margin shall increase to 4.00% for
Offshore Rate Loans and 2.75% for Base Rate Loans. In addition, the Applicable
Margin shall increase by an additional 0.25% at the beginning of each subsequent
three-month period, commencing May 1, 2001, unless and until Company shall have
completed (after the date hereof) one or more Capital Markets Transactions and
applied at least $300,000,000 of Net Securities Proceeds therefrom in the
aggregate to reduce the Aggregate Bridge Commitment.
(b) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Loans pursuant to Section 2.7, 2.8 or 2.9 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during any period when principal of the Loans is due and payable, interest shall
be payable on request for such payment by the holders of the Loans.
(c) While any Event of Default exists, Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law and including post-petition interest in any proceeding under any Debtor
Relief Law) on the principal amount of all Loans, at a rate per annum equal to
the Default Rate. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be payable upon demand.
(d) Anything herein to the contrary notwithstanding, the obligations
of Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest which may
be lawfully contracted for, charged or received by such Bank, and in such event
Company shall pay such Bank interest at the lower of (i) the highest rate
permitted by applicable law and (ii) the rates required by this Agreement.
2.11 Fees. In addition to fees due under other provisions of this
----
Agreement:
(a) Facility Fee. Company shall pay to Administrative Agent for the
------------
account of each Bank pro rata according to its Commitment Percentage, a facility
fee equal to 0.25% times the actual daily amount of its Commitment regardless of
-----
usage. The facility fee shall accrue at all times from the Closing Date until
the Maturity Date, shall be computed on a daily basis, and shall be payable in
arrears (i) on the fifth Business Day after the last day of each fiscal quarter,
commencing on the first such day after the Closing Date and (ii) on the Maturity
Date.
(b) Unused Commitment Fee. Company shall pay to Administrative Agent
---------------------
for the account of each Bank pro rata according to its Commitment Percentage, an
unused commitment fee equal to 0.50% times the actual daily amount by which the
-----
Aggregate Bridge
41
<PAGE>
Commitment exceeds the Outstanding Obligations of all Banks. The commitment fee
shall accrue at all times from the Closing Date until the Maturity Date, shall
be computed on a daily basis, and shall be payable in arrears (i) on the fifth
Business Day after the last day of each fiscal quarter, commencing on the first
such day after the Closing Date and (ii) on the Maturity Date. The commitment
fee shall accrue at all times, including at any time during which one or more
conditions in Article IV are not met.
(c) Utilization Fee. Company shall pay to Administrative Agent for
---------------
the account of each Bank pro rata according to its Commitment Percentage, a
utilization fee equal to 0.25% times the actual daily aggregate principal amount
-----
of such Bank's Outstanding Obligations. The utilization fee shall accrue at all
times from the Closing Date until the Maturity Date, shall be computed on a
daily basis, and shall be payable in arrears (i) on the fifth Business Day of
the last day of each fiscal quarter, commencing on the first such day after the
Closing Date, and (ii) on the Maturity Date.
(d) Amendment Fee. On the Closing Date, Company shall pay to
-------------
Administrative Agent for the account of each Bank that approves the execution of
this Agreement pro rata according to its Commitment Percentage, an amendment fee
in an amount equal to 0.50% times the Aggregate Bridge Commitment. If Company
-----
has not completed (after the date hereof) one or more Capital Markets
Transactions and applied at least $300,000,000 of Net Securities Proceeds
therefrom in the aggregate to reduce the Aggregate Bridge Commitment on or prior
to January 31, 2001, on February 1, 2001, Company shall pay to Administrative
Agent for the account of each Bank pro rata according to its Commitment
Percentage, an additional amendment fee in an amount equal to 2.00% times the
-----
Aggregate Bridge Commitment.
(e) Agency Fee. Company shall pay to Administrative Agent an agency
----------
fee in such amounts and at such times as set forth in a separate fee letter
agreement between Company and Administrative Agent. The agency fee is for
services to be performed by Administrative Agent acting as Administrative Agent
and is fully earned on the date paid. The agency fee paid to Administrative
Agent is solely for its account and is nonrefundable.
(f) Collateral Agency Fee. Company shall pay to Collateral Agent a
---------------------
collateral agency fee in such amounts and at such times as set forth in a
separate fee letter agreement between Company and Collateral Agent. The
collateral agency fee is for services to be performed by Collateral Agent acting
as Collateral Agent and is fully earned on the date paid. The collateral agency
fee paid to Collateral Agent is solely for its accounts and is nonrefundable.
(g) Other Fees. Company shall pay Administrative Agent for its own
----------
account and/or the account of each Co-Agent such fees in such amounts and at
such times as set forth in separate fee letter agreements between Company and
Administrative Agent.
2.12 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by Bank of America's "prime rate" shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest
42
<PAGE>
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). Interest and fees shall accrue during each period during which interest
or such fees are computed from the first day thereof to the last day thereof.
(b) Administrative Agent will notify Company and Banks of each
determination of an Offshore Rate. Any failure by Administrative Agent to give
such notice and any failure by Company and any Bank to receive such notice shall
not relieve Company of any obligation to pay interest or provide the basis for
any claim against Administrative Agent. Administrative Agent shall, upon
request made by Company or any Bank from time to time, advise such Person(s) of
the relevant applicable Offshore Rate(s).
(c) Each determination of an interest rate by Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
Company and Banks in the absence of manifest error.
2.13 Payments by Company.
-------------------
(a) All payments (including prepayments) to be made by Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall be made in Dollars to
Administrative Agent for the ratable account of Banks at Administrative Agent's
Payment Office. Such payments shall be made in immediately available funds and
no later than 11:00 a.m. San Francisco, California time, on the date specified
herein. Administrative Agent will promptly distribute to each Bank the amount
of its Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts, in like funds as
received. Any payment which is received by Administrative Agent later than
11:00 a.m. San Francisco, California time, shall be deemed to have been received
on the immediately succeeding Business Day and any applicable interest or fee
shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be, subject to the provisions
set forth in the definition of "Interest Period" herein.
(c) Unless Administrative Agent shall have received notice from
Company prior to the date on which any payment is due to Banks hereunder from
Company that Company will not make such payment in full, Administrative Agent
may assume that Company has made such payment in full to Administrative Agent on
such date and Administrative Agent may (but shall not be so required), in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent
Company shall not have made such payment in full to Administrative Agent, each
Bank shall repay to Administrative Agent, on request made by Administrative
Agent, such amount distributed to such Bank, together with interest thereon for
each day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to Administrative Agent, at the Federal Funds Rate
as in effect for each such day.
43
<PAGE>
2.14 Payments by the Banks to Administrative Agent.
---------------------------------------------
(a) Unless Administrative Agent shall have received notice from a
Bank at least one Business Day prior to the date of any proposed Borrowing (but
prior to 10:00 a.m. San Francisco, California time, on the same day with respect
to a Borrowing consisting of Base Rate Loans) that such Bank will not make
available to Administrative Agent for the account of Company the amount of that
Bank's Commitment Percentage of the Borrowing, Administrative Agent may assume
that each Bank has made such amount available to Administrative Agent on the
Borrowing Date and Administrative Agent may (but shall not be so required), in
reliance upon such assumption, make available to Company on such date a
corresponding amount. If and to the extent any Bank shall not have made its full
amount available to Administrative Agent and Administrative Agent in such
circumstances has made available to Company such amount, that Bank shall on the
next Business Day following such Borrowing Date make such amount available to
Administrative Agent, together with interest at the Federal Funds Rate for and
determined as of each day during such period.
(b) A certificate of Administrative Agent submitted to any Bank with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to
Administrative Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to
Administrative Agent on the next Business Day following such Borrowing Date,
Administrative Agent shall notify Company of such failure to fund and, upon
request for payment made by Administrative Agent, Company shall pay such amount
to Administrative Agent for Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(c) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.15 Sharing of Payments, etc. If, other than as expressly contemplated
-------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it or
amounts payable in respect of Lender Bridge Letters of Credit, any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) in an amount in excess of its Commitment Percentage of payments on
account of the Loans or amounts payable in respect of Lender Bridge Letters of
Credit obtained by all the Banks, such Bank shall forthwith (a) notify
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them or amounts payable in respect of Lender
Bridge Letters of Credit as shall be necessary to cause such purchasing Bank to
share the excess payment ratably with each of them; provided, however, that if
-------- -------
all or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's Commitment Percentage
(according to the proportion of (i) the amount of such paying Bank's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the
44
<PAGE>
total amount so recovered. Company agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including the right
of set-off but subject to Section 10.10) with respect to such participation as
fully as if such Bank were the direct creditor of Company in the amount of such
participation. Administrative Agent will keep records (which shall be conclusive
and binding in the absence of manifest error), of participations purchased
pursuant to this Section and will in each case notify Banks following any such
purchases and repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
3.1 Taxes.
-----
(a) Any and all payments by Company to each Bank or Administrative
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition,
Company shall pay all Other Taxes.
(b) If Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank, or Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Bank or Administrative Agent, as the case may be, receives and retains
an amount equal to the sum it would have received and retained had no such
deductions or withholdings been made;
(ii) Company shall make such deductions and withholdings;
(iii) Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) Company shall also pay to each Bank or Administrative
Agent for the account of such Bank, at the time interest is paid, Further
Taxes in the amount that the respective Bank specifies as necessary to
preserve the after-tax yield the Bank would have received if such Taxes,
Other Taxes or Further Taxes had not been imposed.
(c) Company agrees to indemnify and hold harmless each Bank and
Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Bank or Administrative Agent makes
written demand therefor.
45
<PAGE>
(d) Within 30 days after the date of any payment by Company of Taxes,
Other Taxes or Further Taxes, Company shall furnish to each Bank or
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or
Administrative Agent.
(e) Company will not be required to pay any additional amounts in
respect of Section 3.1(b) to any Bank or Administrative Agent:
(i) if such Bank shall have delivered to Company a Form 1001 (or
any successor form) pursuant to Section 9.11(a)(i), and such Bank shall not
at any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by Company
hereunder for any reason other than a change in United States law or
regulations or any applicable tax treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any Governmental
Authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such
Form 1001(or any successor form); or
(ii) if such Bank shall have delivered to Company a Form 4224 (or
any successor form) pursuant to Section 9.11(a)(ii), and such Bank shall
not at any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by Company
hereunder for any reason other than a change in United States law or
regulations or in the official interpretation of such law or regulations by
any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the
date of delivery of such Form 4224 (or any successor form).
(f) If, at any time, Company requests any Bank to deliver any forms
or other documentation pursuant to Section 9.11(a)(iii), then Company shall, on
demand of such Bank through Administrative Agent, reimburse such Bank for any
costs and expenses (including Professional Costs) reasonably incurred by such
Bank in the preparation or delivery of such forms or other documentation.
(g) If Company is required to pay additional amounts to any Bank or
Administrative Agent pursuant to this Section 3.1, then such Bank or
Administrative Agent, as the case may be, shall use its reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its Lending Office or take any other reasonable action so as to eliminate any
such additional payment by Company which may thereafter accrue if such change,
in the reasonable judgment of such Bank, is not otherwise materially
disadvantageous to such Bank or Administrative Agent.
3.2 Illegality.
----------
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make
46
<PAGE>
Offshore Rate Loans, then, on notice thereof by the Bank to Company through
Administrative Agent, any obligation of that Bank to make Offshore Rate Loans
shall be suspended until the Bank notifies Administrative Agent and Company that
the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful for such Bank to
maintain any Offshore Rate Loan, Company shall, upon receipt of notice of such
fact and demand from such Bank (with a copy to Administrative Agent), prepay in
full such Offshore Rate Loans of that Bank then outstanding, together with
interest accrued thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans. If Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, Company shall borrow from the affected Bank, in the amount of such
repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, Company may elect, by giving notice
to the Bank through Administrative Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Bank determines that, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation, or (ii)
the compliance by that Bank with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans in an amount deemed material by
such Bank, then Company shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to Administrative Agent), pay to
Administrative Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation; affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased in an amount
deemed material by such Bank as a consequence of its loans, credits or
obligations under this Agreement, then, upon request of such Bank (with a copy
to Administrative Agent), Company shall immediately pay to the Bank, from time
to time as specified by the Bank, additional amounts sufficient to compensate
the Bank for such increase.
47
<PAGE>
3.4 Funding Losses. Company agrees to reimburse each Bank and to hold
--------------
each Bank harmless from any loss, cost or expense which the Bank may sustain or
incur as a consequence of:
(a) any failure of Company to make, on a timely basis, any payment or
prepayment of principal of any Offshore Rate Loan (including payments made after
any acceleration thereof);
(b) any failure of Company to borrow, continue or convert a Loan
after Company has given (or are deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation;
(c) any failure of Company to make any prepayment after Company has
given a notice in accordance with Section 2.7;
(d) any prepayment of an Offshore Rate Loan on a day which is not the
last day of the Interest Period with respect thereto; or
(e) any conversion pursuant to Section 2.4 of any Offshore Rate Loan
to a Base Rate Loan on a day that is not the last day of the relevant Interest
Period; or including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained.
3.5 Inability to Determine Rates. If Administrative Agent or Majority
----------------------------
Banks shall have determined that for any reason adequate and reasonable means do
not exist for ascertaining the Offshore Base Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan or that the Offshore Base
Rate or the Offshore Rate applicable pursuant to Section 2.10 for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to Banks of funding such Loan,
Administrative Agent will forthwith give notice of such determination to Company
and each Bank. Thereafter, the obligation of Banks to make or maintain Offshore
Rate Loans hereunder shall be suspended until Administrative Agent upon the
instruction of Majority Banks revokes such notice in writing. Upon receipt of
such notice, Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by Company. If Company does not revoke
such notice, Banks shall make, convert or continue the Loans, as proposed by
Company, in the amount specified in the applicable notice submitted by Company,
but such Loans shall be made, converted or continued as Base Rate Loans instead
of Offshore Rate Loans.
3.6 Reserves on Offshore Rate Loans. Company shall pay to each Bank, as
-------------------------------
long as such Bank shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to actual costs of such reserves allocated to such Loan by the
Bank (as determined by the Bank in good faith, which determination shall be
conclusive) (without duplication for such costs included in the computation of
the Offshore Rate), payable on each date on which interest is payable on such
Loan provided Company shall have received at
--------
48
<PAGE>
least 15 days' prior written notice (with a copy to Administrative Agent) of
such additional sums from the Bank. Each such notice from a Bank shall set forth
in reasonable detail (as determined by the Bank) the basis for such additional
sums. If a Bank fails to give notice 15 days prior to the relevant Interest
Payment Date, such additional sums shall be payable 15 days from receipt of such
notice.
3.7 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation pursuant to this Article shall deliver to Company (with a copy to
Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and such certificate shall be conclusive
and binding on Company in the absence of manifest error. Each certificate
submitted under this Section may not claim reimbursement or compensation for a
period earlier than 30 days prior to the date of such certificate unless
interpretation of the law or regulation or the guideline or request in question
is retroactive in effect in which case the certificate can cover such
retroactive period.
3.8 Substitution of Banks. Upon receipt by Company from any Bank of a
---------------------
claim for compensation under Section 3.1, 3.2, 3.3 or 3.6 (each such Bank an
"Affected Bank"), Company may: (a) request the Affected Bank to use its
-------------
reasonable efforts without incurring any material expense to obtain a
Replacement Bank; (b) request one or more of the other Banks to acquire and
assume all or part of such Affected Bank's Loans and Commitment; or (c)
designate a Replacement Bank. Any assignment to a Replacement Bank pursuant to
this Section shall be pursuant to an Assignment and Acceptance in compliance
with Section 10.8 including payment of the processing fee to Administrative
Agent (except to the extent that there is any conflict between the provisions of
this Section and Section 10.8, in which case the provisions of this Section
shall control). If Bank of America is the Affected Bank, it may, at its sole
option, resign as Administrative Agent or Collateral Agent. Notwithstanding the
provisions of Section 9.9 or 9.10, any resignation as Administrative Agent or
Collateral Agent by Bank of America under this Section shall take effect upon
delivery of Bank of America's written resignation to Company and Banks without
necessity of further action or lapse of time.
3.9 Survival. The agreements and obligations of Company in this Article
--------
shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1 Condition to Closing. The effectiveness of this Agreement is subject
--------------------
to the following conditions:
(a) Administrative Agent shall have received, on or before the
Closing Date, all of the following documents, in form and substance reasonably
satisfactory to Administrative Agent and Majority Banks:
(i) Loan Documents. Originals of the Loan Documents to which
---------------
Company is a party executed by Company.
49
<PAGE>
(ii) Organization Documents. Copies of the Organization
----------------------
Documents of each Borrower Party, certified by the Secretary of State of
its jurisdiction of organization or, if such document is of a type that may
not be so certified, certified by the secretary or similar officer of the
applicable Borrower Party, together with a good standing certificate from
the Secretary of State of its jurisdiction of organization and each other
state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each dated a recent date
prior to the Closing Date.
(iii) Resolutions; Incumbency.
-----------------------
(A) Copies of the resolutions of the board of directors
of each Borrower Party (or an authorized committee thereof) approving
and authorizing the execution, delivery, and performance by such
Borrower Party of the Loan Documents to which such Borrower Party is a
party, certified as of the Closing Date by the Secretary or an
Assistant Secretary of such Borrower Party.
(B) A certificate of the Secretary or an Assistant
Secretary of each Borrower Party certifying, as of the Closing Date,
the names and true signatures of the officers of such Borrower Party
authorized to execute and deliver, as applicable, this Agreement, and
all other Loan Documents to be delivered hereunder.
(iv) Opinions. Opinions of Wachtell, Lipton, Rosen, & Katz,
--------
special counsel to Company, Albert F. Moreno Esq., Senior Vice President
and General Counsel of Company, and Legal Strategies Group, dated the
Closing Date, and addressed to Administrative Agent and Banks, in form and
substance reasonably satisfactory to Banks.
(v) Closing Certificates from Company. A certificate from the
---------------------------------
president, the chief financial officer, or the treasurer of Company, dated
as of the Closing Date, substantially in the form of Exhibit VI.
----------
(vi) No Material Adverse Effect. There has occurred since
--------------------------
November 28, 1999, as reflected in the draft consolidated financial
statements delivered on January 24, 2000 and the accompanying draft notes,
no event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(vii) Security Interests in Collateral. Evidence satisfactory
--------------------------------
to Administrative Agent that Borrower Parties shall have taken or caused to
be taken all such actions, executed and delivered or caused to be executed
and delivered all such agreements, documents and instruments, and made or
caused to be made all such filings and recordings (other than the filing or
recording of items described in subsections (B), (C) and (D) below) that
may be necessary or, in the opinion of Administrative Agent, desirable in
order to create in favor of Administrative Agent, for the benefit of Banks,
a valid and (upon such filing and recording) perfected Lien on the
Collateral. Such actions shall include the following:
50
<PAGE>
(A) Stock Certificates and Instruments. Delivery to
----------------------------------
Administrative Agent of (1) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in
blank and otherwise satisfactory in form and substance to
Administrative Agent) representing all Capital Stock pledged pursuant
to the Pledge and Security Agreement and (2) all promissory notes or
other instruments (duly endorsed, where appropriate, in a manner
satisfactory to Administrative Agent) evidencing any Collateral;
(B) Lien Searches and UCC Termination Statements.
--------------------------------------------
Delivery to Administrative Agent of (1) the results of a recent
search, by a Person satisfactory to Administrative Agent, of all
effective UCC financing statements and fixture filings and all
judgment and tax lien filings which may have been made with respect to
any personal or mixed property of any Borrower Party, together with
copies of all such filings disclosed by such search, and (2) UCC
termination statements duly executed by all applicable Persons for
filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement);
(C) UCC Financing Statements and Fixture Filings.
--------------------------------------------
Delivery to Administrative Agent of UCC financing statements and,
where appropriate, fixture filings, duly executed by each applicable
Borrower Party with respect to all personal and mixed property
Collateral of such Borrower Party, for filing in all jurisdictions as
may be necessary or, in the opinion of Administrative Agent, desirable
to perfect the security interests created in such Collateral pursuant
to the Collateral Documents; and
(D) Intellectual Property Filings. Delivery to
-----------------------------
Administrative Agent of all cover sheets or other documents or
instruments required to be filed with the United States Patent and
Trademark Office in order to create or perfect Liens in respect of any
IP Collateral.
(viii) Foreign Subsidiaries. Copies of the Organization
--------------------
Documents of each Pledged Foreign Subsidiary.
(ix) Financial Statements. A copy of a draft of the unaudited
--------------------
(A) consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of the fiscal year ended November 28, 1999, (B)
related consolidated and consolidating statements of income of Company and
its Subsidiaries for such fiscal year and (C) related consolidated
statement of cash flows of Company and its Subsidiaries for such fiscal
year.
(x) Evidence of Insurance. A certificate from Company's
---------------------
insurance broker or other evidence satisfactory to Administrative Agent
that all insurance required to be maintained pursuant to Sections 5.16 and
6.6 is in full force and effect.
51
<PAGE>
(xi) Financial Plan. A consolidated plan and financial forecast
--------------
for fiscal years 2000 and 2001 including (A) forecasted consolidated
balance sheets and forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for each such fiscal year and for
each month of fiscal year 2000 and each quarter of fiscal year 2001,
together with a pro forma calculation of compliance with Sections 7.6, 7.7
and 7.8 for each quarter of each such fiscal year, and (B) such other
information as Administrative Agent may reasonably request.
(xii) Intercreditor Agreement. Executed copies of the
-----------------------
Intercreditor Agreement.
(xiii) Other Credit Facilities. Executed copies of the Amended
-----------------------
and Restated 1999 180 Day Credit Agreement, the Amended and Restated 1997
364 Day Credit Agreement, and the 1997 Second Amended and Restated Credit
Agreement, together with evidence satisfactory to Administrative Agent that
all conditions precedent to the effectiveness of such agreements have been
satisfied.
(xiv) Other Documents. Such other approvals, opinions,
---------------
documents or materials as Administrative Agent or any Bank may reasonably
request.
(b) Representations and Warranties. The representations and
------------------------------
warranties made by Company herein, or which are contained in any certificate,
document or financial or other statement furnished at any time under or in
connection herewith or therewith, shall be correct on and as of the Closing
Date.
(c) Existing Receivables Facility. On the Closing Date, LSFLLC shall
-----------------------------
have repurchased all accounts receivable sold under the Existing Receivables
Purchase Agreement, (ii) terminated any commitments to purchase any accounts
receivable or make other extensions of credit thereunder, and (iii) delivered to
Administrative Agent all documents or instruments necessary to assign to LSFLLC
all financing statements filed in respect of transactions under the Existing
Receivables Purchase Agreement. In addition, the Levi Strauss Receivables
Transfer Agreement dated as of April 28, 1999 among Company, Levi Strauss
Financial Center Corporation and Levi Strauss Funding Corp. shall have been
terminated.
(d) Payment of Fees. On the Closing Date, Administrative Agent shall
---------------
have received evidence of payment by Company of all accrued and unpaid fees,
costs and expenses to the extent then due and payable on the Closing Date
pursuant to the terms of this Agreement, together with Professional Costs of
Bank of America, to the extent invoiced prior to or on the Closing Date;
including any such costs, fees and expenses arising under or referenced in
Sections 2.11 and 10.4.
(e) LSFLLC. LSFLLC shall have entered into a Receivables Transfer
------
Agreement with Levi Strauss Financial Center Corporation similar to the
Receivables Transfer Agreement between Levi Strauss Financial Center Corporation
and Levi Strauss Funding Corp. and Administrative Agent shall have received duly
executed UCC financing statements for filing in all appropriate jurisdictions.
52
<PAGE>
4.2 Conditions to Each Borrowing, Issuance of Lender Bridge Letter of
-----------------------------------------------------------------
Credit and execution of Lender Derivative/FX Contract. The obligation of each
- -----------------------------------------------------
Bank to make any Loan to be made by it (including its initial Loan), and of each
Issuing Bridge Lender to issue any Lender Bridge Letter of Credit, is subject to
the satisfaction of the following conditions precedent on the relevant
disbursement date:
(a) Notice. As to any Loan, Administrative Agent shall have received
------
a Notice of Borrowing and as to any Lender Bridge Letter of Credit,
Administrative Agent shall have received a Letter of Credit Application;
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties made by Company and contained in Article V shall
be true and correct in all material respects on and as of each disbursement date
with the same effect as if made on and as of such disbursement date (except to
the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct in all material respects as
of such earlier date);
(c) No Existing Default. No Default or Event of Default shall exist
-------------------
or shall result from such Borrowing, the issuance of such Lender Bridge Letter
of Credit or the execution of such Lender Derivative/FX Contract, as they case
may be; and
(d) Total Utilization of Commitments. After giving effect to the
--------------------------------
proposed Borrowing, the issuance of the proposed Lender Bridge Letter of Credit
or the execution of the proposed Lender Derivative/FX Contract, as the case may
be, (i) the sum of (A) the Total Utilization of Commitments and (B) the Total
Amount of Unsecured Debt shall not exceed the Aggregate Total Commitments and
(ii) the Total Utilization of Bridge Commitments shall not exceed the Aggregate
Bridge Commitment.
Each Notice of Borrowing and each Letter of Credit Application submitted by
Company hereunder shall constitute a representation and warranty by Company
hereunder, as of the date of each such application, request, notice, and
disbursement date that the conditions in Section 4.2 are satisfied.
4.3 Conditions Subsequent. No later than the day following the Closing
---------------------
Date, Administrative Agent shall have received all of the following documents,
in form and substance satisfactory to Administrative Agent and Majority Banks:
(a) Loan Documents. Originals of the Guaranty and the Pledge and
--------------
Security Agreement executed by all Material Domestic Subsidiaries; and
(b) Opinions. An opinion of Wachtell, Lipton, Rosen & Katz, special
--------
counsel to Company, and Albert F. Moreno, Esq., Senior Vice President and
General Counsel of Company, dated the Subsequent Closing Date, addressed to
Administrative Agent and Banks, in form and substance reasonably satisfactory to
Banks.
53
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Company represents and warrants to Administrative Agent and each Bank that:
5.1 Organization, Powers, Good Standing, Business, Ownership of
-----------------------------------------------------------
Subsidiaries and Capitalization.
- -------------------------------
(a) Organization and Powers. Each Borrower Party is a corporation
-----------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1(a) and has all
---------------
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to enter
into each Loan Document, to issue the Notes (in the case of Company) and to
carry out the transactions contemplated hereby and thereby.
(b) Good Standing. Each Borrower Party is duly qualified to do
-------------
business and is in good standing wherever necessary to carry on its respective
present business and operations, except in jurisdictions in which the failure to
be so qualified or to be in good standing has not had and will not have a
Material Adverse Effect.
(c) Conduct of Business. Company and its Subsidiaries, considered
-------------------
together, are engaged only in businesses related or incidental to the
manufacture and sale of clothing and accessories and the LOS/DOS Business.
(d) Common Stock of Company All of the issued and outstanding shares
-----------------------
of Capital Stock of Company and each of its Subsidiaries have been duly and
validly issued and are fully paid and non-assessable.
(e) Restricted Subsidiaries. As of the Closing Date, the only
-----------------------
Restricted Subsidiaries are those listed on Schedule 5.1(e).
---------------
(f) Organizational Structure. As of the Closing Date, the
------------------------
organizational structure of Company and its Subsidiaries is set forth on
Schedule 5.1(f).
- ---------------
(g) Material Subsidiaries. As of the Closing Date, all Material
---------------------
Subsidiaries are listed on Schedule 5.1(g). As of the end of each fiscal
---------------
quarter, the aggregate gross revenues of the Subsidiaries of Company not
constituting Material Subsidiaries for the preceding four fiscal quarter period
shall not be more than 1% of the aggregate gross revenues of Company and its
Subsidiaries on a consolidated basis for such period.
5.2 Authorization of Borrowing, etc.
--------------------------------
(a) Authorization of Borrowing. The execution, delivery and
--------------------------
performance by each Borrower Party of each Loan Document to which it is a party
and the issuance, delivery and payment of the Notes by Company as contemplated
herein have been duly authorized by all necessary corporate action by such
Borrower Party. Each of the Loan Documents (other than the Notes) to which any
Borrower Party is a party has been duly executed and delivered by such
54
<PAGE>
Borrower Party, and the Notes, when executed and delivered, will be duly
executed and delivered by Company.
(b) No Conflict. The execution, delivery and performance by each
-----------
Borrower Party of each Loan Document to which it is a party and the issuance,
delivery and performance of the Notes by Company do not and will not (i) violate
any Borrower Party's Organization Documents or any order, judgment or decree of
any court or other Governmental Authority binding on any Borrower Party, (ii)
conflict with, result in a breach of, constitute a default under, or require the
termination of, any Contractual Obligation of any Borrower Party, except where
such conflicts, breaches, defaults and terminations, in the aggregate, would not
have a Material Adverse Effect, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any of the properties or
assets of any Borrower Party (other than pursuant to the Collateral Documents),
or (iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of any Borrower Party except for such
approvals or consents which will be obtained on or before the Closing Date or
where the failure to obtain such approvals and consents would not, in the
aggregate, have a Material Adverse Effect.
(c) Governmental Consents. The execution, delivery and performance by
---------------------
Borrower Parties of the Loan Documents, the application of the proceeds of the
Loans and the issuance, delivery and performance of the Notes by Company do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any Governmental Authority except actions
which are required due to a change in applicable law after the date hereof and
which have been or will be duly taken within the time period prescribed by any
such law.
(d) Binding Obligation. Each of the Loan Documents (other than the
------------------
Notes) to which any Borrower Party is a party is, and the Notes, when executed
and delivered, will be, the legally valid and binding obligations of such
Borrower Party, enforceable against such Borrower Party in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability, whether
enforcement is sought in a proceeding at law or in equity.
5.3 Financial Condition. On January 24, 2000, Company delivered to
-------------------
Administrative Agent a draft of its unaudited financial statements for its
fiscal year ending November 28, 1999 and the accompanying draft notes. The
foregoing financial statements were prepared in conformity with GAAP, and fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as of the date thereof and the consolidated results
of operations and cash flows of Company and its Subsidiaries for the period
covered thereby, subject, to changes resulting from audit and normal year-end
adjustments. As of the date of this Agreement, Company and its Subsidiaries,
taken as a whole, have no material contingent obligation, contingent liability
or liability for taxes, long-term lease or unusual forward or long-term
commitment, which is not reflected in the unaudited financial statements for its
fiscal year ending November 28, 1999, the notes thereto, or the most recent
financial statements delivered pursuant to Section 6.1 (if any), and which is
required by GAAP to be reflected therein. Since November 28, 1999, there has
been no event or circumstance which has a Material Adverse Effect.
55
<PAGE>
5.4 Title to Properties; Liens. Each of Company and its Subsidiaries has
--------------------------
good, sufficient and legal title to all of its respective properties and assets
reflected in the balance sheets referred to in Section 5.3 or in the most recent
financial statements delivered pursuant to Section 6.1 (if any), except for
assets acquired or disposed of in the ordinary course of business since the date
of such balance sheet and assets disposed of where such disposition would not be
prohibited by Sections 7.3 and 7.4 and except for those imperfections of title
which would not in the aggregate have a Material Adverse Effect. Except as
permitted under Section 7.2, all such properties and assets are free and clear
of Liens. As of the Closing Date, the only Principal Properties are those
listed on Schedule 5.4. As of the Closing Date, all domestic real property that
-------------
is owned or leased by Company and its Subsidiaries is listed on Schedule 5.4.
------------
5.5 Litigation; Adverse Facts. Except as to any confidential governmental
-------------------------
proceeding of which Borrower Parties are unaware, there is no action, suit,
proceeding, claim or dispute (whether or not purportedly on behalf of Company or
any of its Subsidiaries) at law or in equity or before or by any Governmental
Authority, pending or, to the knowledge of any Borrower Party, threatened in
writing against or affecting Company or any of its Subsidiaries or any property
of Company or any of its Subsidiaries, which any Borrower Party reasonably
expects to (a) result in any Material Adverse Effect, or (b) materially and
adversely affect the ability of any Borrower Party to perform the Obligations or
the ability of Banks to enforce the Obligations. Neither Company nor any of its
Subsidiaries is (i) in violation of any applicable Requirement of Law which (as
to all such violations in the aggregate) would have a Material Adverse Effect,
or (ii) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule, or regulation of any Governmental Authority, domestic
or foreign, which (as to all such matters in the aggregate) would have a
Material Adverse Effect. There is no action, suit or proceeding pending or, to
the knowledge of any Borrower Party, threatened in writing against or affecting
Company or any of its Subsidiaries which challenges the validity or the
enforceability of this Agreement, the Notes or the other Loan Documents.
5.6 Payment of Taxes. All federal and state tax returns and reports of
----------------
Company and each of its Subsidiaries required to be filed by such Person, where
the failure to file such returns or reports would have a Material Adverse
Effect, have been timely filed, and all taxes, assessments, fees and other
governmental charges upon such Persons and upon their respective properties,
assets, income and franchises which are due and payable, where the failure to
pay such amounts when due and payable would in the aggregate have a Material
Adverse Effect, have been paid when due and payable. No Borrower Party knows of
any proposed tax assessment against Company or any of its Subsidiaries that
would have a Material Adverse Effect which is not being actively contested in
good faith by the applicable corporation to the extent affected thereby (and as
to which any provision therefor required pursuant to Section 6.5 has been made).
5.7 Materially Adverse Agreements; Performance.
------------------------------------------
(a) Agreements. Neither Company nor any of its Subsidiaries is a
----------
party to or subject to any material agreement or instrument or charter or other
internal restriction which (in the aggregate as to all such matters) would have
a Material Adverse Effect.
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(b) Performance. Neither Company nor any of its Subsidiaries is in
-----------
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation of Company or
any of its Subsidiaries, nor will any default result from the consummation of
this Agreement or any of the other Loan Documents, and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or indirect, of such
default or defaults, if any, would not have a Material Adverse Effect.
5.8 Governmental Regulation. Neither Company nor any of its Material
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, any state public utilities code or to any federal or state
statute or regulation limiting its ability to incur Indebtedness for money
borrowed.
5.9 ERISA Compliance. Except as specifically disclosed in Schedule 5.9:
---------------- ------------
(a) And except as would not have a Material Adverse Effect, each Plan
is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of any Borrower Party, nothing has
occurred which would cause the loss of such qualification. Company and each
ERISA Affiliate have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the best knowledge of any Borrower
Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event that requires notice to be given to the PBGC
has occurred or is reasonably expected to occur; (ii) no Pension Plan has a
Funded Current Liability Percentage of less than 90%; (iii) neither Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); and (iv) neither Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan.
5.10 Environmental Matters. Company and each of its Subsidiaries conducts
---------------------
in the ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business, operations
and properties, and as a result thereof each Borrower Party has reasonably
concluded that, except as specifically disclosed in Schedule 5.10,
-------------
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such Environmental Laws and Environmental Claims are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect.
5.11 Compliance With Laws. Each of Company and its Subsidiaries is in
--------------------
compliance with all Requirements of Law applicable to their properties, assets
and business where the failure to so comply would (as to all such failures to
comply in the aggregate) have a Material Adverse Effect. There are no
proceedings pending or, to the knowledge of any Borrower Party, threatened in
writing, to terminate or modify any license, permit or other approval issued by
a Governmental Authority, the termination or modification of which (in the
aggregate as to all such matters) would have a Material Adverse Effect.
5.12 Regulation U. None of Company nor any of its Subsidiaries is engaged
------------
principally, nor as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. No
part of the proceeds of the Loans will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. No part of the proceeds of the Loans will be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X of the Federal Reserve Board.
5.13 Disclosure. No representation or warranty of any Borrower Party
----------
contained in this Agreement or any other document, certificate or written
statement furnished to Administrative Agent or any Bank by any Borrower Party
for use in connection with any transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or omits to
state or will omit to state a material fact known to such Borrower Party
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
5.14 Matters Relating to Collateral.
------------------------------
(a) The execution and delivery of the Collateral Documents by Borrower
Parties, together with (i) the actions taken on or prior to the date hereof
pursuant to Sections 4.1(a)(vii) and 4.1(a)(viii), (ii) the actions taken
pursuant to Sections 6.9 and 6.11, and (iii) the delivery to Administrative
Agent of any Pledged Collateral not delivered to Administrative Agent at the
time of execution and delivery of the applicable Collateral Document (all of
which Pledged Collateral has been so delivered) are effective to create in favor
of Administrative Agent for the benefit of Banks, as security for the respective
Secured Obligations (as defined in the applicable Collateral Document in respect
of any Collateral), a valid and perfected Lien on all of the Collateral, a
security interest in which may be perfected by filing in the United States or
possession, and all filings and other actions necessary or desirable to perfect
and maintain the perfection of such Liens have been duly made or taken and
remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
(b) No authorization, approval or other action by, and no notice to or
filing with, any Government Authority in the United States is required for
either (i) the pledge or grant by any Borrower Party of the Liens purported to
be created in favor of Administrative Agent
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pursuant to any of the Collateral Documents, or (ii) the exercise by
Administrative Agent of any rights or remedies in respect of any Collateral
(whether specifically granted or created pursuant to any of the Collateral
Documents or created or provided for by applicable law), except for filings or
recordings contemplated by Section 5.14(a) and except as may be required, in
connection with the disposition of any Pledged Collateral, by laws generally
affecting the offering and sale of securities.
(c) The pledge of the Pledged Collateral pursuant to the Collateral
Documents does not violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
(d) All information supplied to Administrative Agent by or on behalf
of any Borrower Party with respect to any of the Collateral (in each case taken
as a whole with respect to any particular Collateral) is accurate and complete
in all material respects.
5.15 Intangible Assets. Company and its Subsidiaries own, or possess the
-----------------
right to use, all trademarks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intangible assets that are used in the conduct of
their respective businesses as now operated, and none of such items, to the best
knowledge of any Borrower Party, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person, to the
extent that such failure to own or possess or such conflict has a Material
Adverse Effect.
5.16 Insurance. The properties of Company and its Subsidiaries are insured
---------
with financially sound and reputable insurance companies not Affiliates of
Company or with Majestic Insurance International Ltd., a wholly-owned Subsidiary
of Company, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Company and its Subsidiaries operate.
From and after the date that is 30 days following the Closing Date, property,
general liability, business interruption and automobile insurance policies shall
name Collateral Agent for the benefit of Banks as an additional insured
thereunder as its interests may appear and, in the case of property insurance,
contain a loss payable subsection or endorsement, satisfactory in form and
substance to Administrative Agent, that names Collateral Agent for the benefit
of Banks as the loss payee thereunder for any covered loss with respect to the
Collateral, as appropriate. Insurance policies shall provide for at least 30
days prior written notice to Administrative Agent of any material modification
or cancellation of such policy.
5.17 Year 2000. Company has (a) initiated a review and assessment of all
---------
areas within its and each of its Subsidiaries' business and operations
(including those affected by customers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by Company or
any of its Subsidiaries (or their respective customers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (b) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(c) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, Company believes that all computer applications and devices
containing imbedded computer chips (including those of its and its Subsidiaries'
customers and vendors) that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and
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<PAGE>
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so does not have a Material Adverse Effect.
5.18 Solvency. Each Borrower Party is and, upon the incurrence of any
--------
Obligations by such Borrower Party on any date on which this representation is
made, will be, Solvent.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall (except in the case of Company's reporting covenants)
cause each of its Subsidiaries to, perform and comply with all covenants in this
Article.
6.1 Financial Statements and Other Reports.
--------------------------------------
(a) Company shall maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP and in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Company or any of its subsidiaries. Company shall deliver to
Administrative Agent for distribution to Banks:
(i) as soon as practicable and in any event within 30 days
after the end of each fiscal month, a copy of the consolidated and
consolidating balance sheets of Company and its Subsidiaries, as at the end
of such period, the related consolidated and consolidating statement of
income of Company and its Subsidiaries for such fiscal month and for the
fiscal year to date, and the related consolidated statement of cash flows
of Company and its Subsidiaries for such fiscal month and for the fiscal
year to date, certified by the chief financial officer, treasurer or
controller of Company as fairly presenting the financial condition of
Company and its Subsidiaries in all material respects as at the dates
indicated and the results of their operations and changes in cash flows for
the periods indicated in accordance with GAAP, except for the absence of
footnotes and subject to changes resulting from audit and normal year-end
adjustment;
(ii) as soon as practicable and in any event within 45 days
after the end of each of the first three fiscal quarters of the fiscal
year, a copy of the consolidated and consolidating balance sheets of
Company and its Subsidiaries, as at the end of such period, the related
consolidated and consolidating statement of income of Company and its
Subsidiaries for such fiscal quarter and for the fiscal year to date, and
the related consolidated statement of cash flows of Company and its
Subsidiaries for such fiscal quarter and for the fiscal year to date,
certified by the chief financial officer, treasurer or controller of
Company as fairly presenting the financial condition of Company and its
Subsidiaries in all material respects as at the dates indicated and the
results of their operations and changes in cash flows for the periods
indicated in accordance with GAAP, except for the absence of footnotes and
subject to changes resulting from audit and normal year-end adjustment;
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(iii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a copy of the consolidated and
consolidating balance sheets of Company and its Subsidiaries, as at the end
of such year, the related consolidated and consolidating statements of
income of Company and its Subsidiaries for such fiscal year and the related
consolidated statements of stockholders' equity and cash flows of Company
and its Subsidiaries for such fiscal year, accompanied by a report thereon
of and a letter from Arthur Andersen LLP or other independent public
accountants of recognized national standing selected by Company and
satisfactory to Majority Banks substantially in the form of Exhibit X which
---------
report shall be unqualified as to going concern and scope of audit and
shall state that such consolidated financial statements present fairly in
all material respects the financial position of Company and its
Subsidiaries as at the dates indicated and the results of operations and
cash flows for the periods indicated in conformity with GAAP (except as
otherwise stated therein) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) together with each delivery of any financial statements
pursuant to Section 6.1(a)(ii) or 6.1(a)(iii) a Compliance Certificate from
Company executed by a Responsible Officer, stating that the signer does not
have knowledge of the existence as at the date of such certificate, of any
condition or event which constitutes a Default or Event of Default, or, if
any such condition or event existed at such date or exists, specifying the
nature and period of existence thereof and what action Company has taken,
is taking and proposes to take with respect thereto, and demonstrating in
reasonable detail compliance during or at the end of such accounting
periods, as applicable, with Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.11
and 7.16; and, should there be any material change in GAAP as in effect as
of the Closing Date, such Compliance Certificate shall include computations
setting forth reconciliation of the items used in computing compliance with
the covenants under this Agreement by reason of the differences between
GAAP used in the preparation of such financial statements and GAAP as in
effect as of the Closing Date;
(v) concurrently with the delivery of the financial
statements referred to in Section 6.1(a)(iii), a certificate of Company's
independent certified public accountants certifying such financial
statement and stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default hereunder or, if
any such Default or Event of Default shall exist, stating the nature and
status of such event;
(vi) as soon as practicable and in any event no later than 10
Business Days after the end of each fiscal month, a cash flow forecast for
Company and its Subsidiaries for the then following 13 weeks and a report
setting forth the cash flows of Company and its Subsidiaries for the prior
13 weeks, together with an explanation of any material variance between
those results and the results previously projected for those 13 weeks;
(vii) (A) as soon as practicable and in any event no later than
10 Business Days after the end of each fiscal month, (1) a report setting
forth the details
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of (y) any Lender Derivative/FX Contract to which Company or FinServ is a
party, including the Termination Value of any such Lender Derivative/FX
Contract, and (z) all other outstanding unsecured Indebtedness of Company
or any of its Subsidiaries (including any letters of credit (other than
Lender Bridge Letters of Credit and Lender 180 Day Letters of Credit)
issued for the benefit of Company and its Subsidiaries) incurred in
accordance with Section 7.1(r), and (2) information with respect to all
other Derivative/FX Contracts to which Company or any of its Subsidiaries
is a party, and (B) promptly upon request, any other information concerning
such Derivative/FX Contracts reasonably requested by Administrative Agent;
(viii) as soon as practicable and in any event no later than 30
days after the end of fiscal year 2000, a consolidated plan and financial
forecast for fiscal year 2001 including (A) forecasted consolidated
balance sheets and forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for such fiscal year and for each
month of such fiscal year, together with a pro forma calculation of
--- -----
compliance with Sections 7.6, 7.7 and 7.8 for each quarter of such fiscal
year and an explanation of the major assumptions on which such forecasts
are based, and (B) such other information as Administrative Agent may
reasonably request;
(ix) promptly after the same are available, copies of each
annual report or proxy statement sent to the stockholders of Company, and
copies of all annual, regular, periodic and special reports and
registration statements which Company may file or, if Company were subject
to the Exchange Act, would be required to file with the Securities and
Exchange Commission under Sections 13 or 15(d) of the Exchange Act, and not
otherwise required to be delivered to Administrative Agent pursuant hereto;
(x) promptly upon any Responsible Officer of Company
obtaining knowledge of any condition or event which constitutes a Default
or Event of Default, or becoming aware that any Bank has given any written
notice of a claimed Default or Event of Default, a certificate from
Company, executed by a Responsible Officer of Company, specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or action taken, and the nature of such claimed
Default or Event of Default, event or condition, and what action Company
has taken, is taking, and proposes to take with respect thereto;
(xi) promptly upon any Responsible Officer of Company
obtaining knowledge of (A) the institution of, or non-frivolous threat of,
any material action, suit, proceeding or arbitration against or affecting
Company or any of its Subsidiaries or any property of Company or any of its
Subsidiaries not previously disclosed in writing by Company to
Administrative Agent, or (B) any material development in any action, suit,
proceeding or arbitration already disclosed, and in each case Company
reasonably expects such institution, threat, or material development to
result in any Material Adverse Effect or materially and adversely to affect
the ability of Company and its Subsidiaries, taken as a whole, to perform
the Obligations or the ability of Banks to enforce the Obligations, Company
shall promptly give notice thereof to Administrative Agent and provide such
other information (excluding communications covered by the attorney-
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client privilege) as may be reasonably requested by Administrative Agent or
a Bank to enable their counsel to evaluate such matters;
(xii) promptly upon any Responsible Officer of Company becoming
aware of its occurrence, notice of any of the following events affecting
Company or any ERISA Affiliate (but in no event more than 10 days after
such event), and such Responsible Officer shall also deliver to
Administrative Agent and each Bank a copy of any notice with respect to
such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to Company or any ERISA Affiliate
with respect to such event:
(A) an ERISA Event;
(B) a decrease in the Funded Current Liability Percentage
for any Pension Plan at the end of any fiscal quarter to less than
90%; or
(C) any significant change in the status of any item
disclosed on Schedule 5.9;
------------
(xiii) promptly upon receipt thereof, copies of any detailed
audit reports, management letters or recommendations submitted to the board
of directors (or the audit committee of the board of directors) of Company
by independent accountants in connection with the accounts or books of
Company or any of its Subsidiaries, or any audit of any of them;
(xiv) promptly upon any discovery or determination that any
computer application (including those of its suppliers and vendors) that is
material to the business and operations of Company or any of its
Subsidiaries will not be Year 2000 Compliant on a timely basis, except to
the extent that such failure does not have a Material Adverse Effect, a
notice thereof; and
(xv) promptly upon any Responsible Officer of Company becoming
aware of its occurrence, a notice of any material change in accounting
policies or financial reporting practices by Company or any of its
Subsidiaries.
(b) Company will deliver to Administrative Agent for distribution to
each Bank together with the Compliance Certificate required under subsection
(iv) of subsection (a) of this Section, a copy of all press releases and other
statements made available generally by Company to the public during the period
covered by the Compliance Certificate. The press releases and such other
statements covered by this subsection are those which concern material
developments in the business of Company and its Subsidiaries taken as a whole.
(c) Company will deliver to Administrative Agent for distribution to
each Bank copies of material financial and other information as Administrative
Agent or Majority Banks may reasonably request from time to time.
6.2 Corporate Existence, etc. Except as permitted by Section 7.4, Company
-------------------------
shall, and shall cause each of its Subsidiaries to, at all times preserve and
keep in full force and effect its
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corporate existence and rights and franchises material to its business and its
goodwill except where the failure to do so would not in the aggregate have a
Material Adverse Effect.
6.3 Compliance With Laws, etc. Company shall, and shall cause each of its
--------------------------
Subsidiaries, to comply with the requirements of each applicable Requirement of
Law, including all laws relating to environmental, health, safety and land use
matters applicable to any property, except where the failure to do so would not
in the aggregate have a Material Adverse Effect.
6.4 Compliance with Agreements. Company shall, and shall cause each of
--------------------------
its Subsidiaries to, promptly and fully comply with all Contractual Obligations
to which any one or more of them is a party, except for any such Contractual
------
Obligations (a) the performance of which would cause a Default or Event of
Default, (b) then being contested by any of them in good faith by appropriate
proceedings, or (c) if the failure to comply therewith does not have a Material
Adverse Effect.
6.5 Payment of Taxes and Claims. Company shall, and shall cause each of
---------------------------
its Subsidiaries to pay, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges not exceeding
$5,000,000 in the aggregate) imposed upon any of them or any of their properties
or assets or in respect of any of their franchises, business, income or property
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
(other than claims not exceeding $5,000,000 in the aggregate) which have become
due and payable and which by law have or may become a Lien upon any of their
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such governmental charge or
--------
claim need be paid if it is being contested in good faith by appropriate
proceedings and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
6.6 Maintenance of Properties; Insurance.
------------------------------------
(a) Company shall, and shall cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
all properties used or useful in the business of Company and its Subsidiaries
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof, if the failure to perform such actions would
in the aggregate have a Material Adverse Effect. Company shall, and shall cause
each of its Subsidiaries to, maintain or cause to be maintained, through self-
insurance or with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations, if the failure
to do so would (as to all such failures in the aggregate) have a Material
Adverse Effect. From and after the date that is 30 days following the Closing
Date, property, general liability, business interruption and automobile
insurance policies shall (i) name Collateral Agent for the benefit of Banks as
an additional insured thereunder with respect to all Collateral as its interests
may appear and, in the case of property insurance, (ii) contain a loss payable
subsection or endorsement, satisfactory in form and substance to Administrative
Agent, that names Collateral Agent for the benefit of
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Banks as the loss payee thereunder for any covered loss with respect to all
Collateral, as appropriate. Insurance policies shall provide for at least 30
days prior written notice to Administrative Agent of any material modification
or cancellation of such policy.
(b) Upon receipt by Company or any of its Subsidiaries of any
insurance proceeds constituting Net Insurance Proceeds, (i) so long as no Event
of Default shall have occurred and be continuing, Company or such Subsidiary may
retain and apply such Net Insurance Proceeds for working capital purposes, in
the case of business interruption insurance proceeds, or to pay or reimburse the
costs of repairing, restoring or replacing the assets (or substantially similar
assets) in respect of which such Net Insurance Proceeds were received or, to the
extent not so applied, as provided in Section 2.8, and (ii) if an Event of
Default shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance Proceeds as provided in Section 2.8.
6.7 Inspection.
----------
(a) Company shall, and shall cause each of its Subsidiaries to, (i)
permit any authorized representatives designated by a Bank, at the expense of
that Bank, to visit and inspect any of the properties of Company or any of its
Subsidiaries, including their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss their affairs, finances and
accounts with their officers and independent public accountants, all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested, and (ii) following the occurrence and
during the continuation of an Event of Default, permit any authorized
representatives designated by a Bank, at the expense of Company, to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
their financial and accounting records, and to make copies and take extracts
therefrom, and to discuss their affairs, finances and accounts with their
officers and independent public accountants, immediately upon request by
Administrative Agent.
(b) Company shall, and shall cause each of its Subsidiaries to, permit
E & Y Restructuring LLC and its affiliates, at the expense of Company, to have
access to and review their financial and accounting records in connection with
the services to be performed by E & Y Restructuring LLC for Banks and to discuss
their affairs, finances and accounts. The scope of such services shall be
determined by Banks from time to time and shall include a monthly review during
the first six months following the Closing Date (including a review of all
Derivative/FX Contracts) and a quarterly review thereafter. Banks agree that
provided no Event of Default has occurred and is continuing, the Professional
- --------
Costs for the services of E & Y Restructuring LLC for which Company shall be
liable shall not exceed $600,000 in the aggregate plus all related expenses.
----
Information acquired by a Bank pursuant to this Section shall be subject to the
confidentiality provisions of Section 10.9.
6.8 Use of Proceeds. Company shall use the proceeds of the Loans solely
---------------
for repayment of all obligations under the Existing Receivables Purchase
Agreement and for working capital and other general corporate purposes and not
in contravention of any applicable Requirement of Law.
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6.9 Execution of Guaranty and Collateral Documents by Additional
------------------------------------------------------------
Subsidiaries.
- ------------
(a) In the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will notify Administrative Agent of
that fact and cause such Material Domestic Subsidiary to execute and deliver to
Administrative Agent a counterpart of the Guaranty and the Pledge and Security
Agreement, and to take all such further actions and execute such further
documents and instruments as may be necessary or, in the opinion of
Administrative Agent, desirable to create in favor of Collateral Agent, for the
benefit of Banks, a valid and perfected Lien on the assets of such Material
Domestic Subsidiary described in the applicable Collateral Documents within 30
days of such Person becoming a Material Domestic Subsidiary; provided, however,
-------- -------
that neither Company nor any of its Subsidiaries shall be required to grant
Liens on any Principal Property, the Capital Stock of a Restricted Subsidiary or
any Indebtedness of or issued by a Restricted Subsidiary.
(b) Company shall deliver to Administrative Agent, together with such
Loan Documents, (i) certified copies of such Subsidiary's Organization
Documents, together with a good standing certificate from the Secretary of State
of the jurisdiction of its organization and each other state in which such
Person is qualified to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a certificate executed by the secretary or similar
officer of such Subsidiary as to (A) the fact that the attached resolutions of
the board of directors of such Subsidiary approving and authorizing the
execution, delivery and performance of such Loan Documents are in full force and
effect and have not been modified or amended and (B) the incumbency and
signatures of the officers of such Subsidiary executing such Loan Documents, and
(iii) a favorable opinion of counsel to such Subsidiary, in form and substance
satisfactory to Administrative Agent and its counsel, as to (A) the due
organization and good standing of such Subsidiary, (B) the due authorization,
execution and delivery by such Subsidiary of such Loan Documents, (C) the
enforceability of such Loan Documents against such Subsidiary, and (D) such
other matters (including matters relating to the creation and perfection of
Liens in any Collateral pursuant to such Loan Documents) as Administrative Agent
may reasonably request, all of the foregoing to be satisfactory in form and
substance to Administrative Agent and its counsel.
(c) In the event that (i) Company or any Material Domestic Subsidiary
acquires any fee interest or leasehold interest in real property after the date
hereof or (ii) at the time any Person becomes a Material Domestic Subsidiary,
such Person owns or holds any fee interest or leasehold interest in real
property, Company or such Material Domestic Subsidiary will notify
Administrative Agent of that fact and deliver, or cause such Material Domestic
Subsidiary to, execute and deliver to Administrative Agent, within 30 days of
such Person acquiring such Property or becoming a Material Domestic Subsidiary,
as the case may be, a fully executed and notarized Mortgage, in proper form for
recording in all appropriate places in all applicable jurisdictions, encumbering
the interest of such Borrower Party in such Property, and the opinions,
appraisals, documents, title insurance, environmental reports described in
Section 6.11(a) or that may be reasonably required by Administrative Agent;
provided, however, that neither Company nor any of its Subsidiaries shall be
- -------- -------
required to grant Liens on any Principal Property.
66
<PAGE>
6.10 Compliance with ERISA. Company shall and shall cause each of its
---------------------
Subsidiaries and their respective ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code.
6.11 Post Closing Actions.
--------------------
(a) Real Estate.
-----------
(i) On or prior to the date that is 60 days after the Closing
Date, Company shall have delivered to Administrative Agent:
(A) Fully executed and notarized Mortgages in proper form
for recording in all appropriate places in all applicable
jurisdictions, encumbering the Property listed on Schedule 6.11(a)(i);
-------------------
(B) An opinion of counsel (which counsel shall be reasonably
satisfactory to Administrative Agent) in each state in which any such
Property is located with respect to the enforceability of the form(s)
of Mortgages to be recorded in such state and such other matters as
Administrative Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Administrative Agent;
(C) (1) ALTA mortgagee title insurance policies or
unconditional commitments therefor issued by a title company
satisfactory to Administrative Agent with respect to the Property
listed on Schedule 6.11(a)(i), in amounts not less than the respective
-------------------
amounts designated therein with respect to any particular Property,
insuring fee simple title to each such Property vested in Company and
assuring Administrative Agent that the applicable Mortgage creates
valid and enforceable mortgage Liens on the respective Property
encumbered thereby subject only to a standard survey exception, which
policies (y) shall include an endorsement for mechanics' liens, for
future advances under this Agreement and for any other matters
reasonably requested by Administrative Agent and (z) shall provide for
affirmative insurance and such reinsurance as Administrative Agent may
reasonably request, all of the foregoing in form and substance
reasonably satisfactory to Administrative Agent; and (2) evidence
satisfactory to Administrative Agent that Company has delivered to the
title company all certificates and affidavits required by the title
company in connection with the issuance of the policies and paid to
the title company or to the appropriate governmental authorities all
expenses and premiums of the title company in connection with the
issuance of the policies and all recording and stamp taxes (including
mortgage recording and intangible taxes) payable in connection with
recording the Mortgages in the appropriate real estate records;
67
<PAGE>
(D) With respect to each Property listed on Schedule
--------
6.11(a)(i), a title report issued by the title company with respect
----------
thereto, dated not more than 30 days prior to the Closing Date and
satisfactory in form and substance to Administrative Agent;
(E) Copies of all recorded documents listed as exceptions to
title or otherwise referred to in the policies or in the title reports
delivered pursuant to subsection (D); and
(F) (1) Evidence, which may be in the form of a letter from
an insurance broker or a municipal engineer, as to whether any
Property is a Flood Hazard Property and the community in which any
such Flood Hazard Property is located is participating in the National
Flood Insurance Program; (2) if there are any such Flood Hazard
Properties, Company's written acknowledgement of receipt of written
notification from Administrative Agent (y) as to the existence of each
such Flood Hazard Property and (z) as to whether the community in
which each such Flood Hazard Property is located is participating in
the National Flood Insurance Program; and (3) in the event that any
such Flood Hazard Property is located in a community that participates
in the National Flood Insurance Program, evidence that Company has
obtained flood insurance in respect of such Flood Hazard Property to
the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System.
(ii) In the event that the pending sale of any of the Properties
listed on Schedule 6.11(a)(ii) is not consummated on or prior to the date
--------------------
that is 90 days after the Closing Date, Company will notify Administrative
Agent of that fact and promptly execute and deliver to Administrative Agent
a fully executed and notarized Mortgage, in proper form for recording in
all appropriate places in all applicable jurisdictions encumbering the
interest of Company in such Property and the opinions, appraisals,
documents, title insurance and environmental reports described in Section
6.11(a)(i) or that may be reasonably required by Administrative Agent.
(iii) In the event that a contract of sale is not entered into
by Company within 120 days after the Closing Date with respect to any of
the Properties listed on Schedule 6.11(a)(iii), Company will notify
---------------------
Administrative Agent of that fact and promptly execute and deliver to
Administrative Agent a fully executed and notarized Mortgage, in proper
form for recording in all appropriate places in all applicable
jurisdictions encumbering the interest of Company in such Property and the
opinions, appraisals, documents, title insurance and environmental reports
described in Section 6.11(a)(i) or that may be reasonably required by
Administrative Agent; provided, however, that in the event a contract of
-------- -------
sale is entered into with respect to any such Property during such period
and a sale is not consummated on or prior to the date that is 60 days after
the execution of any such contract, Company will notify Administrative
Agent of that fact and promptly take the actions described above with
respect to such Property.
68
<PAGE>
Notwithstanding the foregoing, in the event that any Property listed
on Schedule 6.11(a)(ii) or Schedule 6.11(a)(iii) becomes a Principal Property
-------------------- ---------------------
prior to the date on which a Mortgage with respect to such Property is required
to be delivered, Company shall have no obligation to make the deliveries or take
the actions set forth above with respect to such Property.
(b) Insurance. On or prior to the date that is 30 days after the
---------
Closing Date, Company shall have delivered to Collateral Agent a certificate
from Company's insurance broker or other evidence satisfactory to Collateral
Agent that Collateral Agent on behalf of Banks has been named as additional
insured and/or loss payee under all insurance policies to the extent required
under Sections 5.16 and 6.6.
(c) Derivative/FX Contracts. On or prior to the date that is 60 days
-----------------------
after the Closing Date, Company shall have delivered to Administrative Agent
executed copies of amendments to the existing master agreements pursuant to
which Lender Derivative/FX Contracts are issued providing that the obligations
of Company and FinServ under such agreements will be secured by the Collateral
Documents.
(d) Foreign Collateral. Company shall use its best efforts to take or
------------------
cause to be taken all such actions, execute and deliver or cause to be executed
and delivered all such agreements, documents and instruments and make or cause
to be made all such filings and recordings that may be necessary or, in the
opinion of Administrative Agent, desirable in order to create in favor of
Collateral Agent, for the benefit of Banks, a valid and perfected security
interest in all foreign registrations of IP Collateral and 65% of the Capital
Stock owned by Company or any Domestic Subsidiary of all Material Foreign
Subsidiaries (other than the Capital Stock of Restricted Subsidiaries).
(e) Intercompany Transactions. On or prior to the date that is 10
-------------------------
Business Days after the Closing Date, Company shall deliver a certificate
setting forth (i) all Indebtedness of Company to any of its Subsidiaries and of
any of its Subsidiaries to Company or any of its other Subsidiaries, and (ii)
all Investments by Company in any of its Subsidiaries and Investments of any of
its Subsidiaries in Company or any of its other Subsidiaries. On or prior to the
date that is 30 days after the Closing Date, Company shall deliver a fully
executed copy of an intercompany note evidencing all Indebtedness of Foreign
Subsidiaries to Domestic Subsidiaries that are Guarantors.
6.12 Transfer of Receivables. LSFCC shall sell to LSFLLC all accounts
-----------------------
receivable purchased by it from Company immediately upon consummation of such
purchase.
69
<PAGE>
ARTICLE VII
NEGATIVE COVENANTS
------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall cause each of its Subsidiaries to, perform and comply
with all covenants in this Article.
7.1 Indebtedness; Derivative/FX Contracts. Company shall not, and shall
-------------------------------------
not suffer or permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Indebtedness or Derivative/FX Contracts,
except
(a) Indebtedness of Company outstanding on the Closing Date and listed
on Schedule 7.1 and any refinancing of the industrial revenue bond obligations
------------
listed on Schedule 7.1 provided there is no increase in the aggregate principal
------------ --------
amount of such obligations;
(b) Indebtedness under the Loan Documents;
(c) Indebtedness arising from the honoring of a check, draft or
similar instrument against insufficient funds;
(d) Guaranty Obligations of Company guaranteeing the Indebtedness of
Material Foreign Subsidiaries permitted under Section 7.1(r);
(e) Indebtedness of Company and the other Borrower Parties under the
Amended and Restated 1999 180 Day Credit Agreement, the Amended and Restated
1997 364 Day Credit Agreement, and the 1997 Second Amended and Restated Credit
Agreement and the related loan documents;
(f) Indebtedness of Company in respect of Capital Leases not exceeding
$5,000,000 in the aggregate at any time;
(g) Indebtedness of Company to any wholly-owned Subsidiary that is a
Guarantor and Indebtedness of any wholly-owned Domestic Subsidiary that is a
Guarantor to Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor; provided that (i) all such intercompany Indebtedness shall be
--------
evidenced by promissory notes pledged to Administrative Agent on behalf of
Banks, (ii) all such intercompany Indebtedness owed by Company to any of its
Subsidiaries shall be subordinated in right of payment to the payment in full of
the Obligations in any Insolvency Proceeding pursuant to the terms of the
applicable promissory notes or an intercompany subordination agreement, (iii)
any payment by any Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or any of its Subsidiaries for
whose benefit such payment is made;
(h) Indebtedness of Pledged Foreign Subsidiaries to other Pledged
Foreign Subsidiaries;
70
<PAGE>
(i) Indebtedness of Unpledged Foreign Subsidiaries to Pledged Foreign
Subsidiaries or other Unpledged Foreign Subsidiaries;
(j) Indebtedness of Company and its Subsidiaries (other than LSFCC or
LSFLLC) to FinServ and Indebtedness of FinServ to Company and its other
Subsidiaries (other than LSFCC or LSFLLC) in the ordinary course of business;
(k) other Indebtedness of Company to any of its Subsidiaries and other
Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries incurred after the date hereof; provided, however, that the sum of
-------- -------
(i) the aggregate principal amount of all such Indebtedness incurred after the
date hereof plus (ii) the aggregate Investments permitted by Section 7.11(j),
----
plus (iii) the aggregate Dispositions permitted by Section 7.3(j) shall not
- ----
exceed $50,000,000 in the aggregate during fiscal year 2000 or $100,000,000 in
the aggregate during fiscal year 2001;
(l) Derivative/FX Contracts between Company or FinServ and FinServ and
the other Subsidiaries of Company (other than LSFCC or LSFLLC) in the ordinary
course of business;
(m) Indebtedness of Company in the form of Securities issued in a
Capital Markets Transaction; provided (i) Company makes the prepayments required
--------
pursuant to Section 2.8, (ii) the stated maturity date of such Indebtedness is
not earlier than five years from the issuance thereof, and (iii) such
Indebtedness is unsecured;
(n) Indebtedness of Company and its Material Subsidiaries (other than
LSFCC or LSFLLC) secured by Liens permitted under Section 7.2(h) not exceeding
$25,000,000 in the aggregate at any time;
(o) Indebtedness of Foreign Subsidiaries in the form of Permitted
Foreign Receivables Purchase Facilities, provided Company and its Subsidiaries
--------
make the prepayment required pursuant to Section 2.8;
(p) Indebtedness of Company and its Subsidiaries in the form of Real
Estate Financing Transactions not exceeding the limitations in Section 7.2(m) at
any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.8;
(q) Indebtedness of Company and its Subsidiaries in the form of
Equipment Financing Transactions not exceeding the limitations in Section 7.2(m)
at any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.8;
(r) unsecured Indebtedness (including Foreign Credit Lines), unsecured
reimbursement obligations under letters of credit (other than Lender Bridge
Letters of Credit and Lender 180 Day Letters of Credit) and secured or unsecured
Ordinary Course Derivative/FX Contracts (other than Lender Derivative/FX
Contracts and intercompany Ordinary Course Derivative/FX Contracts) of Company
and its Subsidiaries (other than LSFCC and LSFLLC); provided, however, that (i)
-------- -------
the sum of (A) the Total Utilization of Commitments plus (B) the Total Amount of
----
Unsecured Debt shall not exceed the Aggregate Total Commitments at any time,
(ii) the sum of (A) the Unsecured Letter of Credit Usage plus (B) the Total
----
Letter of Credit
71
<PAGE>
Usage shall not exceed the Lender Letter of Credit Sublimit at any time and
(iii) the sum of (A) the Unsecured Derivative/FX Usage plus (B)the Derivative/FX
----
Usage shall not exceed the Lender Derivative/FX Sublimit at any time;
(s) Indebtedness of Company to any of its Subsidiaries and other
Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries outstanding on the Closing Date and set forth on the certificate
delivered pursuant to Section 6.11(e); and
(t) other Indebtedness of Company and its Subsidiaries not exceeding
$5,000,000 in the aggregate at any time.
7.2 Limitation on Liens and Negative Pledges. Company shall not, and
----------------------------------------
shall not suffer or permit any of its Subsidiaries to, directly or indirectly,
incur, assume or suffer to exist any Lien or Negative Pledge upon any of their
Property, whether now owned or hereafter acquired, except:
(a) any Lien or Negative Pledge existing on the property of Company or
its Subsidiaries on the Closing Date and listed on Schedule 7.2;
------------
(b) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.5;
(c) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the Property subject thereto
or if such reserve or other appropriate provision, if any, required by GAAP
shall have been made therefor;
(d) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens securing (i) the performance of tenders, bids, trade
contracts (other than for borrowed money), government contracts, leases,
statutory obligations, and performance and return-of-money bonds, (ii)
contingent obligations on surety and appeal bonds, and (iii) other obligations
of a like nature; in each case, incurred in the ordinary course of business;
(f) Liens consisting of judgment or judicial attachment liens,
provided that the judgment secured by any such Lien shall, within 45 days after
- --------
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall have been discharged within 45 days after the expiration of any
such stay and such Liens do not constitute an Event of Default;
(g) easements, rights-of-way, restrictions and other similar
encumbrances that do not interfere with the ordinary conduct of the businesses
of Company and its Subsidiaries;
72
<PAGE>
(h) purchase money mortgages (including chattel mortgages) or other
purchase money liens or conditional sale or other title retention or security
agreements incurred by Company or any of its Material Subsidiaries (other than
LSFCC or LSFLLC) in connection with the acquisition or construction of any real
or personal property, or mortgages or liens or conditional sale or other title
retention agreements or security agreements existing on any such property at the
time of acquisition or construction or placed thereon within one year of the
acquisition or completion of construction thereof and any extension, renewal or
replacement of any such purchase money mortgage or lien in respect of all or
part of the same property; provided that the aggregate outstanding amount of
--------
Indebtedness secured by such Liens does not exceed $25,000,000 in the aggregate
at any time; provided further that every such mortgage, lien or agreement shall
-------- -------
apply only to the property originally subject thereto and fixed improvements, if
any, then existing or thereafter erected thereon;
(i) any interest or title of a lessor under any Capital or Operating
Lease permitted hereunder (other than any Equipment Financing Transaction);
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
--------
dedicated cash collateral account and is not subject to restrictions against
access by Company or any of its Subsidiaries owning the affected deposit account
or other funds maintained with a creditor depository institution in excess of
those set forth by regulations promulgated by the Federal Reserve Board, and
(ii) such deposit account is not intended by Company or any of its Subsidiaries
to provide collateral to the depository institution;
(k) leases or subleases granted to others in the ordinary course of
business not interfering with the ordinary conduct of the business of the
grantor thereof;
(l) Liens attaching to ownership interests in joint ventures (whether
in partnership, corporate or other form) engaged in the LOS/DOS Business or
attaching to intellectual property rights relating to the LOS/DOS Business;
(m) Liens created in connection with (i) Equipment Financing
Transactions and (ii) Real Estate Financing Transactions so long as (A) the
aggregate amount of all such transactions permitted by this Section 7.2(m) at
any time outstanding (as measured by the sum of all Indebtedness secured by such
Liens then outstanding or to be so created or assumed) shall not exceed
$175,000,000 and (B) Company shall cause, in connection therewith, the
prepayments of Loans required by Section 2.8;
(n) Liens created pursuant to applications or reimbursement agreements
pertaining to documentary letters of credit which encumber documents and other
property relating to such documentary letters of credit and the products and
proceeds thereof;
(o) Liens granted pursuant to the Collateral Documents;
(p) Liens securing Indebtedness under the Amended and Restated 1999
180 Day Credit Agreement, the Amended and Restated 1997 364 Day Credit
Agreement, and the 1997 Second Amended and Restated Credit Agreement;
73
<PAGE>
(q) Liens securing Ordinary Course Derivative/FX Contracts permitted
by Section 7.1(r);
(r) other Liens so long as the aggregate outstanding amount of
Indebtedness secured by such Liens does not exceed $2,000,000 at any time;
(s) Negative Pledges on accounts receivables of Foreign Subsidiaries
and the associated assets of Foreign Subsidiaries in connection with Permitted
Foreign Receivable Purchase Facilities;
(t) Negative Pledges on Intellectual Property licensed from third
parties; and
(u) Negative Pledges with respect to specific property encumbered to
secure payment of particular Indebtedness permitted hereunder.
7.3 Dispositions. Company shall not, and shall not suffer or permit any
------------
of its Subsidiaries to, directly or indirectly, make any Dispositions, except:
(a) Dispositions of obsolete or worn out property, whether now owned
or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory by Company or any of Subsidiaries to
Company or any of its Subsidiaries in ordinary course of business arm's length
transactions;
(c) Dispositions of inventory in the ordinary course of business;
(d) Dispositions of accounts receivable from Company to LSFCC and from
LSFCC to LSFLLC;
(e) Dispositions of Permitted Foreign Receivables pursuant to
Permitted Foreign Receivables Purchase Facilities, provided Company and its
--------
Subsidiaries make the prepayments required pursuant to Section 2.8;
(f) Dispositions of equipment pursuant to Equipment Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.8;
(g) Dispositions of real property pursuant to Real Estate Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.8;
(h) licenses of Intellectual Property in the ordinary course of
business;
(i) the Pending IceHouse Disposition;
(j) other Dispositions by Company to any of its Subsidiaries of
Property other than accounts receivable and other Dispositions by any of its
Subsidiaries to Company or any of its other Subsidiaries of Property other than
accounts receivable; provided, however, that the sum
-------- -------
74
<PAGE>
of (i) the fair market value of the assets sold, transferred, licensed or
otherwise disposed of plus (ii) the aggregate principal amount of Indebtedness
----
permitted by Section 7.1(k) plus (iii) the aggregate Investments permitted by
----
Section 7.11(j) shall not exceed $50,000,000 in the aggregate during fiscal year
2000 or $100,000,000 in the aggregate during fiscal year 2001;
(k) Asset Dispositions by Company and its Subsidiaries of Property
other than accounts receivable; provided that (i) at the time of any
--------
Disposition, no Event of Default shall exist or shall result from such
Disposition; (ii) the consideration received for such Disposition shall be in an
amount at least equal to the fair market value of the assets sold, transferred,
licensed or otherwise disposed of; (iii) the sole consideration received shall
be cash; (iv) the aggregate fair market value of all assets so sold,
transferred, licensed or otherwise disposed of by Company and its Subsidiaries
shall not exceed $50,000,000 in any fiscal year; and (v) Company and its
Subsidiaries make the prepayments required pursuant to Section 2.8;
(l) Dispositions of the Capital Stock of Domestic Subsidiaries that
are Guarantors to Company and wholly owned Domestic Subsidiaries that are
Guarantors; Dispositions of the Capital Stock of Pledged Foreign Subsidiaries to
Company, Domestic Subsidiaries that are Guarantors and other Pledged Foreign
Subsidiaries; and Dispositions of the Capital Stock of Unpledged Foreign
Subsidiaries to Company or any of its other Subsidiaries; and
(m) Dispositions of accounts receivable to collection agencies the
aggregate face amount of which does not exceed $2,000,000.
7.4 Fundamental Changes. Company shall not and shall not suffer or permit
-------------------
its Subsidiaries to, merge or consolidate with or into any Person or liquidate,
wind-up or dissolve themselves, or permit or suffer any liquidation or
dissolution or sell all or substantially all of their respective assets, except
that so long as no Default or Event of Default exists or would result therefrom
(a) any Domestic Subsidiary may merge with or into Company or any other Domestic
Subsidiary that is a Guarantor, or be liquidated, wound-up or dissolved or all
or any part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of to Company or any other Domestic Subsidiary
that is a Guarantor, provided that, in the case of a merger, Company or such
--------
Guarantor, as the case may be, shall be the continuing or surviving corporation;
(b) any Pledged Foreign Subsidiary may merge with or into any other Pledged
Foreign Subsidiary or be liquidated, wound-up or dissolved or all or any part of
its business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of to Company or any other Pledged Foreign Subsidiary; (c)
any Unpledged Foreign Subsidiary may merge with or into any other Unpledged
Foreign Subsidiary or any Pledged Foreign Subsidiary, or be liquidated, wound-up
or dissolved or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of to any other
Unpledged Foreign Subsidiary or a Pledged Foreign Subsidiary, provided that, in
--------
the case of a merger, such Pledged Foreign Subsidiary shall be the continuing or
surviving corporation; and (d) Company and its Subsidiaries may make Asset
Dispositions permitted by Section 7.3(k).
75
<PAGE>
7.5 Use of Proceeds.
---------------
(a) Company shall not use any portion of the Loan proceeds directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance Indebtedness of Company or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Sections 13 or 14 of the Exchange Act.
(b) Company shall not, directly or indirectly, use any portion of the
proceeds of the Loans (i) knowingly to purchase Ineligible Securities from the
Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of Company or any Affiliate of Company. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities.
7.6 Leverage Ratio. Company shall not permit the Leverage Ratio on the
--------------
last day of any period set forth below to be more than the correlative amount
indicated:
<TABLE>
<CAPTION>
PERIOD LEVERAGE RATIO
------ --------------
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 6.00 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
Fiscal Year 2000 5.75 to 1.00
Four Fiscal Quarter Period ending on the last day of the First 5.25 to 1.00
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second 5.00 to 1.00
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third 4.50 to 1.00
Fiscal Quarter of Fiscal Year 2001
Fiscal Year 2001 4.25 to 1.00
</TABLE>
76
<PAGE>
7.7 Interest Coverage Ratio. Company shall not permit the Interest
-----------------------
Coverage Ratio for any period set forth below to be less than the correlative
amount indicated:
<TABLE>
<CAPTION>
PERIOD INTEREST
------ COVERAGE RATIO
--------------
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 1.6 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 1.6 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 1.7 to 1.00
Fiscal Year 2000 1.8 to 1.00
Four Fiscal Quarter Period ending on the last day of the First Fiscal 1.9 to 1.00
Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second 2.0 to 1.00
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third Fiscal 2.1 to 1.00
Quarter of Fiscal Year 2001
Fiscal Year 2001 2.2 to 1.00
</TABLE>
77
<PAGE>
7.8 Minimum Consolidated EBITDA. Company shall not permit Consolidated
---------------------------
EBITDA for any period set forth below to be less than the correlative amount
indicated:
<TABLE>
<CAPTION>
PERIOD MINIMUM
------ CONSOLIDATED EBITDA
-------------------
($ in millions)
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 $ 102
First Two Fiscal Quarter Period of Fiscal Year 2000 $ 205
First Three Fiscal Quarter Period of Fiscal Year 2000 $ 320
Fiscal Year 2000 $ 440
Four Fiscal Quarter Period ending on the last day of the First $ 465
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the $ 490
Second Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third $ 510
Fiscal Quarter of Fiscal Year 2001
Fiscal Year 2001 $ 540
</TABLE>
7.9 Change in Business. Company shall not, and shall not suffer or permit
------------------
any of its Subsidiaries to, engage in any business not related or incidental to
the manufacture and sale of clothing and accessories. The LOS/DOS Business is a
business that is related or incidental to the manufacture and sale of clothing
within the meaning of the preceding sentence. Company shall not suffer or permit
LSFLLC to engage in any business other than the purchase and holding of accounts
receivable and shall not suffer or permit LSFCC to engage in any business other
than the purchase and servicing of accounts receivable generated by Company, the
processing of accounts payable of Company and its Subsidiaries, and other
accounting and general customer relationship functions.
7.10 ERISA. Company shall not, and shall not permit or suffer any of its
-----
Subsidiaries or ERISA Affiliates to:
(a) engage in any transaction in connection with which Company or any
of its Subsidiaries or any of their respective ERISA Affiliates would be subject
to either a civil penalty assessed pursuant to Section 502(i) or 502(l) of ERISA
or a tax imposed by Section 4975 of the Code, in either case in an amount in
excess of $5,000,000;
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<PAGE>
(b) fail to make full payment within five Business Days after the date
when due of all amounts exceeding $5,000,000 which, under the provisions of any
Pension Plan, Company or any of its Subsidiaries or any of their respective
ERISA Affiliates is required to pay as contributions thereto, or (as to any
Subsidiary organized under the laws of any of the United States) permit to exist
any accumulated funding deficiency, whether or not waived, with respect to any
Pension Plan in an aggregate amount greater than $5,000,000;
(c) permit the Funded Current Liability Percentage for any Pension
Plan to be less than 90%; or
(d) fail to make any payments in an aggregate amount greater than
$5,000,000 to any Multiemployer Plan that Company or any of its Subsidiaries, or
any of their respective ERISA Affiliates may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto.
As used in this Section, the term "accumulated funding deficiency"
has the meaning specified in Section 3(23) of ERISA and Section 412 of the Code
and the term "accrued benefit" has the meaning specified in Article 3 of ERISA.
7.11 Investments. Company shall not, and shall not suffer or permit any of
-----------
its Subsidiaries to, directly or indirectly, make any Investments, or acquire,
by purchase or otherwise, all or substantially all the business, property or
fixed assets of, or stock or other ownership interest of any Person, or any
division or line of business of, any Person except:
------
(a) Investments existing on the Closing Date and listed on Schedule
--------
7.11;
- ----
(b) cash and cash equivalents;
(c) advances to officers, directors and employees of Company or any of
their respective Subsidiaries for travel, entertainment, relocation and
analogous ordinary business purposes;
(d) extensions of credit to customers or suppliers of Company or any
of its Subsidiaries in the ordinary course of business and any Investments
received in satisfaction or partial satisfaction thereof;
(e) Investments permitted by Section 7.4;
(f) intercompany loans permitted by Sections 7.1(g), 7.1(h), 7.1(i),
and 7.1(j);
(g) Investments by Company in any wholly-owned Subsidiary that is a
Guarantor and Investments of any wholly-owned Domestic Subsidiary that is a
Guarantor in Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor;
(h) Investments by Pledged Foreign Subsidiaries in other Pledged
Foreign Subsidiaries;
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<PAGE>
(i) Investments by Unpledged Foreign Subsidiaries in other Unpledged
Foreign Subsidiaries;
(j) other Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries made after the date hereof; provided, however, that (i) such
-------- -------
Investments plus (ii) the aggregate principal amount of Indebtedness permitted
----
by Section 7.1(k) plus (iii) the aggregate Dispositions permitted by Section
----
7.3(j) shall not exceed $50,000,000 in the aggregate during fiscal year 2000 or
$100,000,000 in the aggregate during fiscal year 2001; provided further that
-------- -------
Investments in Subsidiaries of Company that are not Solvent immediately prior to
the making of any such Investment shall not exceed $10,000,000 in the aggregate
in any fiscal year;
(k) Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries on the Closing Date and set forth on the certificate delivered
pursuant to Section 6.11(e); and
(l) other Investments not exceeding $25,000,000 at any time.
7.12 Restricted Payments. Company shall not, and shall not permit or
-------------------
suffer any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment other than (a) payments of
Indebtedness in connection with Asset Dispositions as contemplated by the
definition of Net Asset Disposition Proceeds or Equipment Financing Transactions
as contemplated by the definition of Net Equipment Financing Proceeds and (b)
repayments and prepayments of Indebtedness under the Amended and Restated 1999
180 Day Credit Agreement, the Amended and Restated 1997 364 Day Credit
Agreement, and the 1997 Second Amended and Restated Credit Agreement.
7.13 Operating Lease Obligations. Company shall not, and shall not suffer
---------------------------
or permit any of its Subsidiaries to, directly or indirectly, create or suffer
to exist any obligations for the payment of rent for any property under
Operating Leases, except:
------
(a) Operating Leases in existence on the Closing Date; and
(b) Operating Leases entered into or assumed by Company or any
Subsidiary after the date hereof in the ordinary course of business.
7.14 Transactions with Affiliates. Company shall not, and shall not suffer
----------------------------
or permit any of its Subsidiaries to directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of Company
other than arm's-length transactions with Affiliates that are otherwise not
prohibited hereunder.
7.15 Amendments of Documents Relating to Indebtedness and Receivables.
----------------------------------------------------------------
(a) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of any Indebtedness (other
than Indebtedness under the Amended and Restated 1999 180 Day Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement or the 1997 Second
Amended and Restated Credit Agreement), or make
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<PAGE>
any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate or make
less onerous any such event or default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof, or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Indebtedness (or a trustee or other representative on their behalf) which would
be materially adverse to Company or to Banks. Company shall not amend or
otherwise change the terms of the Amended and Restated 1999 180 Day Credit
Agreement, the Amended and Restated 1997 364 Day Credit Agreement or the 1997
Second Amended and Restated Credit Agreement without the written consent of
Majority Banks if the effect of such amendment is to extend the stated maturity
date thereof or increase the aggregate commitments thereunder. Company shall not
amend or otherwise change the terms of the Amended and Restated 1999 180 Day
Credit Agreement, the Amended and Restated 1997 364 Day Credit Agreement or the
1997 Second Amended and Restated Credit Agreement to provide for an earlier
stated maturity date unless this Agreement is amended to provide for the same
maturity date.
(b) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of the Receivables Transfer
Agreements other than amendments to extend the term thereof or to preserve the
arm's length nature of the purchase and sale effected thereby.
7.16 Consolidated Capital Expenditures. Company shall not, and shall not
---------------------------------
suffer or permit any of its Subsidiaries to make or incur Consolidated Capital
Expenditures, in any fiscal year indicated below, in an aggregate amount in
excess of the corresponding amount set forth below opposite such fiscal year:
MAXIMUM CAPITAL
FISCAL YEAR EXPENDITURES
----------- ------------
2000 $60,000,000
2001 $60,000,000
7.17 Materially Adverse Agreements. Company shall not, and shall not
-----------------------------
suffer or permit any of its Subsidiaries to, become a party to or become subject
to any material agreement or instrument or charter or other internal restriction
which (in the aggregate as to all such matters) would have a Material Adverse
Effect.
7.18 Limitations on Upstreaming. Company shall not, and shall not suffer
--------------------------
or permit any of its Subsidiaries to, agree to any restriction or limitation on
the making of Restricted Payments or transferring of assets from any Subsidiary
to its parent except pursuant to this
81
<PAGE>
Agreement, the Amended and Restated 1999 180 Day Credit Agreement, the Amended
and Restated 1997 364 Day Credit Agreement, and the 1997 Second Amended and
Restated Credit Agreement.
7.19 Change in Auditors. Company shall not terminate the certified public
------------------
accountants auditing the books of Company or any of its Subsidiaries unless
Company shall have informed Administrative Agent of the reason for the
termination and selected new certified public accountants of recognized national
standing and reasonably satisfactory to Administrative Agent.
7.20 Restricted Subsidiaries. Company shall not permit any of its
-----------------------
Subsidiaries existing as of the Closing Date to become a Restricted Subsidiary
other than as a result of a change in Consolidated Net Tangible Assets.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.1 Event of Default. Any of the following shall constitute an "Event of
----------------
Default":
(a) Non-Payment. Company fails to pay, (i) when and as required to be
-----------
paid herein, any amount of principal of any Loan or (ii) within three Business
Days after the same becomes due, any other interest, fee or any other amount
payable hereunder or under any other Loan Document; or
(b) Cross Default. Failure of Company or any of its Subsidiaries to
-------------
pay, or any default in the payment of, any principal, interest or any other
amount on any Indebtedness or Derivative/FX Contract beyond any period of grace
provided; or breach or default with respect to any other material term of any
evidence of any Indebtedness or Derivative/FX Contract, or of any loan
agreement, mortgage, indenture or other agreement relating thereto, if such
breach or default continues beyond any applicable period of grace provided, if
and for so long as the effect of such failure, default or breach is to cause or
permit the holder or holders of that Indebtedness or Derivative/FX Contract (or
a trustee on behalf of such holder or holders) to cause, with or without the
giving of notice, that Indebtedness or Derivative/FX Contract to become or be
declared due prior to its stated maturity; provided, however, that this
-------- -------
subsection shall not apply with respect to Indebtedness and Derivative/FX
Contracts, the aggregate principal amount of which or the Termination Value of
which, as the case may be, does not exceed $25,000,000 in the aggregate; or
(c) Representation or Warranty. Any representation or warranty made
--------------------------
by any Borrower Party herein or in any other Loan Document or any representation
or warranty in any statement or certificate at any time given by any Borrower
Party in writing pursuant to any of the Loan Documents or in connection herewith
shall be false in any material respect on the date as of which made; or
(d) Specific Defaults. Failure to perform or observe any term,
-----------------
covenant or agreement contained in Section 6.8 or Article VII; or
82
<PAGE>
(e) Other Defaults. Failure to perform or observe any term, covenant
--------------
or agreement contained in this Agreement or any other Loan Document and such
default shall not have been remedied or waived within 30 days after receipt of
notice from Administrative Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction shall enter a decree or order
for relief in respect of Company or any of its Material Subsidiaries in an
involuntary case under any applicable Debtor Relief Laws, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable Debtor Relief Laws; or
(ii) A decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Material
Subsidiaries or over all or a substantial part of their property, shall
have been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Material Subsidiaries
for all or a substantial part of their property; or the issuance of a
warrant of attachment, execution or similar process against any substantial
part of the property of Company or any of its Material Subsidiaries, and
the continuance of any such events described in this subsection (f)(ii) for
60 days unless stayed, dismissed, bonded or discharged; or
(iii) an involuntary case under any applicable Debtor Relief
Laws shall have been commenced against Company or any of its Material
Subsidiaries and shall not have been dismissed within 60 days after the
commencement of such case; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Company or
---------------------------------------------------
any of its Material Subsidiaries shall commence a voluntary case under any
applicable Debtor Relief Laws, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such Debtor Relief Laws, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of their property; the making by Company or any of
its Material Subsidiaries of any assignment for the benefit of creditors; or the
inability or failure of Company or any of its Material Subsidiaries or the
admission by Company or any of its Material Subsidiaries in writing of their
inability to pay their debts as such debts become due; or the Board of Directors
of Company or any of its Material Subsidiaries (or any committee thereof) adopts
any resolution or otherwise authorizes action to approve any of the foregoing;
or
(h) Judgments and Attachments. Any money judgment, writ or warrant of
-------------------------
attachment, or similar process involving in any case an amount in excess of
$10,000,000 in excess of available insurance coverage as to which the insurer
has not denied coverage shall be entered or filed against Company or any of its
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded and unstayed for a period of 45 days or in any
event later than five days prior to the date of any proposed sale thereunder; or
83
<PAGE>
(i) Unfunded ERISA Liabilities. Any Pension Plan maintained by
--------------------------
Company or any of its ERISA Affiliates shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan, or the PBGC (or any
successor thereto) shall institute proceedings to terminate any Pension Plan or
to appoint a trustee to administer any Pension Plan, and, in each case,
Company's or any such ERISA Affiliate's liability (after giving effect to the
tax consequences thereof) as of the date thereof to the PBGC (or any successor
thereto) for unfunded guaranteed vested benefits under such Pension Plan or
Company's obligations to contribute to any Pension Plan in order to voluntarily
terminate such Pension Plan exceed $20,000,000 (or in the case of a termination
involving Company or any of its ERISA Affiliates as a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA) the withdrawing employer's proportionate
share of such liability shall exceed such amount); or
(j) Withdrawal Liability Under Multiemployer Plan. Company or any of
---------------------------------------------
its ERISA Affiliates as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an amount exceeding
$20,000,000; or
(k) Change of Control. (i) Any person or two or more persons (other
-----------------
than Permitted Transferees) acting in concert shall acquire beneficial
ownership, directly or indirectly, of Securities of Company or Voting Trust
Certificates issued under the Voting Trust Agreement (or other securities
convertible into such securities) representing 30% or more of the combined
voting power of all Securities of Company entitled to vote (or would be entitled
to vote in the absence of the Voting Trust Agreement) in the election of
directors (except that the provisions of this subsection (i) shall not apply to
Voting Trustees serving in their capacities as such under the Voting Trust
Agreement); or (ii) during any period of up to 12 consecutive months, commencing
after the Closing Date, individuals who at the beginning of such 12 month period
were directors of Company shall cease for any reason to constitute a majority of
the Board of Directors of Company unless the persons replacing such individuals
were nominated by the Board of Directors of Company, by Permitted Transferees or
by any of the Voting Trustees; or
(l) Failure to Deliver Certain Loan Documents; Invalidity of
--------------------------------------------------------
Guaranties; Failure of Security; Repudiation of Obligations. The Guaranty or
- -----------------------------------------------------------
the Pledge and Security Agreement shall not be executed and delivered by the
Material Domestic Subsidiaries on or prior to the day following the Closing
Date. At any time after the execution and delivery thereof, (i) any Guaranty
for any reason, other than the satisfaction in full of all Obligations, shall
cease to be in full force and effect (other than in accordance with its terms)
or shall be declared to be null and void, (ii) any Collateral Document shall
cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void by a court of competent jurisdiction, or Collateral Agent
shall not have or shall cease to have a valid and perfected Lien in any
Collateral (other than Inventory in the possession or control of Company's
agents or processors) purported to be covered thereby having a fair market
value, individually or in the aggregate, exceeding $5,000,000, in each case for
any reason other than the failure of Administrative Agent or any Bank to take
any action within its control, or (iii) any Borrower
84
<PAGE>
Party shall contest the validity or enforceability of any Loan Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by Banks, under any Loan Document to which it is a
party.
8.2 Remedies. If any Event of Default occurs, Administrative Agent shall,
--------
at the request of, or may, with the consent of, Majority Banks,
(a) declare the Commitment of each Bank to be terminated, whereupon
such Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable;
without presentment, demand, request, protest or other notice of any kind, all
of which are hereby expressly waived by Company;
(c) demand immediate payment by Company of an amount equal to the
aggregate amount of all outstanding Lender Bridge Letter of Credit Usage to be
held in the Cash Collateral Account; and
(d) exercise on behalf of itself and Banks all rights and remedies
available to it and Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in Section
- -------- -------
8.1(f) or (g) above (after the expiration of any grace or cure period provided
therein), (i) the obligation of each Bank to make Loans shall automatically
terminate; (ii) the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of Administrative Agent or any Bank; and (iii) an
amount equal to the aggregate amount of all outstanding Lender Bridge Letter of
Credit Usage shall be immediately due and payable to the applicable Issuing
Bridge Lender without notice to or demand upon Company, which are expressly
waived by Company, to be held in the Cash Collateral Account.
8.3 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
No Bank may exercise any rights or remedies with respect to the Obligations
without the consent of Majority Banks in their sole and absolute discretion.
The order and manner in which Administrative Agent's and Banks' rights and
remedies are to be exercised shall be determined by Majority Banks in their sole
and absolute discretion. Regardless of how a Bank may treat payments for the
purpose of its own accounting, for the purpose of computing the Obligations
hereunder, payments shall be applied first, to costs and expenses (including
Professional Costs) incurred by Administrative Agent and each Bank, second, to
the payment of accrued and unpaid interest on the Loans to and including the
date of such application, third, to the payment of the unpaid principal of the
Loans, and fourth, to the payment of all other amounts (including fees) then
owing to Administrative Agent and Banks under the Loan Documents, in each case
paid pro rata to each Bank in the same proportions that
85
<PAGE>
the aggregate Obligations owed to each Bank under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all Banks, without
priority or preference among Banks. No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Administrative Agent and Banks hereunder or
thereunder or at law in equity.
ARTICLE IX
ADMINISTRATIVE AGENT; COLLATERAL AGENT
--------------------------------------
9.1 Appointment and Authorization.
-----------------------------
Each Bank hereby irrevocably (subject to Section 9.9) appoints, designates
and authorizes Administrative Agent and Collateral Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, neither Administrative Agent nor Collateral Agent shall have any
duties or responsibilities, except those expressly set forth herein, nor shall
Administrative Agent or Collateral Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Administrative
Agent or Collateral Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with reference to
Administrative Agent or Collateral Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.2 Delegation of Duties. Administrative Agent and Collateral Agent may
--------------------
execute any of their respective duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Neither Administrative Agent nor Collateral Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.
9.3 Liability of Administrative Agent or Collateral Agent. No
-----------------------------------------------------
Administrative Agent-Related Person or Collateral Agent-Related Person shall (a)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be responsible
in any manner to any of Banks for any recital, statement, representation or
warranty made by any Borrower Party or any Subsidiary or Affiliate of any
Borrower Party, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent
86
<PAGE>
or Collateral Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Borrower Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Administrative Agent-Related Person or
Collateral Agent-Related Person shall be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Properties, books or records of any Borrower Party,
or any of Company's Subsidiaries or Affiliates.
9.4 Reliance by Administrative Agent and Collateral Agent.
-----------------------------------------------------
(a) Administrative Agent and Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Company), independent
accountants and other experts selected by Administrative Agent or Collateral
Agent. Administrative Agent and Collateral Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless
Administrative Agent or Collateral Agent, as the case may be, shall first
receive such advice or concurrence of Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of Majority Banks (or all of Banks if required hereunder) and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all of Banks. Where this agreement expressly permits or prohibits an
action unless Majority Banks otherwise determine, and in all other instances,
Administrative Agent or Collateral Agent, as the case may be, may, but shall not
be required to, initiate any solicitation for the consent or a vote of Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
either sent by Administrative Agent or Collateral Agent to such Bank for
consent, approval, acceptance, or satisfaction, required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. Neither Administrative Agent nor Collateral Agent
-----------------
shall be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except that Administrative Agent shall be deemed to have
knowledge with respect to defaults in the payment of principal, interest and
fees required to be paid to Administrative Agent for the account of Banks,
unless Administrative Agent shall have received written notice from a Bank or
Company referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". Administrative Agent
will notify Banks of its receipt of any such notice. Administrative Agent shall
take such action with respect to such Default or Event of Default as may be
directed by Majority Banks in accordance with Article VIII; provided, however,
-------- -------
that unless and until Administrative Agent has received any such direction,
87
<PAGE>
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of Banks.
9.6 Credit Decision; Disclosure of Information by Administrative Agent and
----------------------------------------------------------------------
Collateral Agent. Each Bank acknowledges that no Administrative Agent-Related
- ----------------
Person or Collateral Agent-Related Person has made any representation or
warranty to it, and that no act by Administrative Agent or Collateral Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of Company or any of its Subsidiaries or Affiliates, shall
be deemed to constitute any representation or warranty by any Administrative
Agent-Related Person or Collateral Agent-Related Person to any Bank as to any
matter, including whether Administrative Agent-Related Persons or Collateral
Agent-Related Persons have disclosed material information in their possession.
Each Bank, including any Bank by assignment, represents to Administrative Agent
that it has, independently and without reliance upon any Administrative Agent-
Related Person or Collateral Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Company and its Subsidiaries and
Affiliates, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Administrative Agent-Related Person
or Collateral Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decision in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business prospects, operations,
property, financial and other condition and creditworthiness of Company and its
Subsidiaries and Affiliates. Except for notices, reports and other documents
expressly required to be furnished to Banks by Administrative Agent or
Collateral Agent herein, neither Administrative Agent or Collateral Agent shall
have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Company or any of its Subsidiaries or
Affiliates which may come into the possession of any Administrative Agent
Related Person or any Collateral Agent-Related Person.
9.7 Indemnification of Administrative Agent and Collateral Agent. Whether
------------------------------------------------------------
or not the transactions contemplated hereby are consummated, Banks shall
indemnify upon demand each Administrative Agent-Related Person and each
Collateral Agent-Related Person (to the extent not reimbursed by or on behalf of
any Borrower Party and without limiting the obligation of any Borrower Party to
do so), pro rata, and hold harmless each Administrative Agent Related Person and
each Collateral Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Bank shall be liable for
-------- -------
the payment to any Administrative Agent-Related Person or any Collateral Agent-
Related Person of any portion of such Indemnified Liabilities resulting from
such Person's gross negligence or willful misconduct; provided, however, that no
-------- -------
action taken in accordance with the directions of Majority Banks shall be deemed
to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Bank shall reimburse
Administrative Agent and Collateral Agent upon demand for its ratable share of
any costs or out-
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of-pocket expenses (including Professional Costs) incurred by Administrative
Agent and Collateral Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or financial or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that Administrative Agent or Collateral Agent is not reimbursed for such
expenses by or on behalf of Company. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Administrative Agent or Collateral Agent.
9.8 Administrative Agent in Individual Capacity. Bank of America and its
-------------------------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Company
and its Subsidiaries and Affiliates as though Bank of America were not
Administrative Agent, an Issuing Bridge Lender or Collateral Agent hereunder and
without notice to or consent of Banks. In addition, Banks acknowledge that Bank
of America has been appointed administrative agent and collateral agent under
the Amended and Restated 1999 180 Day Credit Agreement, the Amended and Restated
1997 364 Day Credit Agreement, and the 1997 Second Amended and Restated Credit
Agreement and that the lenders party to those agreements have been granted a
Lien on the Collateral that is subordinated to the Lien granted to Banks
pursuant to the Intercreditor Agreement. Bank of America or its Affiliates may
receive information regarding Company and its Subsidiaries and Affiliates
(including information that may be subject to confidentiality obligations in
favor of Company, such Subsidiary or such Affiliate) or information relating to
the Amended and Restated 1999 180 Day Credit Agreement, the Amended and Restated
1997 364 Day Credit Agreement or the 1997 Second Amended and Restated Credit
Agreement) as a result of the activities described above and Banks acknowledge
that Administrative Agent or Collateral Agent shall be under no obligation to
provide such information to them. With respect to its Loans, Bank of America
shall have the same rights and powers under this Agreement as any other Bank and
may exercise the same as though it were not Administrative Agent, an Issuing
Bridge Lender or Collateral Agent, and the terms "Bank" and "Banks" shall
include Bank of America in its individual capacity.
9.9 Successor Administrative Agent. Administrative Agent may, and at the
------------------------------
request of Majority Banks shall, resign as Administrative Agent upon 30 days'
notice to Company and Banks. If Administrative Agent resigns under this
Agreement, Majority Banks shall appoint from among Banks a successor
administrative agent for Banks which successor administrative agent shall be
consented to by Company at all times other than during the existence of an Event
of Default (which approval of Company shall not be unreasonably withheld or
delayed). If no successor administrative agent is appointed prior to the
effective date of the resignation of Administrative Agent, Administrative Agent
may appoint, after consulting with Banks and Company, a successor administrative
agent from among Banks. Upon the acceptance of its appointment as successor
administrative agent hereunder, such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
benefit as to
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any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor administrative agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and Banks shall perform all of the duties of Administrative Agent hereunder
until such time, if any, as Majority Banks appoint a successor agent as provided
for above. Notwithstanding the foregoing, Bank of America may not be removed as
Administrative Agent at the request of Majority Banks unless Bank of America
shall also simultaneously be replaced as "Collateral Agent" and an "Issuing
Bridge Lender" hereunder pursuant to documentation in form and substance
reasonably satisfactory to Bank of America.
9.10 Successor Collateral Agent. Collateral Agent may, and at the request
--------------------------
of Majority Banks shall, resign as Collateral Agent upon 30 days' notice to
Company and Banks. If Collateral Agent resigns under this Agreement, Majority
Banks shall appoint from among Banks a successor collateral agent for Banks
which successor collateral agent shall be consented to by Company at all times
other than during the existence of an Event of Default (which approval of
Company shall not be unreasonably withheld or delayed). If no successor
collateral agent is appointed prior to the effective date of the resignation of
Collateral Agent, Collateral Agent may appoint, after consulting with Banks and
Company, a successor collateral agent from among Banks. Upon the acceptance of
its appointment as successor collateral agent hereunder, such successor
collateral agent shall succeed to all the rights, powers and duties of the
retiring Collateral Agent and the term "Collateral Agent" shall mean such
successor collateral agent and the retiring Collateral Agent's appointment,
powers and duties as Collateral Agent shall be terminated. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions of
this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement. If no successor collateral agent has accepted appointment as
Collateral Agent by the date which is 30 days following a retiring Collateral
Agent's notice of resignation, the retiring Collateral Agent's resignation shall
nevertheless thereupon become effective and Banks shall perform all of the
duties of Collateral Agent hereunder until such time, if any, as Majority Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
Bank of America may not be removed as Collateral Agent at the request of
Majority Banks unless Bank of America shall also simultaneously be replaced as
"Administrative Agent" and an "Issuing Bridge Lender" hereunder pursuant to
documentation in form and substance reasonably satisfactory to Bank of America.
9.11 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of Administrative Agent, to deliver to
Administrative Agent and Company:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form 1001 (or any successor form) before the
payment of any interest in
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the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Bank,
two properly completed and executed copies of IRS Form 4224 (or any
successor form) before the payment of any interest is due in the first
taxable year of such Bank and in each succeeding taxable year of such Bank
during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify Administrative Agent of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 (or any
successor form) and such Bank sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Company to such Bank, such
Bank agrees to notify Administrative Agent of the percentage amount in which it
is no longer the beneficial owner of Obligations of Company to such Bank. To
the extent of such percentage amount, Administrative Agent will treat such
Bank's IRS Form 1001 (or any successor form) as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 (or any successor form) with Administrative Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Company to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, Administrative Agent may withhold from any interest payment to
such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to Administrative
Agent, then Administrative Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify
Administrative Agent fully for all amounts paid, directly or indirectly, by
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts
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payable to Administrative Agent under this Section, together with all costs and
expenses (including Professional Costs). The obligation of Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Administrative Agent.
9.12 Co-Syndication Agents; Documentation Agent. None of the Banks
------------------------------------------
identified on the facing page or signature pages of this Agreement as a "Co-
Syndication Agent" or a "Documentation Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Banks as such. Without limiting the foregoing, none of
Banks so identified as a "Co-Syndication Agent" or a "Documentation Agent" shall
have or be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
9.13 Collateral Documents, Guaranties and Intercreditor Agreement. Each
------------------------------------------------------------
Bank hereby further authorizes Collateral Agent, on behalf of and for the
benefit of Banks, to enter into each Collateral Document as secured party and
hereby authorizes Administrative Agent, on behalf of and for the benefit of
Banks, to enter into each Guaranty and the Intercreditor Agreement, and each
Bank agrees to be bound by the terms of each Collateral Document, each Guaranty
and the Intercreditor Agreement; provided that neither Administrative Agent nor
--------
Collateral Agent shall (a) enter into or consent to any material amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or Guaranty or (b) release any Collateral without the prior consent of
Majority Banks, Requisite Banks or all Banks, as provided in Section 10.1;
provided, however, that, without further written consent or authorization from
- -------- -------
Banks, Administrative Agent or Collateral Agent, as the case may be, may execute
any documents or instruments necessary to (i) release any Lien encumbering any
item of Collateral that is the subject of a Capital Lease, Equipment Financing
Transaction, Real Estate Financing Transaction, Permitted Foreign Receivables
Purchase Facility or sale or other disposition of assets permitted by Section
7.3, (ii) release any Guarantor from a Guaranty if all of the Capital Stock of
such Guarantor is sold to any Person (other than an Affiliate of Company)
pursuant to a sale or other disposition permitted by Section 7.3, or (iii)
subordinate the Liens of Collateral Agent, on behalf of Banks, to any Lien
permitted hereunder. Anything contained in any of the Loan Documents to the
contrary notwithstanding, Company, Administrative Agent, Collateral Agent and
each Bank hereby agree that (A) no Bank shall have any right individually to
realize upon any of the Collateral under any Collateral Document or to enforce
any Guaranty, it being understood and agreed that all powers, rights and
remedies under the Collateral Documents and the Guaranties may be exercised
solely by Administrative Agent or Collateral Agent for the benefit of Banks in
accordance with the terms thereof, and (B) in the event of a foreclosure by
Collateral Agent on any of the Collateral pursuant to a public or private sale,
Administrative Agent, Collateral Agent or any Bank may be the purchaser of any
or all of such Collateral at any such sale and Administrative Agent, as agent
for and representative of Banks (but not any Bank or Banks in its or their
respective individual capacities unless Majority Banks 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 Obligations as a credit on
account of the purchase price for any collateral payable by Administrative Agent
at such sale.
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ARTICLE X
MISCELLANEOUS
-------------
10.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by Majority Banks and Company and acknowledged by Administrative Agent,
and then such waiver, amendment or consent shall be effective only in the
specific instance and for the specific purpose for which given, except that
written agreement from all of Banks is required for any waiver, amendment, or
consent which does any of the following:
(a) subject to subsection (b), written agreement from Requisite
Banks is required for any waiver, amendment, or consent which releases any (i)
Collateral other than the release of any Lien encumbering any item of Collateral
that is the subject of a Capital Lease, Equipment Financing Transaction, Real
Estate Financing Transaction, Permitted Foreign Receivables Purchase Facility or
sale or other disposition of assets permitted by Section 7.3 or (ii) Guarantor
from a Guaranty other than in connection with the sale of all of the Capital
Stock of such Guarantor to any Person (other than an Affiliate of Company)
pursuant to a sale or other disposition permitted by Section 7.3; and
(b) written agreement from all Banks is required for any waiver,
amendment, or consent which does any of the following:
(i) postpones, extends or delays any date fixed for any
payment of principal, interest, fees or other amounts due to Banks (or any
of them) hereunder or under any Loan Document;
(ii) reduces the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts payable
hereunder or under any Loan Document or any mandatory reduction of the
Aggregate Bridge Commitment or any mandatory prepayment pursuant to Section
2.8;
(iii) changes the Commitment Percentage or the aggregate unpaid
principal amount of the Loans which shall be required for Banks or any of
them to take any action hereunder;
(iv) changes the definition of Majority Banks, Requisite Banks
or the number of Banks required to take any action under this Agreement;
(v) releases any Lien granted in favor of Collateral Agent
with respect to all or substantially all of the Collateral; or
(vi) amends this Section 10.1 or Section 2.13 or 2.14 or 2.15;
provided that no amendment, waiver or consent shall, unless in writing and
- --------
signed by Administrative Agent in addition to Majority Banks or all Banks, as
the case may be, affect the rights or duties of Administrative Agent under this
Agreement or any other Loan Document;
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provided further that no amendment shall, unless in writing and signed by
- -------- -------
Collateral Agent in addition to Majority Banks or all Banks, as the case may be,
affect the rights or duties of Collateral Agent under this Agreement or any
other Loan Document; provided still further that no amendment shall, unless in
-------- ----- -------
writing and signed by Issuing Bridge Lenders, in addition to Majority Banks or
all Banks, as the case may be, affect the rights or duties of Issuing Bridge
Lender under this Agreement or any other Loan Document; provided still further
-------- ----- -------
that this Section 10.1 shall not apply in connection with an Insolvency
Proceeding.
10.2 Notices.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission shall be followed promptly by a
hard copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to Company or Administrative Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as to each other party, at such other address as shall
be designated by such party in a written notice to Company and Administrative
Agent.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery, except that notices
pursuant to Articles II or IX shall not be effective until actually received by
Administrative Agent.
(c) Company acknowledges and agrees that any agreement of
Administrative Agent and Banks in Article II to receive certain notices by
telephone and facsimile is solely for the convenience and at the request of
Company. Administrative Agent and Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by Company to give
such notice and Administrative Agent and Banks shall not have any liability to
Company or other Person on account of any action taken or not taken by
Administrative Agent and Banks in reliance upon such telephonic or facsimile
notice. The obligation of Company to repay the Loans shall not be affected in
any way or to any extent by any failure by Administrative Agent and Banks to
receive written confirmation of any telephonic or facsimile notice or the
receipt by Administrative Agent and Banks of a confirmation which is at variance
with the terms understood by Administrative Agent and Banks to be contained in
the telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of Administrative Agent or any Bank, 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.
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10.4 Costs and Expenses. Company agrees to:
------------------
(a) Whether or not the transactions contemplated hereby are
consummated, pay or reimburse Bank of America (including in its capacity as
Administrative Agent) promptly after demand, for all reasonable costs and
expenses incurred by Bank of America (including in its capacity as
Administrative Agent) in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement, any
Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable Professional Costs and other professional fees
incurred by Bank of America (including in its capacity as Administrative Agent)
with respect thereto;
(b) Subject to the limitations set forth therein, pay or reimburse
Administrative Agent promptly after demand, for all reasonable costs and
expenses incurred by Administrative Agent (including the fees, expenses and
disbursements of any auditors, accountants, advisors and agents employed or
retained by Administrative Agent or its counsel) in connection with obtaining
and reviewing the information provided under Section 6.1 or 6.7;
(c) Pay or reimburse Administrative Agent, Collateral Agent, the
Arranger and each Bank within five Business Days after demand, for all costs and
expenses (including Professional Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding);
(d) Pay or reimburse Administrative Agent and Collateral Agent
promptly after demand, for all the actual costs and reasonable expenses of
creating and perfecting Liens in favor of Collateral Agent on behalf of Banks
pursuant to any Collateral Document, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to
Administrative Agent and Collateral Agent and of counsel providing any opinions
that Administrative Agent, Collateral Agent or Majority Banks may request in
respect of the Collateral Documents or the Liens created pursuant thereto; and
(e) Pay or reimburse Collateral Agent promptly after demand, for
all reasonable costs and expenses incurred by Collateral Agent in connection
with the custody and preservation of the Collateral.
10.5 Company's Indemnification. Whether or not the transactions
-------------------------
contemplated hereby are consummated, Company shall indemnify, defend and hold
Administrative Agent-Related Persons, Collateral Agent-Related Persons and each
Bank and each of its respective officers, directors, employees, counsel, agents,
attorneys-in-fact and Affiliates (each, an "Indemnified Person") harmless from
------------------
and against any and all claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Professional Costs) of any kind or nature whatsoever which may at any
time
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(including at any time following repayment of the Loans and the termination,
resignation or replacement of Administrative Agent or Collateral Agent or
replacement of any Bank) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement, or any document
contemplated by or referred to herein, or the transactions contemplated hereby
or thereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
----------- -----------
provided that Company shall have no obligation hereunder to any Indemnified
- --------
Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that Company makes a payment to
------------------
Administrative Agent or Banks, or Administrative Agent or Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Administrative Agent or such Bank in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any Insolvency Proceeding or
otherwise, then (a) to the extent of such recovery the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Bank severally agrees to pay to Administrative Agent
upon demand its pro rata share of any amount so recovered from or repaid by
Administrative Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
permitted (and those arising by operation of law) successors and assigns, except
that Company may not assign or transfer any rights or obligations under this
Agreement without the prior written consent of Administrative Agent and each
Bank and no Bank may assign or transfer any of its rights or obligations under
this Agreement except in accordance with Section 10.8 and by operation of law.
10.8 Assignments, Participations, etc.
---------------------------------
(a) Any Bank may, with the written consent of Administrative Agent
and Issuing Bridge Lenders (which consent shall not be unreasonably withheld),
at any time, assign and delegate to one or more Eligible Assignees (provided
--------
that no written consent of Administrative Agent or Issuing Bridge Lenders shall
be required in connection with (i) any assignment and delegation by a Bank to an
Affiliate of such Bank or (ii) to another Bank) (each an "Assignee") all, or any
--------
ratable part of all, of the Loans, and the other rights and obligations of such
Bank hereunder, in a minimum amount of $5,000,000; provided, however, that:
-------- -------
(A) a Bank may enter into an assignment and delegation of
less than $5,000,000 if such assignment and delegation consists of
such Bank's entire interest;
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(B) the assignment shall provide that any claims made by
any Assignee under Sections 3.1, 3.2, 3.3, and 3.6 shall not exceed
the claims the assigning Bank could have made on the interests
assigned if the assigning Bank had retained such interests; provided,
--------
however, that this subsection shall not apply when the assignment is
-------
made by a Bank in favor of another Bank which was a Bank on the
Closing Date; and
(C) Company and Administrative Agent may continue to deal
solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (1) written notice of such assignment,
together with payment instructions, addresses and related information
with respect to the Assignee, shall have been given to Company and
Administrative Agent by such Bank and the Assignee; (2) such Bank and
its Assignee shall have delivered to Company and Administrative Agent
an Assignment and Acceptance and any Note or Notes subject to such
assignment; and (3) the assignor Bank or Assignee has paid
Administrative Agent a processing fee of $3,500.
(b) From and after the date that Administrative Agent notifies the
assignor Bank that it has provided its consent to and received an executed
Assignment and Acceptance and payment of the processing fee of $3,500, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other than
any rights of indemnity) and be released from its obligations under the Loan
Documents.
(c) Within five Business Days after its receipt of notice by
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, Company shall execute and deliver to
Administrative Agent, new Notes evidencing such Assignee's assigned Loans and,
if the assignor Bank has retained a portion of its Loans, replacement Notes in
the principal amount of the Loans retained by the assignor Bank (such Notes to
be in exchange for, but not in payment of, the Notes held by such Bank).
Immediately upon each Assignee's making its payment under the Assignment and
Acceptance, this Agreement, shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee. If an
assignor Bank has not retained a portion of its Loans, such Bank shall mark its
Notes "superseded" and return such Notes to Administrative Agent for delivery to
Company.
(d) Any Bank may at any time sell to one or more Eligible Assignees
(a "Participant") participating interests in any Loans and the other interests
-----------
of that Bank (the "Originator") hereunder and under the other Loan Documents;
----------
provided, however, that (i) the Originator's obligations under this Agreement
- -------- -------
shall remain unchanged, (ii) the Originator shall remain solely responsible for
the performance of such obligations, (iii) Company and Administrative Agent
shall continue to deal solely and directly with the Originator in connection
with the Originator's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the
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Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent as
described in Section 10.1. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by Company hereunder shall be determined
as if such Originator had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement (and the Notes held by it) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board or U.S. Treasury Regulation 31 CFR (S)203.14, and may assign all
or any portion of its rights under or interests in this Agreement (and the Notes
held by it) to any Affiliate for purposes of creating such a security interest
or pledge, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.9 Confidentiality. Each Bank agrees to take and to cause its
---------------
Affiliates, directors and employees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to it by Company or any Subsidiary of Company, or by Administrative
Agent or Collateral Agent on Company's or such Subsidiary's behalf or obtained
by a Bank pursuant to such Bank's exercise of its rights under Section 6.7,
under this Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in connection with
other business now or hereafter existing or contemplated with Company or any
Subsidiary of Company; except to the extent such information (a) was or becomes
generally available to the public other than as a result of disclosure by the
Bank or (b) was or becomes available on a non-confidential basis from a source
other than Company, provided that such source is not bound by a confidentiality
--------
agreement with Company known to the Bank; provided, however, that Administrative
-------- -------
Agent, Collateral Agent, and any Bank may disclose such information (i) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (ii) pursuant to subpoena or other court process; (iii) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (iv) to the extent reasonably required in connection with
any litigation or proceeding to which Administrative Agent, Collateral Agent,
any Bank, or their respective Affiliates may be party; (v) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (vi) to such Bank's Affiliates or any of their
Subsidiaries or their Affiliates' directors, officers, employees, auditors,
counsel, advisors, or representatives whom it determines need to know such
information for the purposes set forth in this Section, provided that such
--------
Person agrees to keep such information confidential to the same extent required
by Banks hereunder; (vii) to any bank or financial institution or other entity
to which such Bank has assigned or desires to assign an interest or
participation in the Loan Documents or
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the Obligations, provided that such Person agrees to keep such information
--------
confidential to the same extent required by Banks hereunder; (viii) to any Bank
or its Affiliate, as expressly permitted under the terms of any other document
or agreement regarding confidentiality to which Company or any Subsidiary of
Company is party or is deemed party with such Bank or such Affiliate; and (ix)
to its Affiliates in connection with any such Affiliate's business with Company.
10.10 Set-off. In addition to any rights and remedies of Banks provided
-------
by law, if an Event of Default exists (after the giving of any required notice
and the expiration of any grace period required to make the relevant event an
Event of Default), each Bank is authorized at any time and from time to time,
without prior notice to Company, any such notice being waived by Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owed by, such Bank or, in the case of
Citicorp U.S.A., Inc., Citibank, N.A., to or for the credit or the account of
Company against any and all Obligations owing to such Bank or Citibank, N.A.,
now or hereafter existing, irrespective of whether or not Administrative Agent
or such Bank shall have made a request for payment under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured and
Citibank, N.A. is hereby irrevocably authorized to permit such setoff and
application. Each Bank severally agrees promptly to notify Company and
Administrative Agent after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not affect the
- -------- -------
validity of such set-off and application. The rights of each Bank under this
Section are in addition to the other rights and remedies (including other rights
of set-off) which the Bank may have.
10.11 Notification of Addresses, Lending Offices, etc. Each Bank shall
------------------------------------------------
notify Administrative Agent and Company in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of each of its
Lending Offices, of payment instructions in respect of all payments to be made
to it hereunder and of such other administrative information as Administrative
Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties shall be lodged
with Company and Administrative Agent.
10.13 Severability. The illegality or unenforceability of any provision
------------
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of Company, Banks, Administrative
Agent, Collateral Agent, Administrative Agent-Related Persons and Collateral
Agent-Related Persons and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
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<PAGE>
the other Loan Documents. None of Administrative Agent, Collateral Agent, any
Bank, any Administrative Agent-Related Persons and any Collateral Agent-Related
Persons shall have any obligation to any Person not a party to this Agreement or
other Loan Documents.
10.15 Change in Accounting Principles. If any change in GAAP occurs or
-------------------------------
takes effect after the Closing Date which would result in a change in any
quantity reported to Banks hereunder which provides the basis for any covenant,
performance obligation or standard of measurement used in this Agreement, the
parties hereto agree to enter into negotiations in order to amend such covenant,
performance obligation or standard of performance so as to reflect such change
with the result that the criteria for evaluating compliance with such covenant,
performance obligation or standard of performance shall be the same after the
change as if the change had not been made. Until the parties hereto agree to
such amendment, all covenants, performance obligations and standards of
performance shall be calculated without giving effect to the change in GAAP.
10.16 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES; PROVIDED THAT
ADMINISTRATIVE AGENT, COLLATERAL AGENT, BANKS, AND COMPANY SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, COMPANY, ADMINISTRATIVE AGENT, COLLATERAL AGENT, AND BANKS EACH
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. COMPANY, ADMINISTRATIVE AGENT, COLLATERAL AGENT,
AND BANKS EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
--------------------
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
COMPANY, ADMINISTRATIVE AGENT, COLLATERAL AGENT, AND BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
10.17 Interpretation. This Agreement is the result of negotiations
--------------
between and has been reviewed by counsel to Administrative Agent, Company and
other parties, and is the product of all parties hereto. Accordingly, this
Agreement and the other Loan Documents shall not be construed against Company,
Banks, or Administrative Agent merely because of their involvement in the
preparation of such documents and agreements.
100
<PAGE>
10.18 Representation of Banks. Each Bank party to and as of the date of
-----------------------
this Agreement severally and only with respect to itself and to its status as a
Bank represents that it is entitled to receive interest payments from Company
free and clear of and without deduction for any U.S. taxes collected by way of
withholding that are in effect as of the date of this Agreement. Each Bank
party to and as of the date of this Agreement severally and only with respect to
itself represents that it is either (a) a corporation, company or association,
incorporated or organized in or under the laws of the U.S. or a state of the
U.S. (a "U.S. corporation"); (b) a non-U.S. corporation lending through its U.S.
branch, which will treat the interest income as effectively connected with its
U.S. trade or business; or (c) a non-U.S. corporation, resident in a country
that has a treaty with the U.S. that exempts interest payments by Company from
withholding taxes.
10.19 Waiver of Jury Trial. COMPANY, BANKS, ADMINISTRATIVE AGENT AND
--------------------
COLLATERAL AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE AGENT-RELATED
PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. COMPANY, BANKS,
COLLATERAL AGENT AND ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
ARTICLE XI
GENERAL RELEASE
---------------
11.1 Except with respect to the matters, rights and obligations
specified in Section 11.2, Company for itself and on behalf of its parent,
subsidiary and controlled affiliate corporations, past or present, and each of
them, as well as each of their respective directors, officers, agents, servants,
representatives, attorneys, administrators, executors, heirs, assigns,
predecessors and successors in interest, and each of them (collectively, the
"Releasors") hereby release and forever discharge Administrative Agent,
---------
Collateral Agent and Banks and each of their respective parents, subsidiaries
and affiliates, past or present, and each of them, as well as each of their
respective directors, officers, agents, servants, employees, shareholders,
representatives, attorneys, administrators, executors, heirs, assigns,
predecessors and successors in interest, and all other persons, firms or
corporations with whom any of the former have been, are now, or may hereafter be
affiliated, and each of them (collectively, the "Releasees"), from and
---------
101
<PAGE>
against any and all claims, demands, liens, agreements, contracts, covenants,
actions, suits, causes of action in law or equity, obligations, controversies,
debts, costs, expenses, damages, judgments, orders and liabilities of whatever
kind or nature in law, equity or otherwise, whether known or unknown, fixed or
contingent, suspected or unsuspected by the Releasors, and whether concealed or
hidden, which Releasors now own or hold or have at any time heretofore owned or
held, which are based upon or arise out of or in connection with any matter,
cause or thing existing at any time prior to the date hereof or anything done,
omitted or suffered to be done or omitted at any time prior to the date hereof
in connection with the Existing Credit Agreement, this Agreement and the other
Loan Documents (collectively the "Released Matters").
----------------
11.2 Notwithstanding anything hereunder to the contrary, this Article XI
shall not release or alter any obligation arising subsequent to the date hereof
to comply with the terms and conditions of this Agreement and the other Loan
Documents. It is expressly understood and agreed that it is the intent of
Company to forever release certain claims against Administrative Agent,
Collateral Agent and Banks, including, but not limited to, any claims related to
the actions and omissions of Releasees prior to the date hereof, but that
nothing herein shall affect the obligations of the Releasees arising subsequent
to the date hereof, including, but not by way of limitation, compliance
subsequent to the date hereof with all terms and conditions of this Agreement
and the other Loan Documents.
11.3 Without limiting the generality of the foregoing, Company for itself
and on behalf of the other Releasors expressly releases any and all past,
present and future claims in connection with the Released Matters, about which
the Releasors do not know or suspect to exist in their favor, whether through
ignorance, oversight, error, negligence or otherwise, and which, if known, would
materially affect Company's decision to enter into this release, and to this end
Company for itself, and on behalf of each of the other Releasors, waives all
rights under Section 1542 of the Civil Code of California, which states in full
as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
Company knowingly and willingly waives the provisions of Section
1542 and acknowledges and agrees that this waiver is an essential and material
term of this release. Company has reviewed this release with Company's legal
counsel, and Company understands and acknowledges the significance and
consequence of this release and of the specific waiver of Section 1542 of the
Civil Code of California.
11.4 Company represents, warrants and agrees that in executing and
entering into this release, Company is not relying and has not relied upon any
representation, promise or statement made by anyone which is not recited,
contained or embodied in this Agreement or the other Loan Documents. Company
understands and expressly assumes the risk that any fact not recited, contained
or embodied therein may turn out hereafter to be other than, different from, or
contrary to the facts now known to Company or believed by Company to be true.
Nevertheless, Company intends by this release to release fully, finally and
forever all Released Matters and agrees that this release shall be effective in
all respects notwithstanding any such difference in facts, and
102
<PAGE>
shall not be subject to termination, modification or rescission by reason of any
such difference in facts.
103
<PAGE>
EXHIBIT 10.3
Exhibit VII
-----------
[FORM OF] PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of
---------
January 31, 2000 and entered into by and among Levi Strauss & Co., a Delaware
corporation ("Company"), each of the undersigned direct and indirect
Subsidiaries of Company (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively, "Subsidiary Grantors") and each
- ------------------- -------------------
Additional Grantor that may become a party hereto after the date hereof in
accordance with Section 21 hereof (Company, each Subsidiary Grantor, and each
Additional Grantor being a "Grantor" and collectively, "Grantors") and Bank of
------- --------
America, N.A. as Collateral Agent for and representative of (in such capacity
herein called "Secured Party") Administrative Agent, the several financial
-------------
institutions ("Banks") from time to time party to the Credit Agreement referred
-----
to below and any Derivative/FX Lenders.
PRELIMINARY STATEMENTS
----------------------
A. Pursuant to the Bridge Credit Agreement dated as of January 31, 2000
(said Bridge Credit Agreement, as amended to the date hereof, and as it may
hereafter be further amended, modified, or supplemented from time to time, being
the "Credit Agreement"; the terms defined therein and not otherwise defined
----------------
herein being used herein as therein defined), by and among Company, the several
financial institutions from time to time party thereto (collectively, "Banks");
-----
the several financial institutions party thereto as Co-Syndication Agents; the
financial institution party thereto as Documentation Agent; Bank of America,
N.A. as Administrative Agent (in such capacity, "Administrative Agent"); and
--------------------
Bank of America, N.A. as Collateral Agent (in such capacity, "Collateral
----------
Agent"), Banks have made certain commitments, subject to the terms and
- -----
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company and Levi Strauss & Co. Europe Financial Services, S.C.A.
("FinServ") may from time to time enter, or may from time to time have entered,
-------
into one or more Lender Derivative/FX Contracts in accordance with the terms of
the Credit Agreement, and it is desired that the obligations of Company and
FinServ under the Lender Derivative/FX Contracts, including, without limitation,
the obligation of Company and FinServ to make payments thereunder in the event
of early termination or close out thereof, together with all obligations of
Company under the Credit Agreement and the other Loan Documents, be secured
hereunder.
C. Subsidiary Grantors have executed and delivered that certain
Guaranty dated the date hereof (said Guaranty, as amended to the date hereof,
and as it may hereafter be further amended, modified, or supplemented from time
to time, being the "Guaranty") in favor of Secured Party for the benefit of
--------
Banks, Administrative Agent and any Derivative/FX Lenders, pursuant to which
each Subsidiary Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement and all obligations
of Company and FinServ under the Lender Derivative/FX Contracts, including
without limitation the obligation of Company and FinServ to make payments
thereunder in the event of early termination or close out thereof.
VII-I
<PAGE>
D. It is a condition precedent to the effectiveness of the Credit
Agreement that 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 Banks to enter into the Credit Agreement and to induce
Derivative/FX Lenders to enter into the Lender Derivative/FX Contracts, each
Grantor hereby agrees with Secured Party as follows:
Section 1. Grant of Security. Each Grantor hereby assigns to Secured
-----------------
Party, and hereby grants to 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 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
---------
without limitation 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, general intangibles 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, general
intangibles or other obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, general intangibles and other 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 account established and maintained by Secured Party pursuant to Section
11 (the "Cash Collateral Account"), together with (i) all amounts on deposit
-----------------------
from 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 listed on Schedule 1(d);
VII-2
<PAGE>
(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 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 owned on the date hereof and described on Schedule 1(e)(i), 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 Shares"), 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 Shares; provided, that if the issuer of any of such
--------
Pledged Shares is a controlled foreign corporation (used hereinafter as such
term is defined in Section 957(a) or a successor provision of the Internal
Revenue Code), the Pledged Shares shall not include any shares of stock of such
issuer in excess of the number of shares of such issuer possessing up to but not
exceeding 65% of the voting power of all classes of Capital Stock entitled to
vote of such issuer, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged Shares;
(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, including the indebtedness described on Schedule 1(e)(ii) and issued by
the obligors named therein, and the instruments evidencing such indebtedness
(the "Pledged Debt"), and all interest, cash, instruments and other property or
------------
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt; and
(iii) all other investment property, as that term is defined in
the Uniform Commercial Code ("UCC") of any relevant jurisdiction, of such
---
Grantor;
(f) the "Intellectual Property 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, without
limitation, the trademarks specifically identified in Schedule 1(f)(i), as the
same may be amended pursuant hereto from time to time) (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
VII-3
<PAGE>
countries (including, without limitation, the registrations and applications
specifically identified in Schedule 1(f)(i), as the same may be amended pursuant
hereto from time to time) (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");
-------------------
(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, without limitation, the patents and patent
applications listed in Schedule 1(f)(ii), as the same may be amended pursuant
hereto from time to time), all rights corresponding thereto (including, without
limitation, the right, exercisable only upon the occurrence and during the
continuation of an Event of Default, to sue for past, present and future
infringements in the name of such Grantor or in the name of Secured Party or
Banks), and all re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively referred
to as the "Patents"); 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, without limitation, the
registered works listed on Schedule 1(f)(iii), 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 listed on Schedule 1(f)(iii), 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 to sue for past, present and future infringements of
the Copyrights and Copyright Rights;
VII-4
<PAGE>
(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 other general intangibles (including tax refunds, rights to payment or
performance, choses in action 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 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 (i) 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 or any of its rights or interests in other property 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) or any Negative Pledge permitted
under the Credit Agreement on such rights or interests; 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 and (ii) any real property leasehold, unless
a Grantor has executed a leasehold mortgage or leasehold deed of trust covering
such real property leasehold.
Notwithstanding anything herein to the contrary, neither Company 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 or (iii) any
Pledged Debt of or issued by any Restricted Subsidiary.
Section 2. Security for Obligations.
------------------------
(a) 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
VII-5
<PAGE>
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including without limitation 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:
-------------------
(i) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
obligations and liabilities of every nature of Company and FinServ, now or
hereafter existing under or arising out of or in connection with any Lender
Derivative/FX Contract, and
(ii) 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;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Lender Letters of Credit, payments for
early termination or close out of Lender Derivative/FX 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 Secured Party,
Administrative Agent, any Bank or any Derivative/FX Lender as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of
Grantors now or hereafter existing under this Agreement.
(b) Any and all security interests, liens, rights and interest of
Secured Party in and to any or all of the Collateral are prior to any and all
security interests, liens, rights and interest of the several financial
institutions party to the Amended and Restated 1999 180 Day Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement from time to time in and to any or all of
the Collateral pursuant to the Intercreditor Agreement.
Section 3. Grantors Remain Liable.
----------------------
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 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) 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
Secured Party be obligated to perform any of the obligations or duties of
VII-6
<PAGE>
any Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
Section 4. Representations and Warranties.
------------------------------
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 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 each Additional Grantor,
the date of the applicable counterpart entered into pursuant to Section 21
hereof (each, a "Counterpart") located at the places specified in Schedule 4(b),
-----------
except for 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 specified in Schedule 4(b), (iii) from a supplier or a Grantor to a
processor, or (iv) to customers of a Grantor.
(c) Office Locations. 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 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);
(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 listed in Schedule 4(d) annexed hereto.
(e) Delivery of Certain Collateral. Except as permitted by Section 6.11
------------------------------
of the Credit Agreement, all certificates or instruments (excluding checks)
evidencing, comprising or representing the Collateral (including, without
limitation, the Securities Collateral) have been delivered to Secured Party duly
endorsed or accompanied by duly executed instruments of transfer or assignment
in blank.
(f) Securities Collateral. (i) All of the Pledged Shares described on
---------------------
Schedule 1(e)(i) have been duly authorized and validly issued and are fully paid
and non-assessable; (ii) all of the Pledged Debt described on Schedule 1(e)(ii)
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) the Pledged Shares 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 shares of a foreign controlled
corporation), and there are no
VII-7
<PAGE>
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 Shares; (iv) the
Pledged Debt 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) sets forth all of the Pledged Shares
owned by each Grantor on the date hereof; and (vi) Schedule 1(e)(ii) sets forth
all of the Pledged Debt in existence on the date hereof.
(g) Intellectual Property 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 in Schedule 1(f)(i);
(ii) a true and complete list of all Patents owned by such
Grantor, in whole or in part, that are material to such Grantor's business, is
set forth in Schedule 1(f)(ii);
(iii) a true and complete list of all Copyright Registrations
and applications for Copyright Registrations owned by such Grantor, in whole or
in part, is set forth in Schedule 1(f)(iii);
(iv) after reasonable inquiry, such Grantor is not aware of any
pending or threatened claim by any third party that any of the Intellectual
Property Collateral owned, held or used by such Grantor is invalid or
unenforceable that is reasonably likely to have a Material Adverse Effect; and
(v) no effective security interest or other Lien covering all
or any part of the Intellectual Property 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
----------
Secured Party for the ratable benefit of Banks, Administrative Agent and
Derivative/FX Lenders hereunder constitute valid security interests in the
Collateral, securing the payment of the Secured Obligations. Upon (i) the filing
of UCC financing statements naming each Grantor as "debtor", naming Secured
Party as "secured party" and describing the Collateral in the filing offices
with respect to such Grantor set forth on Schedule 4(h), (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 Secured Party, in each case duly
endorsed or accompanied by duly executed instruments of assignment or transfer
in blank, (iii) in the case of the Intellectual Property 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
-----
VII-8
<PAGE>
security interests in the Collateral granted to Secured Party for the ratable
benefit of Banks, Administrative Agent and Derivative/FX Lenders will constitute
perfected security interests therein, to the extent such security interests may
be perfected by filing in the United States or 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.
------------------
(a) Generally. Each Grantor agrees that from time to time, at the
---------
expense of 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 Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable 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 Secured Party,
mark conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the reasonable request of Secured Party, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) at the reasonable request of Secured
Party, deliver and pledge to 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
Secured Party, (iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby,
(iv) furnish to 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 Secured Party may reasonably request, all in reasonable
detail, (v) if requested by Co-Agents, 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 Company, deliver to 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 Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (viii) at Secured Party's request, appear in and defend any
action or proceeding that may affect such Grantor's title to or Secured Party's
security interest in all or any part of the Collateral. Each Grantor hereby
authorizes 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
VII-9
<PAGE>
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
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to 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 Shares
- ---------- -----------------
or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to Secured Party, the representations and warranties
contained in subsections (i)-(iv) of Section 4(g) 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 Secured
Party to attach each Pledge Supplement to this Agreement and agrees that all
Pledged Shares or Pledged Debt 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 Pledge Supplement with respect
- --------
to any additional Pledged Shares or Pledged Debt pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
(c) Intellectual Property Collateral. Without limiting the generality
--------------------------------
of the foregoing Section 5(a), if any Grantor shall hereafter obtain rights to
any new Intellectual Property Collateral or become entitled to the benefit of
(i) 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 (ii) any Copyright Registration, application for Copyright
Registration or renewals or extension of any Copyright, 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 Company, notify
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,
and of (i) any Trademark Registrations issued or application for a Trademark
Registration or application for a Patent made, and (ii) any Copyright
Registrations issued or applications for Copyright Registration made, in any
such case, after the date hereof. Within 45 days after the end of each fiscal
quarter of Company during which any Grantor files an application for any
(1) Trademark Registration; (2) Patent; and (3) Copyright Registration, each
Grantor shall execute and deliver to Secured Party and record in all places
where a Grant is recorded an IP Supplement, substantially in the form of
Exhibit V (an "IP Supplement"), pursuant to which such Grantor shall grant to
- --------- -------------
Secured Party a security interest to the extent of its interest in such
Intellectual Property Collateral; provided, if, in the reasonable judgment of
--------
such Grantor, after due inquiry, granting such interest would result in the
grant of a Trademark Registration or Copyright Registration in the name of
Secured Party, such Grantor shall give written notice to Secured Party on the
day on which such Grantor would otherwise be required to record the IP
Supplement and the filing shall instead be undertaken as soon as practicable but
in no case later than immediately following the grant of the applicable
Trademark Registration or Copyright Registration, as the case may be. Upon
delivery to Secured Party of an IP Supplement, Schedules 1(f)(i), 1(f)(ii), and
1(f)(iii) 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
Intellectual Property Collateral or any Intellectual Property Collateral
included on
VII-10
<PAGE>
Schedule A to such IP Supplement. Each Grantor hereby authorizes 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 Intellectual Property Collateral or to delete any
reference to any right, title or interest in any Intellectual Property
Collateral in which any Grantor no longer has or claims any right, title or
interest; provided, the failure of any Grantor to execute an IP Supplement with
--------
respect to any additional Intellectual Property Collateral pledged pursuant to
this Agreement shall not impair the security interest of Secured Party therein
or otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
Section 6. Certain Covenants of 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 Secured Party of any change in such Grantor's name, identity
or corporate structure within 30 days of such change;
(c) give 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;
(d) if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) except as otherwise not prohibited by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral.
Section 7. Special Covenants With Respect to Equipment and Inventory.
---------------------------------------------------------
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b), or upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable 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 permitted by Section 6.6 of the Credit
Agreement, cause the Equipment owned by such Grantor to be maintained and
preserved in the same
VII-11
<PAGE>
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. Each Grantor shall promptly furnish to Secured Party a statement respecting
any material loss or damage to 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,
and such Grantor's cost therefor;
(d) if any Inventory is in the possession or control of any of such
Grantor's agents or processors, within 30 days of the Closing Date (with respect
to existing agents or processors) and promptly after any such Inventory comes
into the possession or control of such Grantor's agents or processors (with
respect to future agents or processors), instruct such agent or processor to
hold all such Inventory for the account of Secured Party and subject to the
instructions of Secured Party, and use commercially reasonable efforts, but at
no out-of-pocket cost to such Grantor, to obtain waivers or bailee letters in
form and substance reasonably satisfactory to Collateral Agent from all public
warehouses in which Inventory is maintained and all such agents or processors;
and
(e) each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit 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) or, upon
30 days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable 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
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 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 Secured Party, each Grantor shall deliver to Secured Party complete
and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than three (3) 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.
VII-12
<PAGE>
(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 Secured Party's direction, shall take)
such action as such Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
--------
however, that 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 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 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 Secured Party and, upon such notification and at the
expense of 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 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 Secured Party hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to 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 Account, 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 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 Secured Party.
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 (i) not, except as otherwise not
---------
prohibited by the Credit Agreement, permit any issuer of Pledged Shares 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 Shares which is a
controlled foreign corporation is a controlled foreign corporation, 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
VII-13
<PAGE>
Capital Stock of such issuer entitled to vote; (ii) cause each issuer of Pledged
Shares not to issue any stock, other equity interests or other securities in
addition to or in substitution for the Pledged Shares 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 Shares;
(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 subsection (iv) to the contrary, such Grantor shall only be
required to pledge the outstanding Capital Stock of a controlled foreign
corporation possessing up to but not exceeding 65% of the voting power of all
classes of Capital Stock of such controlled foreign corporation 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 Debt; provided,
--------
notwithstanding anything contained in this subsection (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 subsection (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 Secured Party of any event of which such Grantor becomes
aware causing loss or depreciation in the value of the Securities Collateral
that has a Material Adverse Effect; and (viii) at the request of Secured Party,
promptly execute and deliver to Secured Party an agreement providing for the
control, as that term is defined in the UCC, by 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 Secured Party shall have notified
such Grantor that, in Secured Party's reasonable judgment, such action would
have a Material Adverse Effect; and provided further, such Grantor shall give
-------- -------
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 Shares for or such Grantor's consent to the election of
directors or other members of a governing body of an issuer of Pledged Shares 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, and no notice of any such voting or consent need be given to 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
VII-14
<PAGE>
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 Secured
Party to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) 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 subsection (i) above and to receive the dividends, distributions,
principal or interest payments which it is authorized to receive and retain
pursuant to subsection (ii) above.
Upon the occurrence and during the continuation of an Event of Default, (i)
upon written notice from 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 Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights; (ii) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (iii) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of subsection (ii)
of the immediately preceding paragraph or subsection (ii) above shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of such Grantor and shall forthwith be paid over to Secured Party as
Securities Collateral in the same form as so received (with any necessary
endorsements).
In order to permit 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 Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (ii) without limiting the effect of subsection (i)
above, each Grantor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares 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 Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof),
VII-15
<PAGE>
upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
(d) Investment Property. Company shall not maintain any investment
-------------------
property with any financial or other institution unless such institution has
executed a control agreement in form and substance reasonably satisfactory to
Collateral Agent.
Section 10. Special Covenants With Respect to the Intellectual Property
-----------------------------------------------------------
Collateral.
- ----------
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the
Intellectual Property 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 Intellectual Property 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 Intellectual Property Collateral, including,
without limitation, 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 Intellectual Property Collateral, except where the failure to give
such notice would not have a Material Adverse Effect;
(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 Secured Party from time to time at Secured
Party's reasonable request statements and schedules further identifying and
describing any Intellectual Property 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 Intellectual Property 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 Secured
Party's reasonable direction, shall take) such action as such Grantor or Secured
Party may deem reasonably necessary or advisable to enforce collection of such
amounts; provided, Secured Party shall have the right at any time, upon the
--------
occurrence and
VII-16
<PAGE>
during the continuation of any 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 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 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 Intellectual Property Collateral or any
portion thereof shall be received in trust for the benefit of Secured Party
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to 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 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 Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), 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 Intellectual Property 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 Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by Grantors.
Subject to the foregoing, each Grantor shall give Secured Party written notice
of any abandonment of any Intellectual Property Collateral registered with a
Governmental Authority or any pending patent application or any Patent within 45
days after the end of each fiscal quarter of Company.
(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
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall, within 45 days after the end of each fiscal quarter
of Company, notify Secured Party of the institution of, or of any adverse
determination 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 Intellectual Property
Collateral. Each Grantor shall provide to Secured Party any information with
respect thereto requested by Secured Party.
VII-17
<PAGE>
(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 Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral and any other
collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable 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 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 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 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 Intellectual Property 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. To the extent that the Credit Agreement permits any
Grantor to license the Intellectual Property Collateral, 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
Intellectual Property Collateral permitted hereunder in form and substance
reasonably satisfactory to Secured Party pursuant to which (i) 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 (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.
Section 11. Cash Collateral Account.
-----------------------
Secured Party is hereby authorized to establish and maintain as a blocked
account in the name of Company and under the sole dominion and control of
Secured Party, a restricted deposit account designated as "Levi Strauss & Co.
Cash Collateral Account". All amounts at any time held in the Cash Collateral
Account shall be beneficially owned by Grantors but shall be held in the name of
Secured Party hereunder, for the benefit of Banks, as collateral security for
the Secured Obligations upon the terms and conditions set forth herein.
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. Anything contained herein to the contrary notwithstanding, the 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
VII-18
<PAGE>
deposits of funds in the 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 Secured Party. Each Grantor shall, promptly after initiating a
transfer of funds to the Cash Collateral Account, give notice to Secured Party
by telefacsimile of the date, amount and method of delivery of such deposit.
Cash held by Secured Party in the Cash Collateral Account shall not be invested
by Secured Party but instead shall be maintained as a cash deposit in the 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
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms. Subject to Secured Party's rights
hereunder, any interest earned on deposits of cash in the Cash Collateral
Account shall be deposited directly in, and held in the Cash Collateral Account.
Section 12. Secured Party Appointed Attorney-in-Fact.
----------------------------------------
Each Grantor hereby irrevocably appoints 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, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(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 under the Credit Agreement;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(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 Sections 12(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
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) except as otherwise permitted by Section 6.5 of 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 Secured Party in its sole
discretion, any such payments made by Secured Party to become obligations of
such Grantor to 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
VII-19
<PAGE>
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
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and 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, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Grantors under Section 18(b) hereof.
Section 14. Standard of Care.
----------------
The powers conferred on 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, 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. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property.
Section 15. Remedies.
--------
(a) Generally. If any Event of Default (as defined in the Credit
---------
Agreement) or an Event of Default (as defined in a Master Agreement in the form
prepared by the International Swap and Derivatives Association, Inc., the
International Foreign Exchange Master Agreement or a similar event under any
similar swap agreement) under any Lender Derivative/FX Contract (any such
occurrence being an "Event of Default" for purposes of this Agreement) shall
----------------
have occurred and be continuing, 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 Secured Party forthwith,
assemble all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by 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 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
VII-20
<PAGE>
equipment for the purpose of completing any work in process, taking any actions
described in the preceding subsection (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
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 Secured Party may deem commercially reasonable, (vi) exercise dominion
and control over and refuse to permit further withdrawals from any Deposit
Account maintained with Secured Party or any Bank constituting a part of the
Collateral and (vii) without notice to any Grantor, transfer to or to register
in the name of Secured Party or any of its nominees any or all of the Securities
Collateral. Secured Party or any Bank or Derivative/FX Lender may be the
purchaser of any or all of the Collateral at any such sale and Secured Party, as
agent for and representative of Banks and Derivative/FX Lenders (but not any
Bank or Derivative/FX Lender in its individual capacity unless Requisite
Obligees (as defined in Section 20(a)) 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 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. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed 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 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 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, Grantors shall be jointly
and severally liable for the deficiency and the fees of any attorneys employed
by Secured Party to collect such deficiency. Each Grantor further agrees that a
breach of any of the covenants contained in this Section will cause irreparable
injury to Secured Party, that 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 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 regulations
promulgated thereunder, (the "Securities Act") and applicable state
--------------
securities laws, Secured Party may be compelled, with respect to any sale
of all or any part of the Securities Collateral conducted without
VII-21
<PAGE>
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 Secured Party by such Grantor pursuant
hereto, each Grantor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that 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 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 Shares to be sold
hereunder from time to time to furnish to Secured Party all such
information as 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 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.
(ii) If Secured Party shall determine to exercise its right to
sell all or any of the Securities Collateral pursuant to this Section, each
Grantor agrees that, upon request of Secured Party (which request may be
made by 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 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 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 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 reasonable costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this Section.
VII-22
<PAGE>
(iii) Without limiting the generality of Sections 10.4 and 10.5
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) Secured Party,
each Bank and each Derivative/FX 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 Secured Party and such other Persons
for any legal or other expenses reasonably incurred by 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 Secured
Party and such other Persons and counsel for 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
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 Secured Party or such Persons within the
meaning of the Securities Act.
(c) Collateral Account. If an Event of Default has occurred and is
------------------
continuing and, in accordance with Section 8.2 of the Credit Agreement, Company
is required to pay to Secured Party an amount (the "Aggregate Available Amount")
--------------------------
equal to the maximum amount that may at any time be drawn under all Lender
Letters of Credit then outstanding under the Credit Agreement, Company shall
deliver funds in such an amount for deposit in the Cash Collateral Account. If
for any reason the aggregate amount delivered by Company for deposit in the Cash
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Company shall be apportioned among all
outstanding Lender Letters of Credit for purposes of this Section in accordance
with the ratio of the maximum amount available for drawing under each such
Lender Letter of Credit (as to such Lender Letter of Credit, the "Maximum
-------
Available Amount") to the Aggregate Available Amount. Upon any drawing under any
- ----------------
outstanding Lender Letter of Credit in respect of which Company has deposited in
the Cash Collateral Account any amounts described above, Secured Party shall
apply such amounts to reimburse the Issuing Lender for the amount of such
drawing. In the event of cancellation or expiration of any Lender Letter of
Credit in respect of which Company has deposited in the Cash Collateral Account
any amounts described above, or in the event of any reduction in the Maximum
Available Amount under such Lender Letter of Credit, Secured Party shall apply
the amount then on deposit in the Cash Collateral Account in respect of such
Lender Letter of Credit (less, in the case of such a reduction, the Maximum
Available Amount under such Lender Letter of Credit immediately after such
reduction) first, to the payment of any
VII-23
<PAGE>
amounts payable to 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 Lender Letters of Credit in respect of which
Company has failed to pay all or a portion of the amounts described above (such
cash collateralization to be apportioned among all such Lender 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
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.
Section 16. Additional Remedies for Intellectual Property Collateral.
--------------------------------------------------------
(a) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, (i) Secured Party
shall have the right (but not the obligation) to bring suit, in the name of any
Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Sections 10.4 and 10.5 of
the Credit Agreement and Section 18 hereof, as applicable, in connection with
the exercise of its rights under this Section, and, to the extent that Secured
Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Intellectual Property 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
Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property 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 Secured Party (or any Bank) receives cash proceeds in respect of
the sale of, or other realization upon, the Intellectual Property Collateral;
and (iv) within five Business Days after written notice from Secured Party, each
Grantor shall make available to 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 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 Secured Party's behalf and to be compensated by 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 Secured Party of any rights, title and interests in and to the
Intellectual Property Collateral shall have been previously made, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
VII-24
<PAGE>
written request of any Grantor, 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 Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
--------
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of 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
Secured Party and Liens expressly permitted by the Credit Agreement.
Section 17. Application of Proceeds.
-----------------------
Except as expressly provided elsewhere in this Agreement and in the
Intercreditor Agreement, all proceeds received by Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Grantors, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the exercise of any
right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) and, as to obligations arising
under the Credit Agreement, as provided in the Credit Agreement; and
THIRD: To the payment to or upon the order of Company, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
Section 18. Indemnity and Expenses.
----------------------
(a) Grantors jointly and severally agree to indemnify Secured Party,
each Bank and each Derivative/FX 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 without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Bank's or
Derivative/FX Lender's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Subject to Section 6.7 of the Credit Agreement, Grantors jointly
and severally agree to pay to Secured Party upon demand (i) the amount of any
and all reasonable costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with the administration of this Agreement or the failure by
any Grantor to perform or observe any of the provisions hereof and
VII-25
<PAGE>
(ii) the amount of any and all costs and expenses, including the fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with the exercise or enforcement of any of the rights of
Secured Party hereunder.
(c) The obligations of Grantors in this Section 18 shall (i) survive
the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Lender Derivative/FX Contracts, 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 Secured Obligations and the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Lender Letters
of Credit, (ii) be binding upon Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing subsection (iii), (A),
but subject to the provisions of Sections 10.7 and 10.8 of the Credit Agreement,
any Bank 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 Banks herein or otherwise and (B) any
Derivative/FX Lender may assign or otherwise transfer any Lender Derivative/FX
Contract to which it is a party to any other Person in accordance with the terms
of such Lender Derivative/FX Contract, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Derivative/FX
Lenders herein or otherwise.
(b) Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Lender Letters of Credit, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the applicable Grantors. Upon any such termination Secured Party will, at
Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence such termination. 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 Secured Party, such Grantor shall deliver an
officers' certificate (i) stating that the Collateral subject to such
disposition is being sold, transferred or otherwise disposed of in compliance
with the terms of the Credit Agreement, and (ii) specifying the Collateral being
sold, transferred or otherwise disposed of in the proposed transaction. Upon the
receipt of such officers' certificate, Secured Party shall, at such Grantor's
expense, so long as Secured Party has no reason to believe that the officers'
certificate delivered by such Grantor with respect to such sale is not true and
correct, execute and deliver such releases of its security interest in such
Collateral which is to be so sold, transferred or disposed of, as may be
reasonably requested by such Grantor.
VII-26
<PAGE>
Section 20. Secured Party as Agent.
----------------------
(a) Secured Party has been appointed to act as Secured Party hereunder
by Banks and, by their acceptance of the benefits hereof, Derivative/FX Lenders.
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 without limitation the
release or substitution of Collateral), solely in accordance with this Agreement
and the Credit Agreement; provided that Secured Party shall exercise, or refrain
--------
from exercising, any remedies provided for in Section 15 hereof in accordance
with the instructions of (i) Majority Banks, or (ii) after payment in full of
all Obligations under the Credit Agreement and the other Loan Documents, the
cancellation or expiration of all Lender Bridge Letters of Credit and the
termination of the Commitments, (A) the holders of a majority of the aggregate
notional amount under all Lender Derivative/FX Contracts (including Lender
Derivative/FX Contracts that have been terminated) or (B) if all Lender
Derivative/FX Contracts have been terminated in accordance with their terms, the
aggregate amount then due and payable (exclusive of expenses and similar
payments but including any early termination payments then due) under such
Lender Derivative/FX Contracts (Majority Banks or, if applicable, such holders
being referred to herein as "Requisite Obligees"). In furtherance of the
------------------
foregoing provisions of this Section 20(a), each Derivative/FX 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 Derivative/FX Lender that all rights and remedies
hereunder may be exercised solely by Secured Party for the benefit of Banks and
Derivative/FX Lenders in accordance with the terms of this Section 20(a).
(b) Secured Party shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute notice of resignation as Secured Party under this Agreement; removal
of Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor collateral agent pursuant to Section 9.10 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
Section 9.10 of the Credit Agreement by a successor collateral agent, that
successor collateral agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed 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 or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed collateral agent's resignation or
removal hereunder as 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 Secured Party hereunder.
VII-27
<PAGE>
(c) Secured Party shall not be deemed to have any duty whatsoever with
respect to any Derivative/FX Lender until it shall have received written notice
in form and substance satisfactory to Secured Party from a Grantor or the
Derivative/FX Lender as to the existence and terms of the applicable Lender
Derivative/FX Contract.
Section 21. Additional Grantors.
-------------------
The initial Subsidiary Grantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto as additional Grantors (each an "Additional Grantor"), by
------------------
executing a counterpart substantially in the form of Exhibit VI to this
----------
Agreement. Upon delivery of any such counterpart to Secured Party, notice of
which is hereby waived by 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 Company 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 Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided this Agreement may be modified by the execution of a counterpart by an
- --------
Additional Grantor in accordance with Section 21 hereof and 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.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
applicable signature page hereof, and (ii) shall be followed promptly by a hard
copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to any Grantor or Collateral Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as to each other party, at such other address as shall
be designated by such party in a written notice to each Grantor and Collateral
Agent.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for
VII-28
<PAGE>
overnight delivery or to the telegraph company, transmitted by telecopier,
confirmed by telex answerback or delivered to the cable company, respectively,
or if delivered, upon delivery.
Section 24. Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
Section 25. Severability.
------------
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 26. Headings.
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
Section 27. Governing Law; Terms; Rules of Construction.
-------------------------------------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. 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 Section 1.2 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 THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GRANTOR, SECURED PARTY, ADMINISTRATIVE AGENT AND BANKS EACH CONSENTS, FOR
ITSELF AND
VII-29
<PAGE>
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH GRANTOR, SECURED PARTY, ADMINISTRATIVE AGENT AND BANKS EACH IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GRANTOR, SECURED PARTY,
ADMINISTRATIVE AGENT AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
Section 29. Waiver of Jury Trial.
--------------------
EACH GRANTOR, BANKS, ADMINISTRATIVE AGENT AND SECURED PARTY EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE
AGENT-RELATED PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH
GRANTOR, BANKS, ADMINISTRATIVE AGENT AND SECURED PARTY EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 30. Counterparts.
------------
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but 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.
[Remainder of page intentionally left blank]
VII-30
<PAGE>
IN WITNESS WHEREOF, Grantors and 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 STRAUSS & CO.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Each of the entities listed on Schedule A annexed
----------
hereto
By:
-----------------------------
on behalf of each of the entities listed on
Schedule A annexed hereto
----------
Name:
---------------------------
Title:
--------------------------
BANK OF AMERICA, N.A., as Collateral
Agent, as Secured Party
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
VII-31
<PAGE>
Schedule A
----------
Name Notice Address for each Subsidiary
- ---- ----------------------------------
Grantor
-------
VII-Sch. A-1
<PAGE>
Schedule 1(d) to
----------------
Pledge and Security Agreement
-----------------------------
Deposit Accounts
- ----------------
VII-Sch. 1(d)-1
<PAGE>
Schedule 1(e)(i) to
-------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Percentage of
Class Stock Number of Outstanding
of Stock or Registered Certificate Par Shares Shares Pledged
Stock Issuer Equity Interest Owner Nos. Value
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
VII-Sch. 1(e)(i)-1
<PAGE>
Schedule 1(e)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Amount of
Debt Issuer Payee Indebtedness
================================================================================================
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
VII-Sch. 1(e)(ii)-1
<PAGE>
Schedule 1(f)(i) to
-------------------
Pledge and Security Agreement
-----------------------------
U.S. Trademarks:
- ---------------
<TABLE>
<CAPTION>
Trademark Registration Registration
Registered Owner Description Number Date
- ------------------------- ------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Foreign Trademarks:
- ------------------
Trademark Registration Registration
Registered Owner Description Number Date
- ------------------------- ------------------------- ------------------------- -------------------------
</TABLE>
VII-Sch. 1(f)(i)-1
<PAGE>
Schedule 1(f)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
U.S. Patents Issued:
- -------------------
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
--------- ---------- --------- -------- -----
U.S. Patents Pending:
- --------------------
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- -------
Foreign Patents Issued:
- ----------------------
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
--------- ---------- --------- -------- -----
VII-Sch. 1(f)(ii)-1
<PAGE>
<TABLE>
<CAPTION>
Foreign Patents Pending:
- -----------------------
Applicant's Date Application
Name Filed Number Invention [Inventor]
- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
</TABLE>
VII-Sch. 1(f)(ii)-2
<PAGE>
Schedule 1(f)(iii) to
---------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
U.S. Copyrights:
- ----------------
<S> <C> <C> <C> <C>
Title Registration No. Date of Issue Registered Owner
- ----- ---------------- ------------- ----------------
Foreign Copyright Registrations:
- --------------------------------
Country Title Registration No. Date of Issue Registered Owner
- ------- ----- ---------------- ------------- ----------------
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 [Registered Owner]
- ------- ----- ---------------- ------------- ----------------
</TABLE>
VII-Sch. 1(f)(iii)-1
<PAGE>
Schedule 4(b) to
----------------
Pledge and Security Agreement
-----------------------------
Locations of Equipment and Inventory
------------------------------------
<TABLE>
<CAPTION>
Name of Grantor Locations of Equipment and Inventory
- ------------------------------------------ ---------------------------------------------------
<S> <C>
</TABLE>
VII-Sch. 4(b)-1
<PAGE>
Schedule 4(c) to
----------------
Pledge and Security Agreement
-----------------------------
Office Locations
----------------
<TABLE>
<CAPTION>
Name of Grantor Office Locations
- ------------------------------------------ -------------------------------------------------
<S> <C>
</TABLE>
VII-Sch. 4(c)-1
<PAGE>
Schedule 4(d) to
----------------
Pledge and Security Agreement
-----------------------------
Other Names
-----------
<TABLE>
<CAPTION>
Name of Grantor Other Names
- ---------------------------------------------- ----------------------------------------------
<S> <C>
</TABLE>
VII-Sch. 4(d)-1
<PAGE>
Schedule 4(h) to
----------------
Pledge and Security Agreement
-----------------------------
Filing Offices
--------------
<TABLE>
<CAPTION>
Grantor Filing Offices
- ----------------------------------------------- ---------------------------------------------
<S> <C>
</TABLE>
VII-Sch. 4(h)-1
<PAGE>
Exhibit I to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
Bridge Credit Agreement dated as of January 31, 2000 (said Bridge Credit
Agreement, as amended to the date hereof, and as it may hereafter be further
amended, modified, or supplemented from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined) with the several financial institutions from
time to time party thereto (collectively, "Banks"); the several financial
-----
institutions party thereto as Co-Syndication Agents; the financial institution
party thereto as Documentation Agent; Bank of America, N.A. as Administrative
Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
WHEREAS, Company and Levi Strauss & Co. Europe Financial Services, S.C.A.
("FinServ") may from time to time enter, or may from time to time have entered,
-------
into one or more Lender Derivative/FX Contracts; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks, Administrative Agent and any Derivative/FX Lenders,
pursuant to which Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement, the other Loan
Documents and all obligations of Company and FinServ under the Lender
Derivative/FX Contracts, including, without limitation, the obligation of
Company and FinServ to make payments thereunder in the event of early
termination or close out thereof; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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"):
--------------------
VII-I-1
<PAGE>
(i) all rights, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) 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, without limitation, the trademarks specifically identified in
Schedule A) (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, without limitation, the
registrations and applications specifically identified in Schedule A) (the
"Trademark Registrations"), all common law and other rights (but in no event any
of the obligations) 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"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 is intentionally left blank.]
VII-I-2
<PAGE>
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 _______, 2000.
[NAME OF GRANTOR]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
VII-I-3
<PAGE>
Schedule A to
-------------
Grant of Trademark Security Interest
------------------------------------
<TABLE>
<CAPTION>
United States
Trademark Registration Registration
Registered Owner Description Number Date
- ------------------------- ------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
</TABLE>
VII-Sch. A-1
<PAGE>
Exhibit II to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns and
-------
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, Levi Strauss & Co., a Delaware corporation, has entered into the
Bridge Credit Agreement dated as of January 31, 2000 (said Bridge Credit
Agreement, as amended to the date hereof, and as it may hereafter be further
amended, modified, or supplemented from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined) with the several financial institutions from
time to time party thereto (collectively, "Banks"); the several financial
-----
institutions party thereto as Co-Syndication Agents; the financial institution
party thereto as Documentation Agent; Bank of America, N.A. as Administrative
Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
WHEREAS, Company and Levi Strauss & Co. Europe Financial Services, S.C.A.
("FinServ") may from time to time enter, or may from time to time have entered,
-------
into one or more Lender Derivative/FX Contracts; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks, Administrative Agent and any Derivative/FX Lenders,
pursuant to which Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company and FinServ under the Lender
Derivative/FX Contracts, including, without limitation, the obligation of
Company and FinServ to make payments thereunder in the event of early
termination or close out thereof; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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
VII-II-1
<PAGE>
which Grantor now has or hereafter acquires an interest and wherever the same
may be located (the "Patent Collateral"):
-----------------
(i) all rights, title and interest (including rights acquired pursuant to a
license or otherwise but only to the extent permitted by agreements
governing such license or other use) 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, without limitation,
the patents and patent applications listed in Schedule A), all rights (but
----------
not obligations) corresponding thereto to sue for past, present and future
infringements and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof (all of the foregoing being
collectively referred to as the "Patents"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 intentionally left blank.]
VII-II-2
<PAGE>
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 ____________, 2000.
[NAME OF GRANTOR]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
VII-II-3
<PAGE>
Schedule A to
-------------
Grant of Patent Security Interest
---------------------------------
Patents Issued:
- --------------
<TABLE>
<CAPTION>
Registered
Patent No. Issue Date Invention Inventor Owner
- ------------------ ------------------ ------------------ ------------------ -------------
<S> <C> <C> <C> <C>
<CAPTION>
Patents Pending:
- ---------------
<CAPTION>
Applicant's Date Application
Name Filed Number Invention Inventor
- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
</TABLE>
VII-Sch. A-1
<PAGE>
Exhibit III to
--------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
Bridge Credit Agreement dated as of January 31, 2000 (said Bridge Credit
Agreement, as amended to the date hereof, and as it may hereafter be further
amended, modified, or supplemented from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined) with the several financial institutions from
time to time party thereto (collectively, "Banks"); the several financial
-----
institutions party thereto as Co-Syndication Agents; the financial institution
party thereto as Documentation Agent; Bank of America, N.A. as Administrative
Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
WHEREAS, Company and Levi Strauss & Co. Europe Financial Services, S.C.A.
("FinServ") may from time to time enter, or may from time to time have entered,
-------
into one or more Lender Derivative/FX Contracts; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks, Administrative Agent and any Derivative/FX Lenders,
pursuant to which Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company and FinServ under the Lender
Derivative/FX Contracts, including, without limitation, the obligation of
Company and FinServ to make payments thereunder in the event of early
termination or close out thereof; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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
VII-III-1
<PAGE>
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 but only to the extent permitted by
agreements governing such license or other use) under copyright in various
published and unpublished works of authorship including, without limitation,
computer programs, computer data bases, other computer software layouts, trade
dress, drawings, designs, writings, and formulas (including, without limitation,
the works listed on Schedule A, as the same may be amended pursuant hereto from
----------
time to time) (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 in the United States and any
state thereof and in foreign countries (including, without limitation, the
registrations listed on Schedule A, 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, without limitation,
----------------
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 (but not the obligation) to renew and
extend such Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right (but not the obligation) to sue in the
name of such Grantor or in the name of Secured Party or Banks for past, present
and future infringements of the Copyrights and Copyright Rights; 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision,
VII-III-2
<PAGE>
the Copyright Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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.
[The remainder of this page intentionally left blank.]
VII-III-3
<PAGE>
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 ___________, 2000.
[NAME OF GRANTOR]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
VII-III-4
<PAGE>
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
- ----- ------------- ------------------- -------------------
VII-Sch. A-1
<PAGE>
Exhibit IV to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] PLEDGE SUPPLEMENT
This Pledge Supplement, dated __________________, is delivered pursuant to
the Pledge and Security Agreement, dated January 31, 2000, between Levi Strauss
& Co., a Delaware corporation, the other Grantors named therein, and Bank of
America, N.A. (as it may be from time to time amended, modified, or
supplemented, the "Pledge and Security Agreement"). Capitalized terms used
-----------------------------
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Pledge and Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt] listed on
the schedule attached hereto shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] 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:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
VII-IV-1
<PAGE>
Exhibit V to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] IP SUPPLEMENT
This IP SUPPLEMENT, dated _____________, is delivered pursuant to and
supplements (i) the Pledge and Security Agreement, dated as of January 31, 2000
(as it may be from time to time amended, modified, or supplemented, the "Pledge
------
and Security Agreement"), among Levi Strauss & Co., a Delaware corporation, the
- ----------------------
other Grantors named therein, and Bank of America, N.A., as Secured Party, and
(ii) the [Grant of Trademark Security Interest] [Grant of Patent Security
Interest] [Grant of Copyright Security Interest] dated as of ___________, 2000
(the "Grant") executed by Grantor. Capitalized terms used herein not otherwise
-----
defined herein shall have the meanings ascribed thereto in the Grant.
["Grantor"] grants to Secured Party a security interest in all of Grantor's
right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed 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:
---------------------------
VII-V-1
<PAGE>
Exhibit VI to
-------------
Pledge And Security Agreement
-----------------------------
[Form of] Counterpart
This COUNTERPART (this "Counterpart"), dated _______, 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 Pledge
and Security Agreement, dated as of January 31, 2000 (as it may be from time to
time amended, modified, or supplemented, the "Pledge and Security Agreement";
-----------------------------
capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed therein), among Levi Strauss & Co., a Delaware corporation,
the other Grantors named therein, and Bank of America, N.A., as 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;
(ii) agrees that all Collateral of the undersigned, including
the items of property described 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:
----------------------------------
X-Sch. 1-1
<PAGE>
EXHIBIT 10.4
Exhibit VIII
------------
[FORM OF] GUARANTY
This GUARANTY is entered into as of February 1, 2000 by the
undersigned (each a "Guarantor", and together with any future Subsidiaries
---------
executing this Guaranty, being collectively referred to herein as the
"Guarantors") in favor of and for the benefit of Bank of America, N.A., as agent
- -----------
for and representative of (in such capacity herein called "Guarantied Party")
----------------
Collateral Agent, the several financial institutions ("Banks") from time to time
-----
party to the Credit Agreement referred to below and any Derivative/FX Lenders,
and for the benefit of the other Beneficiaries (as hereinafter defined).
PRELIMINARY STATEMENTS
----------------------
A. Levi Strauss & Co., a Delaware corporation ("Company"), has entered
-------
into that certain Bridge Credit Agreement dated as of January 31, 2000 with
Banks, the several financial institutions party thereto as Co-Syndication
Agents, the financial institution party thereto as Documentation Agent, and
Guarantied Party, as Administrative Agent and Collateral Agent for Banks (said
Bridge Credit Agreement, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Credit Agreement"; capitalized terms
----------------
defined therein and not otherwise defined herein being used herein as therein
defined).
B. Company and Levi Strauss & Co. Europe Financial Services, S.C.A.
("FinServ") may from time to time enter, or may from time to time have entered,
- ---------
into one or more Lender Derivative/FX Contracts in accordance with the terms of
the Credit Agreement, and it is desired that the obligations of Company and
FinServ under the Lender Derivative/FX Contracts, including, without limitation,
the obligation of Company and FinServ to make payments thereunder in the event
of early termination or close out thereof, together with all obligations of
Company under the Credit Agreement and the other Loan Documents, be guarantied
hereunder.
C. Guarantied Party, Banks, Collateral Agent and each Derivative/FX
Lender for which Guarantied Party has received the notice required by Section
17(c) hereof are sometimes referred to herein as "Beneficiaries".
-------------
D. A portion of the proceeds of the Loans may be advanced to Guarantors,
and thus the Guarantied Obligations (as hereinafter defined) are being incurred
for and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
E. It is a condition precedent to the effectiveness of the Credit
Agreement that Company's obligations thereunder be guarantied by Guarantors.
F. Guarantors are willing irrevocably and unconditionally to guaranty
such obligations of Company.
VIII-1
<PAGE>
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 Banks and Guarantied Party to enter into the Credit Agreement
and to induce Derivative/FX Lenders to enter into the Lender Derivative/FX
Contracts, Guarantors hereby agree as follows:
1. Guaranty. (a) In order to induce Banks to extend credit to
--------
Company pursuant to the Credit Agreement and the entry by Derivative/FX Lenders
into the Lender Derivative/FX Contracts, Guarantors jointly and severally
irrevocably and unconditionally guaranty, as primary obligors and not merely as
sureties, the due and punctual payment in full of all Guarantied Obligations (as
hereinafter defined) when the same shall become due, whether at stated maturity,
by acceleration, demand or otherwise (including amounts that would become due
but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term "Guarantied Obligations" is
----------------------
used herein in its most comprehensive sense and includes any and all Obligations
of Company and all obligations of Company and FinServ under Lender Derivative/FX
Contracts, now or hereafter made, incurred or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not due, and however
arising under or in connection with the Credit Agreement, the Lender
Derivative/FX Contracts, this Guaranty and the other Loan Documents, including
those arising under successive borrowing transactions under the Credit Agreement
which shall either continue the Obligations of Company or from time to time
renew them after they have been satisfied.
Each Guarantor acknowledges that a portion of the Loans may be advanced to
it, that Lender Letters of Credit may be issued for the benefit of its business
and that the Guarantied Obligations are being incurred for and will inure to its
benefit.
Any interest on any portion of the Guarantied Obligations that accrues
after the commencement of any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company or FinServ (or, if interest on any portion of the
Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceeding had not been commenced)
shall be included in the Guarantied Obligations because it is the intention of
each Guarantor and Guarantied Party that the Guarantied Obligations should be
determined without regard to any rule of law or order that may relieve Company
or FinServ of any portion of such Guarantied Obligations.
In the event that all or any portion of the Guarantied Obligations is
paid by Company or FinServ, the obligations of each Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) is rescinded or
recovered directly or indirectly from Guarantied Party or any other Beneficiary
as a preference, fraudulent transfer or otherwise, and any such payments that
are so rescinded or recovered shall constitute Guarantied Obligations.
VIII-2
<PAGE>
Subject to the other provisions of this Section 1, upon the failure of
Company or FinServ to pay any of the Guarantied Obligations when and as the same
shall become due, each Guarantor will upon demand pay, or cause to be paid, in
cash, to Guarantied Party for the ratable benefit of Beneficiaries, an amount
equal to the aggregate of the unpaid Guarantied Obligations.
(b) Anything contained in this Guaranty to the contrary notwithstanding,
the obligations of each Guarantor under this Guaranty shall be limited to a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
----------
Transfer Laws"), in each case after giving effect to all other liabilities of
- -------------
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (i) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (ii) under
any guaranty which contains a limitation as to maximum amount similar to that
set forth in this Section 1(b), pursuant to which the liability of such
Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement, indemnification or contribution of
such Guarantor pursuant to applicable law or pursuant to the terms of any
agreement.
(c) Each Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Credit Agreement (the "Related Guaranties")
------------------
that contain a contribution provision similar to that set forth in this Section
1(c), together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
- ------------------------
arising under this Guaranty and the Related Guaranties. Accordingly, in the
event any payment or distribution is made on any date by a Guarantor under this
Guaranty or a guarantor under a Related Guaranty, each such Guarantor or such
other guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Guarantied Obligations paid to Beneficiaries.
2. Guaranty Absolute; Continuing Guaranty. The obligations of each
--------------------------------------
Guarantor hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees that: (a) this Guaranty is a guaranty
of payment when due and not of collectibility; (b) Guarantied Party may enforce
this Guaranty upon the occurrence of an Event of Default under the Credit
Agreement or the occurrence of an early termination date, close out date or
similar event under any Lender Derivative/FX Contract notwithstanding the
existence of any dispute between Company or FinServ and any Beneficiary with
respect to the existence of such event; (c) the obligations of each Guarantor
hereunder are independent of the obligations of Company under the Loan Documents
or of Company and FinServ under the Lender Derivative/FX Contracts and the
obligations of any other Guarantor
VIII-3
<PAGE>
and a separate action or actions may be brought and prosecuted against each
Guarantor whether or not any action is brought against Company, FinServ or any
of such other Guarantors and whether or not Company or FinServ is joined in any
such action or actions; and (d) a payment of a portion, but not all, of the
Guarantied Obligations by one or more Guarantors shall in no way limit, affect,
modify or abridge the liability of such or any other Guarantor for any portion
of the Guarantied Obligations that has not been paid. This Guaranty is a
continuing guaranty and shall be binding upon each Guarantor and its successors
and assigns, and each Guarantor irrevocably waives any right to revoke this
Guaranty as to future transactions giving rise to any Guarantied Obligations.
3. Actions by Beneficiaries. Any Beneficiary may from time to time,
------------------------
without notice or demand and without affecting the validity or enforceability of
this Guaranty or giving rise to any limitation, impairment or discharge of any
Guarantor's liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guaranty or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security now or hereafter
held by or for the benefit of any Beneficiary in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that Guarantied Party or the other
Beneficiaries, or any of them, may have against any such security, as Guarantied
Party in its discretion may determine consistent with the Credit Agreement, the
Lender Derivative/FX Contracts and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (f) exercise any other rights available to Guarantied Party or the other
Beneficiaries, or any of them, under the Loan Documents or the Lender
Derivative/FX Contracts.
4. No Discharge. This Guaranty and the obligations of Guarantors
------------
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations, (b) any waiver or modification
of, or any consent to departure from, any of the terms or provisions of the
Credit Agreement, any of the other Loan Documents, the Lender Derivative/FX
Contracts or any agreement or instrument executed pursuant thereto, or of any
other guaranty or security for the Guarantied Obligations, (c) the Guarantied
Obligations, or any agreement relating thereto, at any
VIII-4
<PAGE>
time being found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even though Guarantied Party or the other
Beneficiaries, or any of them, might have elected to apply such payment to any
part or all of the Guarantied Obligations, (e) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guarantied Obligations, (f) any defenses, set-offs or counterclaims which
Company or FinServ may assert against Guarantied Party or any Beneficiary in
respect of the Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury, and (g) any other act or thing
or omission, or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of a Guarantor as an obligor in respect of
the Guarantied Obligations.
5. Waivers. Each Guarantor waives, for the benefit of Beneficiaries:
-------
(a) any right to require Guarantied Party or the other Beneficiaries, as a
condition of payment or performance by such Guarantor, to (i) proceed against
Company or FinServ, any other guarantor (including any other Guarantor) of the
Guarantied Obligations or any other Person, (ii) proceed against or exhaust any
security held from Company or FinServ, any other guarantor of the Guarantied
Obligations or any other Person, (iii) proceed against or have resort to any
balance of any deposit account or credit on the books of any Beneficiary in
favor of Company, FinServ or any other Person, or (iv) pursue any other remedy
in the power of any Beneficiary; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of Company or
FinServ including, without limitation, any defense based on or arising out of
the lack of validity or the unenforceability of the Guarantied Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of Company or FinServ from any cause other than payment in full of
the Guarantied Obligations; (c) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (d) any
defense based upon Guarantied Party's or any other Beneficiary's errors or
omissions in the administration of the Guarantied Obligations, except behavior
that amounts to gross negligence or willful misconduct; (e) (i) any principles
or provisions of law, statutory or otherwise, that are or might be in conflict
with the terms of this Guaranty and any legal or equitable discharge of such
Guarantor's obligations hereunder, (ii) the benefit of any statute of
limitations affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that any Beneficiary protect, secure,
perfect or insure any Lien or any property subject thereto; (f) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guaranty,
notices of default under the Credit Agreement, notices of default, close out or
early termination under any Lender Derivative/FX Contract or any agreement or
instrument related thereto, notices of any renewal, extension or modification of
the Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company or FinServ and notices of any of the matters
referred to in Sections 3 and 4 hereof and any right to consent to any thereof;
and (g) to the fullest extent permitted by law, any defenses or benefits that
may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Guaranty.
VIII-5
<PAGE>
As used in this paragraph, any reference to "the principal" includes
Company and FinServ, and any reference to "the creditor" includes Guarantied
Party and each other Beneficiary. In accordance with Section 2856 of the
California Civil Code (a) each Guarantor waives any and all rights and defenses
available to it by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of
the California Civil Code, including without limitation any and all rights or
defenses such Guarantor may have by reason of protection afforded to the
principal with respect to any of the Guarantied Obligations, or to any other
guarantor of any of the Guarantied Obligations with respect to any of such
guarantor's obligations under its guaranty, in either case pursuant to the
antideficiency or other laws of the State of California limiting or discharging
the principal's indebtedness or such guarantor's obligations, including without
limitation Section 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure; and (b) each Guarantor waives all rights and defenses arising out of
an election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a Guarantied
Obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise; and even though that election of remedies by
the creditor, such as nonjudicial foreclosure with respect to security for an
obligation of any other guarantor of any of the Guarantied Obligations, has
destroyed such Guarantor's rights of contribution against such other guarantor.
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this paragraph. As
provided below, this Guaranty shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of New York, without
regard to conflicts of laws principles. This paragraph is included solely out of
an abundance of caution, and shall not be construed to mean that any of the
above-referenced provisions of California law are in any way applicable to this
Guaranty or to any of the Guarantied Obligations.
6. Guarantors' Rights of Subrogation, Contribution, Etc.;
------------------------------------------------------
Subordination of Other Obligations. Until the Guarantied Obligations shall have
- ----------------------------------
been paid in full, the Commitments shall have terminated and all Lender Letters
of Credit shall have expired or been cancelled, no Guarantor shall exercise any
claim, right or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against Company, FinServ or their respective assets in connection
with this Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity,
under contract, by statute (including without limitation under California Civil
Code Section 2847, 2848 or 2849), under common law or otherwise and including
without limitation (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company or FinServ, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now has or may hereafter have against
Company or FinServ, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary. Each Guarantor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Guarantor may have against Company or FinServ or against
any collateral or security, and any rights of contribution such Guarantor may
have against any such other guarantor, shall be junior and subordinate to any
rights Guarantied
VIII-6
<PAGE>
Party or the other Beneficiaries may have against Company or FinServ, to all
right, title and interest Guarantied Party or the other Beneficiaries may have
in any such collateral or security, and to any right Guarantied Party or the
other Beneficiaries may have against such other guarantor.
Any indebtedness of Company or FinServ now or hereafter held by any
Guarantor is subordinated in right of payment to the Guarantied Obligations, and
any such indebtedness of Company or FinServ to a Guarantor collected or received
by such Guarantor after an Event of Default has occurred and is continuing, and
any amount paid to a Guarantor on account of any subrogation, reimbursement,
indemnification or contribution rights referred to in the preceding paragraph
when all Guarantied Obligations have not been paid in full, shall be held in
trust for Guarantied Party on behalf of Beneficiaries and shall forthwith be
paid over to Guarantied Party for the benefit of Beneficiaries to be credited
and applied against the Guarantied Obligations.
7. Expenses. Guarantors jointly and severally agree to pay, or cause
--------
to be paid, on demand, and to save Guarantied Party and the other Beneficiaries
harmless against liability for, any and all costs and expenses (including fees
and disbursements of counsel and allocated costs of internal counsel) incurred
or expended by Guarantied Party or any other Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.
8. Financial Condition of Company or FinServ. No Beneficiary shall
-----------------------------------------
have any obligation, and each Guarantor waives any duty on the part of any
Beneficiary, to disclose or discuss with such Guarantor its assessment, or such
Guarantor's assessment, of the financial condition of Company or FinServ or any
matter or fact relating to the business, operations or condition of Company or
FinServ. Each Guarantor has adequate means to obtain information from Company
or FinServ on a continuing basis concerning the financial condition of Company
or FinServ and its ability to perform its obligations under the Loan Documents
and the Lender Derivative/FX Contracts, as the case may be, and each Guarantor
assumes the responsibility for being and keeping informed of the financial
condition of Company or FinServ and of all circumstances bearing upon the risk
of nonpayment of the Guarantied Obligations.
9. Representations and Warranties. Each Guarantor makes, for the
------------------------------
benefit of Beneficiaries, each of the representations and warranties made in the
Credit Agreement by Company as to such Guarantor, its assets, financial
condition, operations, organization, legal status, business and the Loan
Documents to which it is a party.
10. Covenants. Each Guarantor agrees that, so long as any part of
---------
the Guaranteed Obligations shall remain unpaid, any Lender Letter of Credit
shall be outstanding, any Bank shall have any Commitment, or any Derivative/FX
Lender shall have any obligation under any Lender Derivative/FX Contract, such
Guarantor will, unless Majority Banks shall otherwise consent in writing,
perform or observe, and cause its Subsidiaries to perform or observe, all of the
terms, covenants and agreements that the Loan Documents state that Company is to
cause a Guarantor and such Subsidiaries to perform or observe.
11. Set Off. In addition to any other rights any Beneficiary may
-------
have under law or in equity, if any amount shall at any time be due and owing by
a Guarantor to any Beneficiary
VIII-7
<PAGE>
under this Guaranty, such Beneficiary is authorized at any time or from time to
time, without notice (any such notice being expressly waived), to set off and to
appropriate and to apply any and all deposits (general or special, including but
not limited to indebtedness evidence by certificates of deposit, whether matured
or unmatured) and any other indebtedness of such Beneficiary owing to a
Guarantor and any other property of such Guarantor held by a Beneficiary to or
for the credit or the account of such Guarantor against and on account of the
Guarantied Obligations and liabilities of such Guarantor to any Beneficiary
under this Guaranty.
12. Discharge of Guaranty Upon Sale of Guarantor. If all of the
--------------------------------------------
stock of a Guarantor or any of its successors in interest under this Guaranty
shall be sold or otherwise disposed of (including by merger or consolidation) in
a sale in compliance with the terms of the Credit Agreement, the obligations of
such Guarantor or such successor in interest, as the case may be, hereunder
shall automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such sale; provided
--------
that, if the sale of such stock constitutes a Disposition as a condition
precedent to such discharge and release, Guarantied Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Guarantied Party of the Net Asset Disposition Proceeds (if any)
as required by the Credit Agreement.
13. Amendments and Waivers. No amendment, modification, termination
----------------------
or waiver of any provision of this Guaranty, and no consent to any departure by
any Guarantor therefrom, shall in any event be effective without the written
concurrence of Guarantied Party and, in the case of any such amendment or
modification, Guarantors. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
14. Miscellaneous. It is not necessary for Beneficiaries to inquire
-------------
into the capacity or powers of any Guarantor, Company or FinServ or the
officers, directors or any agents acting or purporting to act on behalf of any
of them.
The rights, powers and remedies given to Beneficiaries by this Guaranty
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Beneficiaries by virtue of any statute or rule of law or
in any of the Loan Documents or Lender Derivative/FX Contracts or any agreement
between one or more Guarantors and one or more Beneficiaries or between Company
or FinServ and one or more Beneficiaries. Any forbearance or failure to
exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS, GUARANTIED
PARTY AND THE OTHER BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE
VIII-8
<PAGE>
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Guaranty shall inure to the benefit of Beneficiaries and their
respective successors and assigns.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR, GUARANTIED
PARTY, COLLATERAL AGENT AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW
EACH GUARANTOR, COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE
AGENT-RELATED PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH
GUARANTOR, COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
15. Additional Guarantors. The initial Guarantor(s) hereunder shall
---------------------
be such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time
VIII-9
<PAGE>
subsequent to the date hereof, Subsidiaries of Company may become parties
hereto, as additional Guarantors (each an "Additional Guarantor"), by
--------------------
executing a counterpart, a form of which is attached as Exhibit A, of this
Guaranty. Upon delivery of any such counterpart to Guarantied Party, notice of
which is hereby waived by Guarantors, each such Additional Guarantor shall be a
Guarantor and shall be as fully a party hereto as if such Additional Guarantor
were an original signatory hereof. Each Guarantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Guarantor hereunder, nor by any election of the
Guarantied Party not to cause any Subsidiary of Company to become an Additional
Guarantor hereunder. This Guaranty shall be fully effective as to any Guarantor
that is or becomes a party hereto regardless of whether any other Person becomes
or fails to become or ceases to be a Guarantor hereunder.
16. Counterparts; Effectiveness. This Guaranty may be executed in
---------------------------
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by the Guaranteed Party of written or
telephonic notification of such execution and authorization of delivery thereof.
17. Guarantied Party as Agent.
-------------------------
(a) Guarantied Party has been appointed to act as Guarantied
Party hereunder by Banks. Guarantied 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,
solely in accordance with this Guaranty and the Credit Agreement.
(b) Guarantied 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 9.9 of the Credit
Agreement shall also constitute notice of resignation as Guarantied Party under
this Guaranty; removal of Administrative Agent pursuant to Section 9.9 of the
Credit Agreement shall also constitute removal as Guarantied Party under this
Guaranty; and appointment of a successor administrative agent pursuant to
Section 9.9 of the Credit Agreement shall also constitute appointment of a
successor Guarantied Party under this Guaranty. Upon the acceptance of any
appointment as administrative agent under Section 9.9 of the Credit Agreement by
a successor administrative agent, that successor administrative agent shall
thereupon succeed to become vested with all the rights, powers, privileges and
duties of the retiring or removed Guarantied party under this Guaranty, and the
retiring or removed Guarantied Party under this Guaranty shall promptly (i)
transfer to such successor Guarantied Party all sums held hereunder, together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate in
connection with the assignment to such successor Guarantied Party of the rights
created hereunder, whereupon such retiring or removed Guarantied Party shall be
VIII-10
<PAGE>
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefits as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
(c) Guarantied Party shall not be deemed to have any duty
whatsoever with respect to any Derivative/FX Lender until it shall have received
written notice in form and substance satisfactory to Guarantied Party from
Company, a Guarantor or the Derivative/FX Lender as to the existence and terms
of the applicable Lender Derivative/FX Contract.
[The remainder of this page intentionally left blank.]
VIII-11
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first written above.
BATTERY STREET ENTERPRISES, INC.
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS FINANCIAL CENTER
CORPORATION
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS FUNDING, LLC
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
VIII-12
<PAGE>
LEVI STRAUSS GLOBAL
OPERATIONS, INC.
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS INTERNATIONAL
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS LATIN AMERICA, INC.
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
LEVI'S ONLY STORES, INC.
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
VIII-13
<PAGE>
NF INDUSTRIES, INC.
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
ACKNOWLEDGED AND FOR PURPOSES
OF THE WAIVER OF JURY TRIAL SET
FORTH IN SECTION 14 ONLY, AGREED
AS OF THE DATE FIRST WRITTEN ABOVE
Bank of America, N.A., as Administrative Agent
By:_____________________________
Title: _________________________
VIII-14
<PAGE>
Exhibit A to
------------
Guaranty
--------
[FORM OF] COUNTERPART FOR ADDITIONAL GUARANTORS
This COUNTERPART (this "Counterpart"), dated _______, _____, is
-----------
delivered pursuant to Section 15 of the Guaranty referred to below. The
undersigned hereby agrees that this Counterpart may be attached to the Guaranty,
dated as of February 1, 2000 (as it may be from time to time amended, modified,
or supplemented, the "Guaranty"; capitalized terms used herein not otherwise
--------
defined herein shall have the meanings specified therein), among the Guarantors
named therein and Bank of America, N.A., as Guarantied Party. The undersigned,
by executing and delivering this Counterpart, hereby becomes an Additional
Guarantor under the Guaranty in accordance with Section 15 thereof and agrees to
be bound by all of the terms thereof.
IN WITNESS WHEREOF, the undersigned has caused this Counterpart to be
duly executed and delivered by its officer thereunto duly authorized as of
______________, ____.
[NAME OF ADDITIONAL GUARANTOR]
By:__________________
Name:________________
Title:_______________
Address: __________________________
__________________________
__________________________
X-Sch. 1-1
<PAGE>
EXHIBIT 10.5
EXECUTION COPY
LEVI STRAUSS & CO.
LIMITED WAIVER
This LIMITED WAIVER (this "Waiver") is dated as of February
------
29, 2000 and entered into by and among Levi Strauss & Co., a Delaware
corporation ("Company"); the financial institutions party hereto ("Banks"); Bank
------- -----
of America, N.A. as Administrative Agent for Banks ("Administrative Agent"); and
--------------------
Bank of America, N.A. as Collateral Agent for Banks ("Collateral Agent"), and is
----------------
made with reference to that certain Bridge Credit Agreement dated as of
January 31, 2000 (the "Credit Agreement"), by and among Company; Banks; the
----------------
several financial institutions party thereto as Co-Syndication Agents; the
financial institution party thereto as Documentation Agent; Administrative
Agent; and Collateral Agent. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Banks desire to waive certain provisions of the
Credit Agreement as set forth below:
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
Section 1. WAIVER
Subject to the terms and conditions set forth herein and in
reliance on the representations and warranties of Company contained herein,
Banks hereby waive compliance with the provisions of Section 7.1(o) of the
Credit Agreement to the extent, and only to the extent, necessary to permit
Company to become and remain liable with respect to unsecured Guaranty
Obligations under (i) the Permitted Foreign Receivables Purchase Facilities to
be entered into by Company and certain of its Subsidiaries and ABN AMRO Bank N.V
or its Affiliates on or about February 29, 2000 and (ii) additional Permitted
Foreign Receivables Purchase Facilities to be entered into by the above parties
with respect to Permitted Foreign Receivables generated by Levi Strauss
Nederland B.V., Dockers Europe B.V. and Levi Strauss Japan K.K.; provided that
--------
the aggregate amount of such Guaranty Obligations (including those related to
defaulted and diluted Permitted Foreign Receivables but excluding those related
to servicing Permitted Foreign Receivables) shall not exceed $15,000,000.
Without limiting the generality of the provisions of Section
10.1 of the Credit Agreement, the waiver set forth above shall be limited
precisely as written and relates solely to the noncompliance by Company with the
provisions of Section 7.1(o) of the Credit Agreement in the manner and to the
extent described above, and nothing in this waiver shall be deemed to:
<PAGE>
(a) constitute a waiver of compliance by Company with respect to
Section 7.1(o) of the Credit Agreement in any other instance or any other
term, provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein; or
(b) prejudice any right or remedy that Administrative Agent or any
Bank may now have or may have in the future under or in connection with the
Credit Agreement or any other instrument or agreement referred to therein.
Except as expressly set forth herein, the terms, provisions and conditions
of the Credit Agreement and the other Loan Documents shall remain in full force
and effect and in all other respects are hereby ratified and confirmed.
Section 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Banks to enter into this Waiver, Company hereby
represents and warrants that after giving effect to this Waiver:
(a) as of the date hereof, there exists no Event of Default under
the Credit Agreement;
(b) all representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true and correct in all material respects on and as of such earlier date; and
(c) as of the date hereof, Company has performed all agreements to
be performed on its part as set forth in the Credit Agreement.
Section 3. GOVERNING LAW
THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
Section 4. COUNTERPARTS; EFFECTIVENESS
This Waiver may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but 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. This Waiver shall
become effective upon the execution of a counterpart hereof by Company and
Majority Banks.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Waiver
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
LEVI STRAUSS & CO.
By:
-----------------------------------------------
Title:
--------------------------------------------
BANK OF AMERICA, N.A., as a Bank
By:
-----------------------------------------------
Title:
--------------------------------------------
THE BANK OF NOVA SCOTIA, as a Co-Syndication Agent
and as a Bank
By:
-----------------------------------------------
Title:
-------------------------------------------
CITICORP U.S.A. INCORPORATED, as a Co-Syndication
Agent and as a Bank
By:
-----------------------------------------------
Title:
--------------------------------------------
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent and as a Bank
By:
-----------------------------------------------
Title:
--------------------------------------------
3
<PAGE>
BANK ONE, N.A., as a Bank
By:
-----------------------------------------------
Title:
--------------------------------------------
BANK OF AMERICA, N.A., as Administrative Agent
By:
-----------------------------------------------
Title:
--------------------------------------------
BANK OF AMERICA, N.A., as Collateral Agent
By:
-----------------------------------------------
Title:
--------------------------------------------
ACKNOWLEDGED:
BATTERY STREET ENTERPRISES, INC.
By:
-----------------------------
Title:
--------------------------
LEVI STRAUSS FINANCIAL CENTER CORPORATION
By:
-----------------------------
Title:
--------------------------
LEVI STRAUSS FUNDING, LLC
By:
-----------------------------
Title:
--------------------------
LEVI STRAUSS GLOBAL FULFILLMENT SERVICES, INC.
By:
-----------------------------
Title:
--------------------------
4
<PAGE>
LEVI STRAUSS GLOBAL OPERATIONS, INC.
By:
-----------------------------
Title:
--------------------------
LEVI STRAUSS INTERNATIONAL
By:
-----------------------------
Title:
--------------------------
LEVI STRAUSS LATIN AMERICA, INC.
By:
-----------------------------
Title:
--------------------------
LEVI'S ONLY STORES, INC.
By:
-----------------------------
Title:
--------------------------
NF INDUSTRIES, INC.
By:
-----------------------------
Title:
--------------------------
5
<PAGE>
EXHIBIT 10.6
EXECUTION COPY
AMENDED AND RESTATED 1997 364 DAY CREDIT AGREEMENT
among
LEVI STRAUSS & CO.
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Senior Managing Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Managing Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Co-Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Banks
and
BANK OF AMERICA, N.A.,
as Agent for Banks
BANK OF AMERICA, N.A.,
as Collateral Agent for Banks
dated as of January 31, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS
1.1 Defined Terms............................................................................ 1
1.2 Other Interpretive Provisions............................................................ 25
1.3 Accounting Principles.................................................................... 26
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments; the Credit............................................. 26
2.2 Notes; Loan Accounts..................................................................... 26
2.3 Procedure for Borrowing.................................................................. 27
2.4 Conversion and Continuation Elections.................................................... 27
2.5 Voluntary Prepayments.................................................................... 28
2.6 Mandatory Prepayments and Reductions of Aggregate Commitment............................. 28
2.7 Repayment; Scheduled Reductions of Aggregate Commitment.................................. 30
2.8 Interest................................................................................. 31
2.9 Fees..................................................................................... 32
2.10 Computation of Fees and Interest......................................................... 33
2.11 Payments by the Company.................................................................. 33
2.12 Payments by the Banks to the Agent....................................................... 34
2.13 Sharing of Payments, etc................................................................. 34
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes.................................................................................... 35
3.2 Illegality............................................................................... 36
3.3 Increased Costs and Reduction of Return.................................................. 37
3.4 Funding Losses........................................................................... 37
3.5 Inability to Determine Rates............................................................. 38
3.6 Reserves on Offshore Rate Loans.......................................................... 38
3.7 Certificates of Banks.................................................................... 39
3.8 Substitution of Banks.................................................................... 39
3.9 Survival................................................................................. 39
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Condition to Closing.................................................................... 39
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Good Standing, Business, Ownership of Subsidiaries and
Capitalization.......................................................................... 43
5.2 Authorization of Borrowing, etc......................................................... 44
5.3 Financial Condition..................................................................... 44
5.4 Title to Properties; Liens.............................................................. 45
5.5 Litigation; Adverse Facts............................................................... 45
5.6 Payment of Taxes........................................................................ 45
5.7 Materially Adverse Agreements; Performance.............................................. 46
5.8 Governmental Regulation................................................................. 46
5.9 ERISA Compliance........................................................................ 46
5.10 Environmental Matters................................................................... 47
5.11 Compliance With Laws.................................................................... 47
5.12 Regulation U............................................................................ 47
5.13 Disclosure.............................................................................. 47
5.14 Matters Relating to Collateral.......................................................... 47
5.15 Intangible Assets....................................................................... 48
5.16 Insurance............................................................................... 48
5.17 Year 2000............................................................................... 48
5.18 Solvency................................................................................ 49
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements and Other Reports.................................................. 49
6.2 Corporate Existence, etc................................................................ 53
6.3 Compliance With Laws, etc............................................................... 53
6.4 Compliance with Agreements.............................................................. 53
6.5 Payment of Taxes and Claims............................................................. 53
6.6 Maintenance of Properties; Insurance.................................................... 53
6.7 Inspection.............................................................................. 54
6.8 Use of Proceeds......................................................................... 54
6.9 Execution of Guaranty and Collateral Documents by Additional Subsidiaries............... 55
6.10 Compliance with ERISA................................................................... 56
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
6.11 Post Closing Actions................................................................... 56
6.12 Transfer of Receivables................................................................ 58
ARTICLE VII
NEGATIVE COVENANTS
7.1 Indebtedness; Derivative/FX Contracts.................................................. 58
7.2 Limitation on Liens and Negative Pledges............................................... 60
7.3 Dispositions........................................................................... 63
7.4 Fundamental Changes.................................................................... 64
7.5 Use of Proceeds........................................................................ 64
7.6 Leverage Ratio......................................................................... 65
7.7 Interest Coverage Ratio................................................................ 65
7.8 Minimum Consolidated EBITDA............................................................ 66
7.9 Change in Business..................................................................... 66
7.10 ERISA.................................................................................. 66
7.11 Investments............................................................................ 67
7.12 Restricted Payments.................................................................... 68
7.13 Operating Lease Obligations............................................................ 68
7.14 Transactions with Affiliates........................................................... 68
7.15 Amendments of Documents Relating to Indebtedness and Receivables....................... 68
7.16 Consolidated Capital Expenditures...................................................... 69
7.17 Materially Adverse Agreements.......................................................... 69
7.18 Limitations on Upstreaming............................................................. 69
7.19 Change in Auditors..................................................................... 69
7.20 Restricted Subsidiaries................................................................ 69
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default....................................................................... 70
8.2 Remedies............................................................................... 72
8.3 Rights Not Exclusive................................................................... 73
ARTICLE IX
AGENT; COLLATERAL AGENT
9.1 Appointment and Authorization.......................................................... 73
9.2 Delegation of Duties................................................................... 74
9.3 Liability of Agent or Collateral Agent................................................. 74
9.4 Reliance by Agent and Collateral Agent................................................. 74
</TABLE>
iii
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
9.5 Notice of Default...................................................................... 75
9.6 Credit Decision; Disclosure of Information by Agent and Collateral Agent............... 75
9.7 Indemnification of Agent and Collateral Agent.......................................... 76
9.8 Agent in Individual Capacity........................................................... 76
9.9 Successor Agent........................................................................ 77
9.10 Successor Collateral Agent............................................................. 77
9.11 Withholding Tax........................................................................ 78
9.12 Co-Agents; Managing Agents............................................................. 79
9.13 Collateral Documents, Guaranties and Intercreditor Agreement........................... 79
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers................................................................ 80
10.2 Notices............................................................................... 80
10.3 No Waiver; Cumulative Remedies........................................................ 81
10.4 Costs and Expenses.................................................................... 81
10.5 Company's Indemnification............................................................. 82
10.6 Payments Set Aside.................................................................... 82
10.7 Successors and Assigns................................................................ 83
10.8 Assignments, Participations, etc...................................................... 83
10.9 Confidentiality....................................................................... 84
10.10 Set-off............................................................................... 85
10.11 Notification of Addresses, Lending Offices, etc....................................... 85
10.12 Counterparts.......................................................................... 86
10.13 Severability.......................................................................... 86
10.14 No Third Parties Benefited............................................................ 86
10.15 Change in Accounting Principles....................................................... 86
10.16 Governing Law and Jurisdiction........................................................ 86
10.17 Interpretation........................................................................ 87
10.18 Representation of Banks............................................................... 87
10.19 Waiver of Jury Trial.................................................................. 87
10.20 Amendments and Waivers Regarding Collateral........................................... 88
</TABLE>
ARTICLE XI
GENERAL RELEASE
iv
<PAGE>
EXHIBIT LIST
Exhibit I..........................[FORM OF] NOTICE OF CONVERSION/CONTINUATION
Exhibit II......................................................[FORM OF] NOTE
Exhibit III...................................[FORM OF] COMPLIANCE CERTIFICATE
Exhibit IV.......................[FORM OF] CLOSING DATE CERTIFICATE OF COMPANY
Exhibit V..............................[FORM OF] PLEDGE AND SECURITY AGREEMENT
Exhibit VI..................................................[FORM OF] GUARANTY
Exhibit VII................................[FORM OF] ASSIGNMENT AND ACCEPTANCE
Exhibit VIII....................................................PRIVITY LETTER
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An extra section break has been inserted above this paragraph. Do not
delete this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
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<PAGE>
AMENDED AND RESTATED 1997 364 DAY CREDIT AGREEMENT
This AMENDED AND RESTATED 1997 364 DAY CREDIT AGREEMENT is entered into as
of January 31, 2000 among Levi Strauss & Co., a Delaware corporation
("Company"); the several financial institutions from time to time party to this
-------
Agreement (collectively "Banks" and individually a "Bank"); the several
----- ----
financial institutions party to this Agreement as Senior Managing Agents; the
several financial institutions party to this Agreement as Managing Agents; the
several financial institutions party to this Agreement as Co-Agents; Bank of
America, N.A. as Agent for Banks; and Bank of America, N.A. as Collateral Agent
for Banks.
WHEREAS, Banks and Company are parties to the 1997 364 Day Credit
Agreement dated as of February 7, 1997, as amended by First Amendment to 1997
364 Day Credit Agreement dated as of April 6, 1999 and Second Amendment to 1997
364 Day Credit Agreement dated as of August 31, 1999 and as amended and extended
by Extension Agreements dated as of February 6, 1998 and February 2, 1999 (the
"Existing Credit Agreement"); and
-------------------------
WHEREAS, pursuant to a Waiver dated as of November 12, 1999, Banks agreed
to waive certain provisions of the Existing Credit Agreement until February 3,
2000; and
WHEREAS, Company and Banks have agreed to amend and restate the Existing
Credit Agreement; and
WHEREAS, Company has agreed to secure its Obligations hereunder and under
the other Loan Documents by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of its personal property and certain of its real
property (other than Principal Property), including a pledge of 100% of the
Capital Stock of certain of its Domestic Subsidiaries and 65% of the Capital
Stock of certain of its Foreign Subsidiaries (other than Restricted
Subsidiaries); and
WHEREAS, certain of the Domestic Subsidiaries of Company have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of their respective personal property and certain of
their respective real property (other than Principal Property), including a
pledge of 100% of the Capital Stock of certain of their respective Domestic
Subsidiaries and 65% of the Capital Stock of certain of their respective Foreign
Subsidiaries (other than Restricted Subsidiaries);
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. In addition to the terms defined elsewhere in this
-------------
Agreement, the following terms have the following meanings:
"Affected Bank" has the meaning specified in Section 3.8.
-------------
1
<PAGE>
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, (a)
power to vote 10% or more of the Securities (on a fully diluted basis) of
the other Person having ordinary voting power for the election of directors
or managing general partners, or (b) to direct or cause the direction of
the management and policies of the other Person, whether through the
ownership of voting Securities, membership interests, by contract, or
otherwise.
"Affiliated Fund" means, with respect to any Bank, a fund that invests
---------------
in commercial loans and is managed by the same investment advisor as such
Bank, an Affiliate of such Bank or by an Affiliate of the same investment
advisor as such Bank.
"Agent" means Bank of America, in its capacity as agent for Banks
-----
hereunder, and any successor agent pursuant to Section 9.9.
"Agent-Related Persons" means Agent and any successor agent arising
---------------------
under Section 9.9, together with their respective Affiliates (including, in
the case of Bank of America, the Arranger), and the officers, directors,
employees, agents, counsel, and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set forth on
----------------------
the signature page hereto in relation to Agent or such other address as
Agent may from time to time specify in accordance with Section 10.2.
"Aggregate Bridge Commitment" means the combined Commitments (as
---------------------------
defined therein) under the Bridge Credit Agreement.
"Aggregate Commitment" means the combined Commitments of Banks. The
--------------------
Aggregate Commitment as of the Closing Date is $545,647,399.50.
"Agreement" means this Amended and Restated 1997 364 Day Credit
---------
Agreement, as amended, supplemented, or modified from time to time.
"Amended and Restated 1999 180 Day Credit Agreement" means the Amended
--------------------------------------------------
and Restated 1999 180 Day Credit Agreement dated as of January 31, 2000,
between Company, Bank of America, as administrative agent, Bank of America,
as collateral agent, and the other lenders parties thereto.
"Applicable Margin" has the meaning specified in Section 2.8.
-----------------
"Arranger" means BancAmerica Securities, Inc., a Delaware corporation.
--------
"Asset Disposition" means the sale by Company or any of its
-----------------
Subsidiaries to any Person other than Company or any of its Subsidiaries of
(a) any of the stock of any of Company's Subsidiaries, (b) substantially
all of the assets of any division or line of business of Company or any of
its Subsidiaries, or (c) any other assets (whether tangible
2
<PAGE>
or intangible) of Company or any of its Subsidiaries other than
Dispositions permitted by Sections 7.3(a), 7.3(c), 7.3(e), 7.3(f), 7.3(g),
7.3(h), and 7.3(m).
"Assignee" has the meaning specified in Section 10.8(a).
--------
"Assignment and Acceptance" means an Assignment and Acceptance
-------------------------
substantially in the form of Exhibit VII.
-----------
"Bank" and "Banks" have the meanings specified in the introductory
---- -----
clause hereto; provided that for purposes of any determination made with
--------
respect to Citicorp U.S.A., Inc. under Section 3.2, 3.3, 3.4, 3.5 or 3.6,
"Bank" shall be deemed to include Citibank, N.A.
"Bank of America" means Bank of America, N.A.
---------------
"Bankruptcy Code" means Title 11 of the United States Code, entitled
---------------
"Bankruptcy" (11 U.S.C. (S) 101, et seq.).
-------
"Base Rate" means, for any day, a fluctuating rate per annum equal to
---------
the higher of (a) the Federal Funds Rate plus 1/2 of 1%, and (b) the rate
----
of interest in effect for such day as publicly announced from time to time
by Bank of America as its "prime rate." Such rate is a rate set by Bank of
America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
--------------
Rate.
"Borrower Party" means Company and any of its Material Domestic
--------------
Subsidiaries from time to time party to a Loan Document, and "Borrower
--------
Parties" means all such Persons, collectively.
-------
"Borrowing" [Intentionally Omitted]
---------
"Bridge Credit Agreement" means the Bridge Credit Agreement dated as
-----------------------
of January 31, 2000, between Company, Bank of America, as administrative
agent, Bank of America, as collateral agent, and the other lenders parties
thereto.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York or San Francisco,
California are authorized or required by law to close and with respect to
calculations, disbursements, and payments relating to Offshore Rate Loans,
a day on which dealings are carried on in the offshore Dollar interbank
market in London.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation,
3
<PAGE>
whether or not having the force of law, in each case, regarding capital
adequacy of any bank or of any corporation controlling a bank.
"Capital Lease", as applied to any Person, means any lease of any
-------------
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Capital Markets Transaction" means (a) an issuance or sale of
---------------------------
Securities by Company, through a public offering or private placement, or
(b) a capital contribution to Company; provided, however, that in the case
-------- -------
of debt Securities, any such Securities (i) shall be unsecured, and (ii)
shall not have a stated maturity date or required principal payments
earlier than five years from the date of issuance thereof.
"Capital Stock" means (a) in the case of a corporation, corporate
-------------
stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of a
limited liability company, membership interests, and (e) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distribution of assets of, the issuing
Person.
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 4.1 are satisfied or waived by Majority Banks, or in the
case of Section 4.1(d), waived by the Person entitled to obtain such
payment.
"Co-Agent" means each of the financial institutions party to this
--------
Agreement which is identified as a Co-Agent in its signature block.
"Co-Documentation Agent" means each of The Bank of Nova Scotia,
----------------------
Citicorp USA, Inc. and Morgan Guaranty Trust Company of New York.
"Code" means the Internal Revenue Code of 1986 as amended and any
----
regulations promulgated thereunder.
"Collateral" means, collectively, all of the Property (including
----------
Capital Stock) in which Liens are purported to be granted pursuant to the
Collateral Documents as security for the Obligations.
"Collateral Agent" means Bank of America, in its capacity as
----------------
collateral agent for Banks hereunder, and any successor collateral agent.
"Collateral Agent-Related Person" means Collateral Agent and any
-------------------------------
successor collateral agent arising under Section 9.10, together with their
respective Affiliates (including, in the case of Bank of America, the
Arranger), and the officers, directors, employees, agents, counsel, and
attorneys-in-fact of such Persons and Affiliates.
"Collateral Documents" means the Pledge and Security Agreement, the
--------------------
Foreign Pledge Agreements, the Mortgages, and all other instruments or
documents delivered by
4
<PAGE>
any Borrower Party pursuant to this Agreement or any of the other Loan
Documents in order to grant to Collateral Agent, on behalf of Banks, a Lien
on any Property of that Borrower Party as security for the Obligations.
"Commitment" means, for each Bank, the amount set forth opposite such
----------
Bank's name on Schedule 2.1, as such amount may be reduced or adjusted from
------------
time to time in accordance with the terms of this Agreement.
"Commitment Percentage" means, as to any Bank, the percentage set
---------------------
forth opposite such Bank's name on Schedule 2.1, as adjusted as
------------
contemplated herein.
"Committed Borrowing" [Intentionally Omitted]
-------------------
"Company" has the meaning specified in the introductory clause
-------
hereto.
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit III properly completed and signed by a Responsible Officer of
-----------
Company.
"Consolidated Capital Expenditures" means, for any period, the sum of
---------------------------------
the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries during that
period that, in conformity with GAAP, are included in "additions to
property, plant or equipment" or comparable items reflected in the
consolidated statement of cash flows of Company and its Subsidiaries;
provided, however, that Consolidated Capital Expenditures shall not include
-------- -------
software costs.
"Consolidated EBITDA" means, for any period, for Company and its
-------------------
Subsidiaries on a consolidated basis, an amount equal to (a) the sum,
without duplication, of (i) Consolidated Net Income, (ii) Consolidated
Interest Charges, (iii) the amount of taxes, based on or measured by
income, used or included in the determination of such Consolidated Net
Income, (iv) the amount of depreciation and amortization expense deducted
in determining such Consolidated Net Income, and (v) accruals for Company's
Global Success Sharing Plan, Long Term Performance Plan, Leadership Shares
and Long Term Incentive Payment Plan minus (b) Company's cash payments for
-----
Company's Global Success Sharing Plan, Long Term Performance Plan,
Leadership Shares and Long Term Incentive Payment Plan.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
-----------------------------
positive) equal to (a) the sum, without duplication, of the amounts for
such period of (i) Consolidated EBITDA plus (or minus) (ii) loss (gain) on
---- -----
sales of assets plus (iii) to the extent not otherwise included, all
----
noncash expenses plus (iv) the first $50,000,000 of proceeds from the
----
Pending IceHouse Disposition plus (or minus) (v) the Consolidated Working
---- -----
Capital Adjustment minus (b) the sum, without duplication, of the amounts
-----
for such period for (i) scheduled repayments of Consolidated Funded
Indebtedness (excluding repayments of revolving loans except to the extent
the corresponding commitments are permanently reduced in connection with
such repayments), (ii) Consolidated Capital Expenditures (net of any
proceeds of related financings with
5
<PAGE>
respect to such expenditures), (iii) Consolidated Interest Charges paid in
cash, (iv) taxes based on income of Company and its Subsidiaries paid in
cash, (v) the excess of bank fees paid over bank fees amortized, and (vi)
cash payments for long-term employee benefits and other related liabilities
(other than changes in accruals under the Global Success Sharing Plan, Long
Term Performance Plan, Leadership Shares and Long Term Incentive Payment
Plan).
"Consolidated Funded Indebtedness" means, as of any date of
--------------------------------
determination, for Company and its Subsidiaries on a consolidated basis,
the sum, without duplication, of (a) the outstanding principal amount of
all obligations and liabilities, whether current or long-term, for borrowed
money (including Obligations in respect of Loans hereunder), (b) that
portion of obligations with respect to Capital Leases that are capitalized
in the consolidated balance sheet of Company and its Subsidiaries, in each
case to the extent treated as debt in accordance with GAAP, and (c) the
outstanding amount of all obligations under any Receivables Purchase
Facility.
"Consolidated Interest Charges" means, for any period, for Company and
-----------------------------
its Subsidiaries on a consolidated basis, all interest (net of all interest
income), premium payments, fees, charges and related expenses payable by
Company and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with
GAAP.
"Consolidated Net Income" means, for any period, for Company and its
-----------------------
Subsidiaries on a consolidated basis, the net income (or loss) of Company
and its Subsidiaries determined in accordance with GAAP for that period.
"Consolidated Net Tangible Assets" means the aggregate amount of
--------------------------------
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any indebtedness
for money borrowed having a maturity of less than 12 months from the date
of the most recent consolidated balance sheet of Company but which by its
terms is renewable or extendable beyond 12 months from such date at the
option of the borrower), and (b) all goodwill, trade names, patents,
unamortized debt discount and expense and any other like intangibles, all
as set forth on the most recent consolidated balance sheet of Company and
computed in accordance with generally accepted accounting principles.
"Consolidated Working Capital Adjustment" means, for any period, for
---------------------------------------
Company and its Subsidiaries on a consolidated basis, an amount equal to
(a) the sum of the decrease (increase) during that period in current
assets, excluding changes in cash and cash equivalents, and changes in
current tax assets plus (b) the sum of the increase (decrease) during that
----
period in current liabilities, excluding changes in short-term Indebtedness
or current maturities of long-term Indebtedness, changes in short-term tax
liabilities and changes in short-term interest liabilities.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage,
6
<PAGE>
deed of trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which Company (a)
----------------------------
converts Base Rate Loans to Offshore Rate Loans, or (b) converts Offshore
Rate Loans to Base Rate Loans, or (c) continues Offshore Rate Loans having
Interest Periods expiring on such date as Offshore Rate Loans but with a
new Interest Period.
"Debtor Relief Laws" means the Bankruptcy Code, and all other
------------------
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means an interest rate equal to the Base Rate plus the
------------ ----
Applicable Margin, if any, applicable to Base Rate Loans plus 2% per annum;
----
provided, however, that with respect to an Offshore Rate Loan, the Default
-------- -------
Rate shall be an interest rate equal to the interest rate (including any
Applicable Margin) otherwise applicable to such Loan plus 2% per annum, in
----
each case to the fullest extent permitted by applicable laws; provided
--------
further that with respect to an Offshore Rate Loan, upon the expiration of
-------
the Interest Period in effect at the time any such increase in interest
rate is effective, such Offshore Rate Loan shall thereupon become a Base
Rate Loan and shall thereafter bear interest at the Default Rate applicable
to Base Rate Loans.
"Derivative/FX Contract" means (a) any and all interest rate swaps,
----------------------
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions,
cap transactions, floor transactions, collar transactions, currency swaps,
cross-currency rate swaps, currency options, spot contracts or any other
similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any such
transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., the International Foreign Exchange Master Agreement, or any other
master agreement, including any such obligations or liabilities under any
such agreement.
"Derivative/FX Lender" means a Bank party to the Bridge Credit
--------------------
Agreement or any of its Affiliates.
7
<PAGE>
"Disposition" means the sale, transfer, license or other disposition
-----------
(including any sale and leaseback transaction) of any Property by any
Person, including any sale, assignment, transfer or other disposal with or
without recourse of any notes or accounts receivable or any rights and
claims associated therewith.
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
"Domestic Subsidiary" means any Subsidiary of Company that is
-------------------
incorporated or organized in the United States, any state thereof or in the
District of Columbia.
"Eligible Assignee" means (a) a financial institution organized under
-----------------
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of any such country, and having a combined capital and surplus
of at least $100,000,000, provided that such bank is acting through a
--------
branch or agency located in the United States; (c) a Person that is
primarily engaged in the business of commercial banking and that is (i) a
Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (iii) a Person of which a Bank is a Subsidiary; (d) another
Bank, any Affiliate of a Bank and any Affiliated Fund of any Bank; and (e)
any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933, as amended) which extends
credit or buys loans as one of its businesses, including but not limited
to, insurance companies, mutual funds and lease financing companies. No
Borrower Party or any Affiliate of a Borrower Party shall be an Eligible
Assignee.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters, but excluding routine zoning ordinances.
"Equipment Financing Transaction" means any financing arrangement with
-------------------------------
any Person of equipment pursuant to a lease intended as security which will
be treated as indebtedness under GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) under common control with Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
8
<PAGE>
"ERISA Event" means (a) a Reportable Event with respect to a Pension
-----------
Plan; (b) a withdrawal by Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization, in each case which would
reasonably be expected to result in a liability to Company or any of its
Subsidiaries of more than $10,000,000; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Company
or any ERISA Affiliate.
"Event of Default" means any of the events or circumstances specified
----------------
in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
------------
regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning specified in the recitals
-------------------------
hereto.
"Existing Receivables Purchase Agreement" means the Receivables
---------------------------------------
Purchase Agreement dated as of April 28, 1999 among LSFCC, Levi Strauss
Funding Corp., Ciesco L.P., Receivables Capital Corporation, the financial
institutions from time to time party thereto and Citicorp North America,
Inc., as agent.
"Exposure Factor" means 125%.
---------------
"FDIC" means the Federal Deposit Insurance Corporation and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published
by the Federal Reserve Bank on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds Rate
--------
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b)
if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate charged to Bank
of America on such day on such transactions as determined by Agent.
9
<PAGE>
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System and any Governmental Authority succeeding to any of its
principal functions.
"FinServ" means Levi Strauss & Co. Europe Financial Services, S.C.A.,
-------
a Belgian corporation.
"Flood Hazard Property" means real property located in an area
---------------------
designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.
"Foreign Pledge Agreement" means each pledge agreement or similar
------------------------
instrument governed by the laws of a country other than the United States,
executed and delivered pursuant to Section 6.11 or from time to time
thereafter in accordance with Section 6.9 by Company or any Material
Domestic Subsidiary that owns Capital Stock of one or more Foreign
Subsidiaries organized in such country, in form and substance satisfactory
to Agent, as such Foreign Pledge Agreement may thereafter be amended,
supplemented, or modified from time to time.
"Foreign Subsidiary" means any Subsidiary of Company, other than a
------------------
Domestic Subsidiary.
"Four Facility Commitment Reduction Fraction" means, as of any date of
-------------------------------------------
determination, a fraction, the numerator of which is the Aggregate
Commitment and the denominator of which is the sum of (a) the Aggregate
Commitment plus (b) the Aggregate Bridge Commitment plus (c) the Aggregate
---- ----
180 Day Commitment (as defined therein) under the Amended and Restated 1999
180 Day Credit Agreement plus (d) the Aggregate Commitment (as defined
----
therein) under the 1997 Second Amended and Restated Credit Agreement.
"Funded Current Liability Percentage" means "funded current liability
-----------------------------------
percentage" within the meaning of Section 412(1)(8)(B) of the Code.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section 3.1.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other statements by
such other entity as may be in general use by significant segments of the
U.S. accounting profession, which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary
or regulatory
10
<PAGE>
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and
any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" means any Material Domestic Subsidiary that executes
---------
and delivers a counterpart of the Guaranty on the Subsequent Closing Date
or from time to time thereafter pursuant to Section 6.9.
"Guaranty" means the Guaranty executed and delivered by existing
--------
Material Domestic Subsidiaries on the Subsequent Closing Date and to be
executed and delivered by additional Material Domestic Subsidiaries from
time to time thereafter in accordance with Section 6.9, substantially in
the form of Exhibit VI, as such Guaranty may thereafter be amended,
----------
supplemented, or modified from time to time.
"Guaranty Obligation" means, as to any Person, any (a)
-------------------
guaranty by such Person of Indebtedness of, or other obligation payable or
performable by, any other Person, or (b) assurance, agreement, letter of
responsibility, letter of awareness, undertaking or arrangement given by
such Person to an obligee of any other Person with respect to the payment
or performance of an obligation by, or the financial condition of, such
other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any agreement to
support the solvency or level of any balance sheet item of such other
Person or any "keep-well" or other arrangement of whatever nature given for
the purpose of assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided, however, that the
-------- -------
term Guaranty Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guaranty Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof,
covered by such Guaranty Obligation or, if less, the amount to which such
Guaranty Obligation is specifically limited, or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the person in good faith.
"Indebtedness" means, as to any Person at a particular time:
-----------
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) any direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), banker's acceptances,
bank guaranties, surety bonds and similar instruments;
(c) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (other than obligations under a long term supply
contract), which purchase price is (i) due
11
<PAGE>
more than 90 days from the date of incurrence of the obligation in respect
thereof, or (ii) evidenced by a note or similar written instrument, and
indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such Person or
is limited in recourse;
(d) without duplication, lease payment obligations under Capital
Leases or Synthetic Lease Obligations; and
(e) without duplication, all Guaranty Obligations of such Person in
respect of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which
such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person except for
customary exceptions acceptable to Majority Banks.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
-----------------------
"Indemnified Person" has the meaning specified in Section 10.5.
------------------
"Indentures" means that certain Indenture dated as of November 6, 1996
----------
between Company and Citibank, N.A., as trustee, and that certain Fiscal
Agency Agreement dated as of November 22, 1996 between Company and
Citibank, N.A., as fiscal agent.
"Ineligible Securities" means securities which may not be underwritten
---------------------
or dealt in by member banks of the Federal Reserve System under Section 16
of the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case covered by subsections
(a) and (b) undertaken under U.S. Federal, State or foreign law, including
the Bankruptcy Code.
"Intellectual Property" means all patents, trademarks, tradenames,
---------------------
copyrights, technology, software, know-how and processes used in or
necessary for the conduct of the business of Company and its Subsidiaries
as currently conducted that are material to the condition (financial or
otherwise), business or operations of Company and its Subsidiaries, taken
as a whole.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
-----------------------
of January 31, 2000 between the respective lenders under this Agreement,
the Bridge Credit Agreement, the Amended and Restated 1999 180 Day Credit
Agreement, and the 1997 Second Amended and Restated Credit Agreement.
12
<PAGE>
"Interest Coverage Ratio" means, as of any date of determination, the
-----------------------
ratio of (a) Consolidated EBITDA for the period specified to (b)
Consolidated Interest Charges during such period.
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each fiscal quarter;
provided, however, that if any Interest Period for an Offshore Rate Loan
-------- -------
exceeds three months, interest shall also be paid on last day of each
successive three-month period (commencing with the beginning of such
Interest Period) and each such day will be an Interest Payment Date.
"Interest Period" means, with respect to any Offshore Rate Loan, the
---------------
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date of such Loan, as applicable, and ending on the
date one, two, three, or six months thereafter (and if consented to by
Majority Banks in the given instance, nine months), as selected by Company
in its Notice of Conversion/Continuation;
provided that:
--------
(a) if any Interest Period pertaining to an Offshore Rate Loan would
otherwise end on a day which is not a Business Day, that Interest Period
shall be extended to the next succeeding Business Day unless the result of
such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period;
(c) no Interest Period shall extend beyond the Maturity Date; and
(d) unless Agent otherwise consents, there may not be more than 24
Interest Periods for Offshore Rate Loans in effect at any time under this
Agreement, the Bridge Credit Agreement, the Amended and Restated 1999 180
Day Credit Agreement, and the 1997 Second Amended and Restated Credit
Agreement.
"Investment" means, as to any Person, any acquisition or any
----------
investment by such Person, whether by means of the purchase or other
acquisition of stock or other Securities of any other Person or by means of
a loan, creating a debt, capital contribution, guaranty or other debt or
equity participation or interest in any other Person, including any
partnership and joint venture interests in such other Person. For purposes
of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases
in the value of such Investment.
"IP Collateral" means, collectively, the Intellectual Property owned
-------------
by Company or any of its Material Domestic Subsidiaries that constitutes
Collateral under the Pledge and Security Agreement.
13
<PAGE>
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Lender Derivative/FX Contract" means any Ordinary Course
-----------------------------
Derivative/FX Contract entered into by Company or FinServ and a
Derivative/FX Lender that is subject to a legally enforceable netting
agreement between Company or FinServ, as the case may be, and such
Derivative/FX Lender with respect to all Ordinary Course Derivative
FX/Contracts between such parties.
"Lender Letters of Credit" means letters of credit issued or
------------------------
outstanding under the Bridge Credit Agreement or the Amended and Restated
1999 180 Day Credit Agreement.
"Lending Office" means, with respect to any Bank, the office or
--------------
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, below its name on
the signature pages hereto, or such other office or offices of such Bank as
it may from time to time specify to Company and Agent.
"Leverage Ratio" means, as of any date of determination, for Company
--------------
and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) (i) as of the end of the first
fiscal quarter of fiscal year 2000, Consolidated EBITDA for such fiscal
quarter times 4; (ii) as of the end of the second fiscal quarter of fiscal
-----
year 2000, Consolidated EBITDA for the first two fiscal quarters of fiscal
year 2000 times 2; (iii) as of the end of the third fiscal quarter of
-----
fiscal year 2000, Consolidated EBITDA for the first three fiscal quarters
of fiscal year 2000 times 1.333; and (iv) as of the end of any fiscal
-----
quarter thereafter, Consolidated EBITDA for the four fiscal quarter period
then ended.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the
owner of the asset to which such lien relates as debtor, under the UCC of
any jurisdiction or any comparable law, or the interest of the Person other
than Company or any of its Subsidiaries in connection with any Equipment
Financing Transaction) and any contingent or other agreement to provide any
of the foregoing, but not including the interest of a lessor under an
operating lease or the interest of a purchaser of Permitted Receivables
under any Permitted Receivables Purchase Facility.
"Loan" means a loan by a Bank to Company under Section 2.1, and may be
----
an Offshore Rate Loan or a Base Rate Loan.
14
<PAGE>
"Loan Documents" means this Agreement, any Notes, the fee letters
--------------
referred to in Section 2.9, the Guaranty, the Collateral Documents, and all
other instruments, documents and agreements delivered to Agent or any Bank
in connection herewith.
"LOS/DOS Business" means the ownership and operation by Company or a
----------------
Subsidiary of Company, whether directly or through joint ventures with
third parties in partnership, corporate or other form, of businesses
engaged solely in selling apparel and accessories and related products
including, without limitation, selling through retail stores, outlet
stores, telephone sales, catalog or other mail orders, and electronic
sales. LOS/DOS Business shall not include any business engaging in
manufacturing or in selling and in manufacturing.
"LSFCC" means Levi Strauss Financial Center Corporation, a California
-----
corporation, formerly Levi Strauss Credit Corp., a California corporation.
"LSFLLC" means Levi Strauss Funding, LLC, a Delaware limited liability
------
company.
"Majority Banks" means, at any time, (a) Banks holding more than 50%
--------------
of the Aggregate Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 50% of the then aggregate unpaid
principal amount of the Loans.
"Managing Agent" means each of the financial institutions party to
--------------
this Agreement which is identified as a Managing Agent in its signature
block.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise), business, assets, operations or
prospects of Company and its Subsidiaries, taken as a whole, or (c)
materially impairs or could reasonably be expected to materially impair the
ability of any Borrower Party to perform the Obligations.
"Material Domestic Subsidiary" means any Domestic Subsidiary that is a
----------------------------
Material Subsidiary.
"Material Foreign Subsidiary" means any Foreign Subsidiary that is a
---------------------------
Material Subsidiary.
"Material Subsidiary" means (a) any Subsidiary of Company, (i) the net
-------------------
book value of which is $5,000,000 or more or (ii) the annual gross revenue
of which is $15,000,000 or more and (b) any other Subsidiary of Company
designated by Company to be a "Material Subsidiary" for purposes of this
Agreement.
"Maturity Date" means January 31, 2002.
-------------
15
<PAGE>
"Mortgage" means a security instrument (whether designated as a deed
--------
of trust or a mortgage or by any similar title) containing standard and
customary terms and provisions executed and delivered by any Borrower
Party, in such form as may be approved by Co-Agents in their sole
discretion after consultation with Company, in each case with such changes
thereto as may be recommended by Agent's local counsel based on local laws
or customary local mortgage or deed of trust practices. "Mortgages" means
all such instruments, collectively.
"Multiemployer Plan" means a "multiemployer plan", within the meaning
------------------
of Section 4001(a)(3) of ERISA, to which Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"Negative Pledge" means a Contractual Obligation that restricts Liens
---------------
on property.
"Net Asset Disposition Proceeds" means cash payments (including cash
------------------------------
received by way of deferred payment pursuant to, or by monetization of, a
note receivable or otherwise, but only as and when so received) received
for an Asset Disposition, net of any bona fide direct costs incurred in
connection with such Asset Disposition including (a) income taxes
reasonably estimated to be actually payable within one year of the date of
such Asset Disposition as a result of any gain recognized in connection
with such Asset Disposition, (b) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness
(other than the Loans and Indebtedness under the Bridge Credit Agreement,
the Amended and Restated 1999 180 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement) that is secured by a Lien on the
stock or assets in question that is required to be repaid under the terms
thereof as a result of such Asset Disposition, and (c) brokers' fees and
legal fees incurred in connection with such Asset Disposition; provided,
--------
however, that the first $50,000,000 of proceeds from the Pending IceHouse
-------
Disposition shall not constitute Net Asset Disposition Proceeds.
"Net Equipment Financing Proceeds" means any cash proceeds received in
--------------------------------
connection with an Equipment Financing Transaction, net of (a) all
reasonable costs payable to Persons not Affiliates of Company in connection
with such Equipment Financing Transaction and (b) payment of the
outstanding principal amount of, premium or penalty, if any, and interest
on any Indebtedness (other than the Loans and Indebtedness under the Bridge
Credit Agreement, the Amended and Restated 1999 180 Day Credit Agreement,
and the 1997 Second Amended and Restated Credit Agreement) that is secured
by a Lien on the equipment in question that is required to be repaid under
the terms thereof as a result of such Equipment Financing Transaction.
"Net Insurance Proceeds" means any cash payments or proceeds received
----------------------
by Company or any of its Subsidiaries with respect to Collateral under (a)
any business interruption policy in respect of a covered loss thereunder,
or (b) under any property insurance policy in respect of a covered loss
thereunder, in each case, net of any actual and reasonable documented costs
incurred by Company or any of its Subsidiaries in
16
<PAGE>
connection with the adjustment or settlement of any claims of Company or
such Subsidiary in respect thereof.
"Net Real Estate Financing Proceeds" means any cash proceeds received
----------------------------------
in connection with a Real Estate Financing Transaction, net of all
reasonable costs payable to Persons not Affiliates of Company in connection
with such Real Estate Financing Transaction.
"Net Securities Proceeds" means (a) the cash proceeds (net of
-----------------------
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and
expenses) from the issuance of Securities of Company or any of its
Subsidiaries, or (b) any cash capital contribution to Company.
"1997 Second Amended and Restated Credit Agreement" means the 1997
-------------------------------------------------
Second Amended and Restated Credit Agreement dated as of January 31, 2000,
between Company, Bank of America, as agent, Bank of America, as collateral
agent, and the other lenders parties thereto.
"Notes" has the meaning specified in Section 2.2.
-----
"Notice of Conversion/Continuation" means a notice, signed by Company,
---------------------------------
and given to Agent pursuant to Section 2.4, in substantially the form of
Exhibit I.
---------
"Obligations" means all advances to, and debts, liabilities,
-----------
obligations, covenants and duties of, any Borrower Party arising under any
Loan Document, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Laws by or against
any Borrower Party or any Subsidiary or Affiliate of any Borrower Party.
"Offshore Rate" means for any Interest Period with respect to any
-------------
Offshore Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:
Offshore Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means, for such Interest Period:
------------------
(a) the rate per annum equal to the rate determined by Agent to be
the offered rate that appears on the page of the Telerate Screen that
displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period, determined as of
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or
17
<PAGE>
(b) in the event that the rate referenced in the preceding subsection
(a) does not appear on such page or service or such page or service shall
cease to be available, the rate per annum equal to the rate determined by
Agent to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period, determined as of
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or
(c) in the event that the rates referenced in the preceding
subsections (a) and (b) are not available, the rate per annum determined by
Agent as the rate of interest at which Dollar deposits (for delivery on the
first day of such Interest Period) in same day funds in the approximate
amount of the applicable Offshore Rate Loan and with a term equivalent to
such Interest Period would be offered by Bank of America's London Branch to
major banks in the offshore Dollar market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any Interest
-----------------------------
Period, the reserve percentage (expressed as a decimal, rounded upward to
the next 1/100/th/ of 1%) in effect on such day, whether or not applicable
to any Bank, under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Offshore Rate for each
outstanding Offshore Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
The determination of the Eurodollar Reserve Percentage and the
Offshore Base Rate by Agent shall be conclusive in the absence of manifest
error.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including leases that may be terminated by the lessee at any time) of any
Property that is not a Capital Lease, other than any such lease under which
that Person is the lessor.
"Ordinary Course Derivative/FX Contracts" means any and all interest
---------------------------------------
rate swaps, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity
contracts, interest rate options, forward foreign exchange transactions,
cap transactions, floor transactions, collar transactions, currency swaps,
cross-currency rate swaps, currency options, spot contracts or any other
similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any such
transaction is governed by or subject to any master agreement, in each case
that are (or were) entered into by any Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or
18
<PAGE>
reasonably anticipated by such Person, or changes in the value of
securities issued by such Person and not for purposes of speculation or
taking a "market view" and that do not contain any provision ("walk-away"
provision) exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party.
"Organization Documents" means, (a) with respect to any corporation,
----------------------
the certificate or articles of incorporation and the bylaws; (b) with
respect to any limited liability company, the articles of formation and
operating agreement; and (c) with respect to any partnership, joint
venture, trust or other form of business entity, the partnership or joint
venture agreement and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation with the secretary
of state or other department in the state of its formation, in each case as
amended from time to time.
"Originator" has the meaning specified in Section 10.8(d).
----------
"Other Taxes" means any present or future stamp, court or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in Section 10.8(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Pending IceHouse Disposition" means the proposed sale of the property
----------------------------
located at 151 Union Street, San Francisco, California.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which Company or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to
make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five plan years.
"Permitted Receivables" means all obligations of any obligor (whether
---------------------
now existing or hereafter arising) under a contract for sale of goods or
services by Company or any of its Subsidiaries, which includes any
obligation of such obligor (whether now existing or hereafter arising) to
pay interest, finance charges or amounts with respect thereto, and, with
respect to any of the foregoing receivables or obligations, (a) all of the
interest of Company or any of its Subsidiaries in the goods (including
returned goods) the sale of which gave rise to such receivable or
obligation after the passage of title thereto to any obligor, (b) all other
Liens and property subject thereto from time to time purporting to secure
payment of such receivables or obligations, (c) all guaranties, insurance,
letters of credit and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any such
receivables or obligations, (d) all books and records relating to the
foregoing, lockbox accounts containing primarily proceeds of the foregoing,
and other similar related assets customarily transferred (or in which
security
19
<PAGE>
interests are customarily granted) to purchasers in receivables purchase
transactions that are treated as sales under GAAP, (e) all rights of
Foreign Subsidiaries to refunds on account of value added tax in respect of
goods sold to an obligor, any receivable from whom is or becomes a
defaulted receivable, and (f) proceeds of or judgments relating to any of
the foregoing, any debts represented thereby and all rights of action
against any Person in connection therewith.
"Permitted Receivables Purchase Facility" means any agreement of
---------------------------------------
Company or any of its Subsidiaries providing for sales, transfers or
conveyances of, or granting of security interests in, Permitted Receivables
that do not provide, directly or indirectly, for recourse against the
seller of such Permitted Receivables (or against any of such seller's
Affiliates) by way of a guaranty or any other support arrangement, with
respect to the amount of such Permitted Receivables (based on the financial
condition or circumstances of the obligor thereunder), other than such
limited recourse as is reasonable given market standards for receivables
purchase transactions that are treated as sales under GAAP, taking into
account such factors as historical bad debt loss experience and obligor
concentration levels.
"Permitted Transferees" has the meaning specified in the Stockholders
---------------------
Agreement dated as of April 15, 1996 between Company and the stockholders
of Company party thereto as in effect as of the Closing Date, except that
transferees pursuant to Section 2.2(a)(A) thereof shall not be deemed to be
Permitted Transferees for purposes of this Agreement.
"Person" means an individual, partnership, corporation, limited
------
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which Company or any of its Subsidiaries sponsors or maintains or to
which Company or any of its Subsidiaries makes, is making, or is obligated
to make contributions and includes any Pension Plan.
"Pledge and Security Agreement" means the Pledge and Security
-----------------------------
Agreement executed and delivered by Company on the Closing Date and
existing Material Domestic Subsidiaries on the Subsequent Closing Date and
to be executed and delivered by additional Material Domestic Subsidiaries
from time to time thereafter in accordance with Section 6.9, substantially
in the form of Exhibit V, as such Pledge and Security Agreement may
---------
thereafter be amended, supplemented, or modified from time to time.
"Pledged Collateral" means the "Pledged Collateral" as defined in the
------------------
Pledge and Security Agreement.
"Pledged Foreign Subsidiary" means a Foreign Subsidiary no more than
--------------------------
65% of the Capital Stock of which is pledged to Collateral Agent.
"Principal Property" means any contiguous or proximate parcel of real
------------------
property owned by, or leased to, Company or any of its Restricted
Subsidiaries, and any
20
<PAGE>
equipment located at or comprising a part of any such property, having a
gross book value (without deduction of any depreciation reserves), as of
the date of determination, in excess of 1% of Consolidated Net Tangible
Assets; provided, however, that in the event that the Indentures, or the
-------- -------
limitations regarding Liens granted by Company or Restricted Subsidiaries
contained in the Indentures, are no longer binding on Company, no Property
shall be a Principal Property.
"Professional Costs" means and includes all reasonable fees and
------------------
disbursements of any law firm or other external counsel, the allocated cost
of internal legal services and all disbursements of internal counsel and
the reasonable fees and costs of financial advisors, accountants,
appraisers, consultants, etc.
"Property" means any estate or interest in any kind of property or
--------
asset, whether real, personal or mixed, and whether tangible or intangible.
"Real Estate Financing Transaction" means any arrangement with any
---------------------------------
Person pursuant to which Company or any of its Subsidiaries incurs
Indebtedness secured by a Lien on real property of Company or any of its
Subsidiaries and related personal property.
"Receivables Purchase Facility" means any agreement providing for
-----------------------------
sales, transfers or conveyances of, or granting of security interests in,
accounts receivable that do not provide, directly or indirectly, for
recourse against the seller of such accounts receivable (or against any of
such seller's Affiliates) by way of a guaranty or any other support
arrangement, with respect to the amount of such accounts receivable (based
on the financial condition or circumstances of the obligor thereunder),
other than such limited recourse as is reasonable given market standards
for receivables purchase transactions that are treated as sales under GAAP,
taking into account such factors as historical bad debt loss experience and
obligor concentration levels.
"Receivables Transfer Agreements" means that certain Receivables
-------------------------------
Purchase and Sale Agreement dated as of January 28, 2000 among Company,
LSFCC, Levi Strauss Funding Corp. and LSFLLC and that certain Third Amended
and Fully Restated Receivables Purchase and Sale Agreement between LSFCC
and Company effective January 28, 2000.
"Released Matters" has the meaning specified in Section 11.1.
----------------
"Releasees" has the meaning specified in Section 11.1.
---------
"Releasors" has the meaning specified in Section 11.1.
---------
"Replacement Bank" means an Eligible Assignee satisfactory to Company
----------------
which acquires and assumes all or a ratable part of all of a Bank's Loans
and Commitment pursuant to Section 3.8. Each designation of a Replacement
Bank shall be subject to the prior written consent of Agent (which consent
shall not be unreasonably withheld).
21
<PAGE>
"Reportable Event" means, any of the events set forth in Section
----------------
4043(c) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Requisite Banks" means, at any time, (a) Banks holding more than 90%
---------------
of the Aggregate Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 90% of the then aggregate unpaid
principal amount of the Loans.
"Responsible Officer" of Company means the chief executive officer,
------------------
the president, the chief financial officer, or the treasurer of Company, or
any other officer having substantially the same authority and
responsibility.
"Restricted Payment" means:
------------------
(a) the declaration or payment of any dividend or other distribution
by Company or any of its Subsidiaries, directly or indirectly, either in
cash or property, on any shares of the Capital Stock of any class of
Company or any of its Subsidiaries (except dividends or other distributions
payable solely in shares of Capital Stock of Company or any of its
Subsidiaries or payable by any Subsidiary to Company or to a wholly-owned
Subsidiary of Company);
(b) the purchase, redemption or retirement by Company or any of its
Subsidiaries of any shares of its Capital Stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
Capital Stock, whether directly or indirectly (except the purchase,
redemption or retirement of Capital Stock (or any such warrants, rights or
options) held by Company or any wholly-owned Subsidiary of Company); and
(c) the prepayment, repayment, redemption, defeasance or other
acquisition or retirement for value prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any Indebtedness
not otherwise permitted under any Loan Document to be so paid.
"Restricted Subsidiary" means any Subsidiary of Company which owns or
---------------------
leases a Principal Property; provided, however, that in the event that the
-------- -------
Indentures, or the limitations regarding Liens granted by or on the Capital
Stock or Indebtedness of Restricted Subsidiaries contained in the
Indentures, are no longer binding on Company, no Subsidiary of Company
shall be a Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission, or any successor
---
thereto.
"Securities" means any stock, shares, partnership interests, voting
----------
trust certificates, certificates of interest or participation in any
profit-sharing agreement or
22
<PAGE>
arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or in general any instruments commonly known as "securities"
or any certificates of interest, shares or participations in temporary or
interim certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"Senior Managing Agent" means each of the financial institutions party
---------------------
to this Agreement which is identified as a Senior Managing Agent in its
signature block.
"Solvent" means, with respect to any Person, that as of the date of
-------
determination both (a)(i) the then fair saleable value of the property of
such Person is (A) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (B) not less than the amount
that will be required to pay the probable liabilities on such Person's then
existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to
such Person; (ii) such Person's capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and
(iii) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts beyond its ability to pay
such debts as they become due; and (b) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become
an actual or matured liability.
"Subsequent Closing Date" means the date on which all conditions
-----------------------
precedent set forth in Section 4.2 are satisfied or waived by all Banks.
"Subsidiary" of a Person means a corporation, partnership, joint
----------
venture, limited liability company or other business entity of which a
majority of the shares of Securities or other interests having ordinary
voting power for the election of directors or other governing body (other
than Securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.
"Synthetic Lease Obligations" means all monetary obligations of a
---------------------------
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations which do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such Person, would be
characterized as the Indebtedness of such Person (without regard to
accounting treatment).
"Taxes" means any and all present or future taxes, levies,
-----
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and Agent, respectively, taxes imposed on or measured by its
net income by the jurisdiction (or any political subdivision thereof) under
23
<PAGE>
the laws of which such Bank or Agent, as the case may be, is organized or
maintains a lending office.
"Term Borrowing" [Intentionally Omitted]
--------------
"Termination Value" means, in respect of any Derivative/FX Contract,
-----------------
after taking into account the effect of any legally enforceable netting
agreement relating to such Derivative/FX Contract, the termination value,
expressed in Dollars, as determined by Company; provided, however, that in
-------- -------
the event that two Banks determine that the mark-to-market value, expressed
in Dollars, for any Derivative/FX Contract, as determined based upon one or
more mid-market or other readily available quotations provided by any
recognized dealer in such Derivative/FX Contract, is greater than the
termination value for such Derivative/FX Contract determined by Company,
the Termination Value of such Derivative/FX Contract shall be the amount
determined by such Banks.
"Three Facility Commitment Reduction Fraction" means, as of any date
--------------------------------------------
of determination, a fraction, the numerator of which is the Aggregate
Commitment and the denominator of which is the sum of (a) the Aggregate
Commitment plus (b) the Aggregate 180 Day Commitment (as defined therein)
----
under the Amended and Restated 1999 180 Day Credit Agreement plus (c) the
----
Aggregate Commitment (as defined therein) under the 1997 Second Amended and
Restated Credit Agreement.
"Two Facility Commitment Reduction Fraction" means, as of any date of
------------------------------------------
determination, a fraction, the numerator of which is the Aggregate
Commitment and the denominator of which is the sum of (a) the Aggregate
Commitment plus (b) the Aggregate Commitment (as defined therein) under the
----
1997 Second Amended and Restated Credit Agreement.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
---
legislation) as in effect in any applicable jurisdiction.
"United States" and "U.S." each means the United States of America.
------------- ----
"Unpledged Foreign Subsidiaries" means Foreign Subsidiaries none of
------------------------------
the Capital Stock of which is pledged to Collateral Agent.
"Utilization Fee Day" has the meaning defined in Section 2.9(b).
-------------------
"Voting Trust Agreement" means the Voting Trust Agreement entered into
----------------------
as of April 15, 1996 by and among Robert D. Haas; Peter E. Haas, Sr.; Peter
E. Haas, Jr.; and F. Warren Hellman as the Voting Trustees and the
stockholders of LSAI Holding Corp. who are parties thereto.
"Voting Trustees" means the persons entitled to act as voting trustees
---------------
under the Voting Trust Agreement.
24
<PAGE>
1.2 Other Interpretive Provisions.
-----------------------------
(a) Defined Terms. Except as provided in Section 1.1, unless
-------------
otherwise specified herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. Terms
(including uncapitalized terms) not otherwise defined herein and that are
defined in the UCC of California shall have the meanings therein described.
(b) The Agreement. The words "hereof", "herein", "hereunder" and
-------------
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section and exhibit references are to this Agreement unless otherwise specified.
(c) Certain Common Terms.
--------------------
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(d) Performance; Time. Whenever any performance obligation hereunder
-----------------
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including". If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
(e) Contracts. Unless otherwise expressly provided herein, references
---------
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
(f) Laws. References to any statute or regulation are to be construed
----
as including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are for
--------
convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this
--------------------------
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are
25
<PAGE>
cumulative and must each be performed, except as expressly stated to the
contrary in this Agreement.
1.3 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed in accordance with GAAP,
consistently applied; except that, subject to Section 10.15, all financial
computations required under this Agreement shall be made in accordance with GAAP
as in effect on the Closing Date.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of Company. The fiscal quarters of Company end on the last
Sunday in February, May, August, and November of each year. Each fiscal year of
Company ends on the last Sunday in November of such year.
(c) References herein to "consolidated" and "consolidated basis" with
reference to Company are to Company and its Subsidiaries on a consolidated
basis.
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments; the Credit. Each Bank severally
--------------------------------
agrees, on the terms and conditions set forth herein, that all loans outstanding
on the Closing Date under the Existing Credit Agreement shall be deemed to be
Loans hereunder on the Closing Date and each Bank shall be deemed to have made a
Loan to Company in an amount equal to the product of the aggregate principal
amount of such outstanding loans times the percentage set forth opposite such
-----
Bank's name on Schedule 2.1 under the heading "Commitment Percentage" (such
------------
amount, as the same may be reduced pursuant to the terms of this Agreement or as
a result of one or more assignments under Section 10.8, the Bank's
"Commitment").
----------
2.2 Notes; Loan Accounts.
--------------------
(a) The Loans made by each Bank shall be evidenced by one or more
loan accounts or records maintained by such Bank in the ordinary course of
business. The loan accounts or records maintained by Agent and each Bank shall
be conclusive evidence, absent manifest error, of the amount of the Loans made
by Banks to Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of Company hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of any Bank made through Agent, the Loans made
by such Bank may be evidenced by one or more notes, as applicable ("Notes"),
instead of or in addition to loan accounts. Each such Note shall be in the form
of Exhibit II. Each such Bank shall endorse on the schedules annexed to its Note
----------
the date, amount, and maturity of each Loan made by it and the amount of each
payment of principal made by Company with respect thereto. Each such Bank is
irrevocably authorized by Company to endorse its Note and each Bank's record
shall be conclusive absent manifest error; provided, however, that the failure
-------- -------
of a Bank to
26
<PAGE>
make, or an error in making, a notation thereon with respect to any Loan shall
not limit or otherwise affect the obligations of Company hereunder or under any
such Note to such Bank.
2.3 Procedure for Borrowing. [Intentionally Omitted]
-----------------------
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) Company may upon irrevocable notice to Agent in accordance with
Section 2.4(b):
(i) elect to convert on any Business Day, any Base Rate Loans
(or any part thereof in an amount not less than $10,000,000 or that is in
an integral multiple of $1,000,000 in excess thereof) into Offshore Rate
Loans; or
(ii) elect to convert on any Interest Payment Date any Offshore
Rate Loans maturing on such Interest Payment Date (or any part thereof in
an amount not less than $10,000,000 or that is in an integral multiple of
$1,000,000 in excess thereof) into Base Rate Loans; or
(iii) elect to renew on any Interest Payment Date any Offshore
Rate Loans maturing on such Interest Payment Date (or any part thereof in
an amount not less than $10,000,000 or that is in an integral multiple of
$1,000,000 in excess thereof);
provided that if the Aggregate Commitment shall have been reduced to less than
- --------
$10,000,000, on and after such reduction the right of Company to elect to
continue such Loans as, and convert such Loans into, Offshore Rate Loans shall
terminate.
(b) Company shall deliver in writing (or by facsimile transmission
confirmed immediately by a telephone call or by a telephone call confirmed
immediately by a facsimile transmission), an irrevocable Notice of
Conversion/Continuation to be received by Agent not later than 9:00 a.m., San
Francisco, California time, at least three Business Days in advance of the
Conversion/Continuation Date, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the nature of the proposed conversion or continuation; and
(iv) with respect to Offshore Rate Loans, the duration of the
requested Interest Period.
(c) (i) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, Company has failed to select a new Interest Period to
be applicable to such Offshore Rate Loans, and if no Event of Default shall
then exist, Company shall be deemed to have elected to continue such
Offshore Rate Loans as Offshore Rate Loans with an Interest Period of one
month.
27
<PAGE>
(ii) If an Event of Default exists at the time any Interest
Period applicable to Offshore Rate Loans expires, Company shall be deemed
to have elected to convert Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/ Continuation (or
telephonic notice in lieu thereof), Agent will promptly notify each Bank
thereof, or, if no timely notice is provided, Agent will promptly notify each
Bank of the details of any automatic conversion. All conversions and
continuations shall be made pro rata according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given or
which are subject to automatic conversion held by each Bank.
2.5 Voluntary Prepayments.
---------------------
(a) Subject to Section 3.4, Company may (from time to time) ratably
prepay Loans in whole or in part in the minimum amount of $10,000,000 or any
integral multiple of $1,000,000 in excess thereof, upon notice to Agent given
not later than 9:00 a.m. San Francisco, California time:
(i) at least three Business Days' prior to the proposed date of
prepayment for Offshore Rate Loans; and
(ii) on the Business Day prior to the proposed date of
prepayment for Base Rate Loans.
Each such notice of prepayment shall specify the date and amount of such
prepayment and whether such prepayment is of Base Rate Loans or Offshore Rate
Loans, or any combination thereof. In the event that Company fails to so
specify, any voluntary prepayments of the Loans pursuant to this Section 2.5
shall be applied first to Base Rate Loans to the full amount thereof before
application to Offshore Rate Loans. Such notice shall not thereafter be
revocable by Company and Agent will promptly notify each Bank thereof and the
amount of such Bank's Commitment Percentage of such prepayment. If such notice
is given by Company, Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and the
amounts required pursuant to Section 3.4. Amounts prepaid may not be reborrowed.
(b) Notice to Agent under this Section shall be in writing, signed by
Company or may be by telephone notice promptly confirmed by notice sent by
facsimile transmission.
2.6 Mandatory Prepayments and Reductions of Aggregate Commitment. The
------------------------------------------------------------
Loans shall be prepaid and the Aggregate Commitment shall be permanently reduced
in the amounts and under the circumstances set forth below, all such payments to
be applied as set forth below or as more specifically provided in Section
2.6(j). Each prepayment required under this Section shall be subject to Section
3.4.
(a) Permitted Receivables Purchase Facility. No later than five
---------------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
proceeds in respect of a
28
<PAGE>
Permitted Receivables Purchase Facility, Company shall prepay the Loans and the
Aggregate Commitment shall be permanently reduced in an aggregate amount equal
to the product of the net proceeds received by Company or any of its
Subsidiaries from such Permitted Receivables Purchase Facility times the Two
-----
Facility Commitment Reduction Fraction.
(b) Equipment Financing Transactions. No later than (i) five Business
--------------------------------
Days following the receipt by Company or any of its Subsidiaries of any Net
Equipment Financing Proceeds in respect of any equipment not constituting
Collateral and (ii) the date of receipt by Company or any of its Subsidiaries of
any other Net Equipment Financing Proceeds, Company shall prepay the Loans and
the Aggregate Commitment shall be permanently reduced in an aggregate amount
equal to the product of such Net Equipment Financing Proceeds times the Three
-----
Facility Commitment Reduction Fraction.
(c) Real Estate Financing Transactions. No later than (i) five
----------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
Net Real Estate Financing Proceeds in respect of any real property not
constituting Collateral and (ii) the date of receipt by Company or any of its
Subsidiaries of any other Net Real Estate Financing Proceeds, Company shall
prepay the Loans and the Aggregate Commitment shall be permanently reduced in an
aggregate amount equal to the product of such Net Real Estate Financing Proceeds
times the Three Facility Commitment Reduction Fraction.
- -----
(d) Asset Dispositions. No later than (i) five Business Days
------------------
following the receipt by Company or any of its Subsidiaries of any Net Asset
Disposition Proceeds in respect to Asset Dispositions not involving Collateral
and (ii) the date of receipt by Company or any of its Subsidiaries of any Net
Asset Disposition Proceeds from the Pending IceHouse Disposition in excess of
$50,000,000 or any other Net Asset Disposition Proceeds, Company shall prepay
the Loans and the Aggregate Commitment shall be permanently reduced in an
aggregate amount equal to the product of such Net Asset Disposition Proceeds
times the Four Facility Commitment Reduction Fraction.
- -----
(e) Insurance. No later than two Business Days following the receipt
---------
by Company or any of its Subsidiaries of any Net Insurance Proceeds that are
required to be applied to prepay the Loans and reduce the Aggregate Commitment
pursuant to Section 6.6, Company shall prepay the Loans and the Aggregate
Commitment shall be permanently reduced in an aggregate amount equal to the
product of such Net Insurance Proceeds times the Four Facility Commitment
-----
Reduction Fraction.
(f) Excess Cash Flow. In the event that there shall be Consolidated
----------------
Excess Cash Flow for fiscal year 2000, Company shall, no later than 60 days
after the end of such fiscal year, prepay the Loans and the Aggregate Commitment
shall be permanently reduced in an aggregate amount equal to (i) 60% of such
Consolidated Excess Cash Flow minus voluntary commitment reductions under this
----
Agreement, the Bridge Credit Agreement, the Amended and Restated 1999 180 Day
Credit Agreement, and the 1997 Second Amended and Restated Credit Agreement made
during such fiscal year times (ii) the Four Facility Commitment Reduction
-----
Fraction.
29
<PAGE>
(g) Tax Refunds. No later than five Business Days following the
-----------
receipt by Company or any of its Subsidiaries of any proceeds in respect of any
federal tax refunds in respect of the 1999 fiscal year in excess of $70,000,000
in the aggregate, Company shall prepay the Loans and the Aggregate Commitment
shall be permanently reduced in an aggregate amount equal to the product of the
excess proceeds received times the Four Facility Commitment Reduction Fraction.
-----
(h) Capital Markets Transactions. No later than two Business Days
----------------------------
following the receipt by Company or any of its Subsidiaries of any Net
Securities Proceeds, Company shall prepay the Loans and the Aggregate Commitment
shall be permanently reduced in an aggregate amount equal to the product of such
Net Securities Proceeds times (i) until Net Securities Proceeds in an amount
-----
equal to $300,000,000 in the aggregate have been applied to reduce the Aggregate
Bridge Commitment, zero (0)% and (ii) thereafter, the Four Facility Commitment
Reduction Fraction.
(i) Calculations of Net Proceeds Amounts; Additional Prepayments and
----------------------------------------------------------------
Reductions Based on Subsequent Calculations. Concurrently with any prepayment of
- -------------------------------------------
the Loans pursuant to this Section 2.6, Company shall deliver to Agent an
officer's certificate demonstrating the calculation of the amount of the
applicable proceeds or Consolidated Excess Cash Flow, as the case may be, that
gave rise to such prepayment. In the event that Company shall subsequently
determine that the actual amount was greater than the amount set forth in such
officer's certificate, Company shall promptly make an additional prepayment of
the Loans (and the Aggregate Commitment shall be permanently reduced in
accordance with the applicable subsection of this Section 2.6) in an amount
equal to the amount of such excess, and Company shall concurrently therewith
deliver to Agent an officer's certificate demonstrating the derivation of the
additional amount resulting in such excess.
(j) Application of Prepayments. Any mandatory prepayments of the
--------------------------
Loans pursuant to this Section 2.6 shall be applied first to Base Rate Loans to
the full extent thereof before application to Offshore Rate Loans and shall be
in addition to, and shall not be applied to reduce, the scheduled Commitment
reductions set forth in Section 2.7.
2.7 Repayment; Scheduled Reductions of Aggregate Commitment. Company shall
-------------------------------------------------------
make principal payments on the Loans in installments on the dates set forth
below, and the Commitments shall be permanently reduced on the dates set forth
below, in an amount equal to the product of the correlative amount indicated
times the Three Facility Commitment Reduction Fraction:
- -----
Date Scheduled Reduction
---- -------------------
May 25, 2000 $ 50,000,000
August 24, 2000 $ 50,000,000
November 22, 2000 $100,000,000
February 22, 2001 $ 50,000,000
May 24, 2001 $ 50,000,000
August 23, 2001 $100,000,000
30
<PAGE>
; provided that Company shall repay the principal amount of the outstanding
--------
Loans on the Maturity Date.
2.8 Interest.
--------
(a) Subject to Section 2.8(d), each Loan shall bear interest on the
outstanding principal amount thereof (before and after default, before and after
maturity, before and after judgment, and before and after the commencement of
any proceeding under any Debtor Relief Laws) from the Closing Date until it
becomes due at a rate per annum equal to the Offshore Rate or the Base Rate, as
the case may be, plus the Applicable Margin (the "Applicable Margin"). The
---- -----------------
initial Applicable Margin, subject to adjustment as provided below, shall be a
rate per annum equal to 3.25% for Offshore Rate Loans and 2.00% for Base Rate
Loans. If Company has not completed (after the date hereof) one or more Capital
Markets Transactions and applied at least $300,000,000 of Net Securities
Proceeds therefrom in the aggregate to reduce the Aggregate Bridge Commitment on
or prior to January 31, 2001, then effective February 1, 2001, the Applicable
Margin shall increase to 4.25% for Offshore Rate Loans and 3.00% for Base Rate
Loans. In addition, the Applicable Margin shall increase by an additional 0.25%
at the beginning of each subsequent three-month period, commencing May 1, 2001,
unless and until Company shall have completed (after the date hereof) one or
more Capital Markets Transactions and applied at least $300,000,000 of Net
Securities Proceeds therefrom in the aggregate to reduce the Aggregate Bridge
Commitment.
(b) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Loans pursuant to Section 2.5, 2.6 or 2.7 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during any period when principal of the Loans is due and payable, interest shall
be payable on request for such payment by the holders of the Loans.
(c) While any Event of Default exists, Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law and including post-petition interest in any proceeding under any Debtor
Relief Law) on the principal amount of all Loans, at a rate per annum equal to
the Default Rate. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be payable upon demand.
(d) Anything herein to the contrary notwithstanding, the obligations
of Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest which may
be lawfully contracted for, charged or received by such Bank, and in such event
Company shall pay such Bank interest at the lower of (i) the highest rate
permitted by applicable law and (ii) the rates required by this Agreement.
31
<PAGE>
2.9 Fees. In addition to fees due under other provisions of this
----
Agreement:
(a) Facility Fee. Company shall pay to Agent for the account of each
------------
Bank pro rata according to its Commitment Percentage, a facility fee equal to
0.25% times the actual daily amount of its Commitment. The facility fee shall
accrue at all times from the Closing Date until the Maturity Date, shall be
computed on a daily basis, and shall be payable in arrears (i) on the fifth
Business Day after the last day of each fiscal quarter, commencing on the first
such day after the Closing Date and (ii) on the Maturity Date.
(b) Utilization Fee. Company shall pay to Agent for the account of
---------------
each Bank pro rata according to its Commitment Percentage, a utilization fee
equal to 0.25% times the actual daily aggregate principal amount of such Bank's
Loans then outstanding hereunder. The utilization fee shall accrue at all times
from the Closing Date until the Maturity Date, shall be computed on a daily
basis, and shall be payable in arrears (i) on the last Business Day of each
calendar quarter, commencing on the first such day after the Closing Date, and
(ii) on the Maturity Date.
(c) Amendment Fee. On the Closing Date, Company shall pay to Agent
-------------
for the account of each Bank that approves the execution of this Agreement pro
rata according to its Commitment Percentage, an amendment fee in an amount equal
to 0.50% times the Aggregate Commitment. If Company has not completed (after the
-----
date hereof) one or more Capital Markets Transactions and applied at least
$300,000,000 of Net Securities Proceeds therefrom in the aggregate to reduce the
Aggregate Bridge Commitment on or prior to January 31, 2001, on February 1,
2001, Company shall pay to Agent for the account of each Bank pro rata according
to its Commitment Percentage, an additional amendment fee in an amount equal to
2.00% times the Aggregate Commitment.
-----
(d) Agency Fee. Company shall pay to Agent an agency fee in such
----------
amounts and at such times as set forth in a separate fee letter agreement
between Company and Agent. The agency fee is for services to be performed by
Agent acting as Agent and is fully earned on the date paid. The agency fee paid
to Agent is solely for its account and is nonrefundable.
(e) Collateral Agency Fee. Company shall pay to Collateral Agent a
---------------------
collateral agency fee in such amounts and at such times as set forth in a
separate fee letter agreement between Company and Collateral Agent. The
collateral agency fee is for services to be performed by Collateral Agent acting
as Collateral Agent and is fully earned on the date paid. The collateral agency
fee paid to Collateral Agent is solely for its accounts and is nonrefundable.
(f) Other Fees. Company shall pay Agent for its own account and/or
----------
the account of each Co-Agent such fees in such amounts and at such times as set
forth in separate fee letter agreements between Company and Agent.
2.10 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by Bank of America's "prime rate" shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed (which results in more
32
<PAGE>
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
(b) Agent will notify Company and Banks of each determination of an
Offshore Rate. Any failure by Agent to give such notice and any failure by
Company and any Bank to receive such notice shall not relieve Company of any
obligation to pay interest or provide the basis for any claim against Agent.
Agent shall, upon request made by Company or any Bank from time to time, advise
such Person(s) of the relevant applicable Offshore Rate(s).
(c) Each determination of an interest rate by Agent pursuant to any
provision of this Agreement shall be conclusive and binding on Company and Banks
in the absence of manifest error.
2.11 Payments by the Company.
-----------------------
(a) All payments (including prepayments) to be made by the Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall be made in Dollars to the
Agent for the ratable account of the Banks at the Agent's Payment Office. Such
payments shall be made in immediately available funds and no later than 11:00
a.m., San Francisco, California time, on the date specified herein. The Agent
will promptly distribute to each Bank the amount of its Commitment Percentage
(or other applicable share as expressly provided herein) of such principal,
interest, fees or other amounts, in like funds as received. Any payment which is
received by the Agent later than 11:00 a.m., San Francisco, California time,
shall be deemed to have been received on the immediately succeeding Business Day
and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be, subject to the provisions
set forth in the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks hereunder from the
Company that the Company will not make such payment in full, the Agent may
assume that the Company has made such payment in full to the Agent on such date
and the Agent may (but shall not be so required), in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent the Company shall
not have made such payment in full to the Agent, each Bank shall repay to the
Agent, on request made by the Agent, such amount distributed to such Bank,
together with interest at the Federal Funds Rate for and determined as of each
day during the period from and including each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent.
2.12 Payments by the Banks to the Agent.
----------------------------------
(a) Unless the Agent shall have received notice from a Bank on the
Closing Date or, with respect to each Borrowing after the Closing Date, at least
one Business Day prior to the date of any proposed Committed Borrowing or the
Term Borrowing, as applicable (but
33
<PAGE>
prior to 10:00 a.m. San Francisco, California time, on the same day with respect
to a Borrowing consisting of Base Rate Loans) that such Bank will not make
available to the Agent for the account of the Company the amount of that Bank's
Commitment Percentage of the Committed Borrowing, or the Term Borrowing, as
applicable, the Agent may assume that each Bank has made such amount available
to the Agent on the Borrowing Date and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Bank shall not have
made its full amount available to the Agent and the Agent in such circumstances
has made available to the Company such amount, that Bank shall on the next
Business Day following such Borrowing Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for and determined as of
each day during such period.
A certificate of the Agent submitted to any Bank with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to the Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the next Business Day
following such Borrowing Date, the Agent shall notify the Company of such
failure to fund and, upon request for payment made by the Agent, the Company
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a Loan
on such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.13 Sharing of Payments, etc. If, other than as expressly contemplated
-------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in an amount in excess of its Commitment Percentage of
payments on account of the Loans obtained by all the Banks, such Bank shall
forthwith (a) notify the Agent of such fact, and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's Commitment Percentage (according to the proportion of (i) the amount of
such paying Bank's required repayment to (ii) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank pursuant to this
Section may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off but subject to Section 10.10) with
respect to such participation as fully as if such Bank were the direct creditor
of the Company in the amount of such participation. The Agent will keep records
(which shall be conclusive and binding in the absence of manifest error), of
participations purchased pursuant to this Section and will in each case notify
the Banks following any such purchases and repayments.
34
<PAGE>
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
3.1 Taxes.
-----
(a) Any and all payments by Company to each Bank or Agent under this
Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, Company shall pay
all Other Taxes.
(b) If Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank, or Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Bank or Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained
had no such deductions or withholdings been made;
(ii) Company shall make such deductions and withholdings;
(iii) Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) Company shall also pay to each Bank or Agent for the
account of such Bank, at the time interest is paid, Further Taxes in
the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed.
(c) Company agrees to indemnify and hold harmless each Bank and
Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by Company of
Taxes, Other Taxes or Further Taxes, Company shall furnish to each Bank or Agent
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to such Bank or Agent.
(e) Company will not be required to pay any additional amounts in
respect of Section 3.1(b) to any Bank or Agent:
35
<PAGE>
(i) if such Bank shall have delivered to Company a Form 1001
(or any successor form) pursuant to Section 9.11(a)(i), and such Bank
shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments
by Company hereunder for any reason other than a change in United
States law or regulations or any applicable tax treaty or regulations
or in the official interpretation of any such law, treaty or
regulations by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 1001 (or any
successor form); or
(ii) if such Bank shall have delivered to Company a Form 4224
(or any successor form) pursuant to Section 9.11(a)(ii), and such Bank
shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments
by Company hereunder for any reason other than a change in United
States law or regulations or in the official interpretation of such law
or regulations by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224 (or any
successor form).
(f) If, at any time, Company requests any Bank to deliver any forms
or other documentation pursuant to Section 9.11(a)(iii), then Company shall, on
demand of such Bank through Agent, reimburse such Bank for any costs and
expenses (including Professional Costs) reasonably incurred by such Bank in the
preparation or delivery of such forms or other documentation.
(g) If Company is required to pay additional amounts to any Bank or
Agent pursuant to this Section 3.1, then such Bank or Agent, as the case may be,
shall use its reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office or take any other
reasonable action so as to eliminate any such additional payment by Company
which may thereafter accrue if such change, in the reasonable judgment of such
Bank, is not otherwise materially disadvantageous to such Bank or Agent.
3.2 Illegality.
----------
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make Offshore Rate Loans, then,
on notice thereof by the Bank to Company through Agent, any obligation of that
Bank to make Offshore Rate Loans shall be suspended until the Bank notifies
Agent and Company that the circumstances giving rise to such determination no
longer exist.
(b) If a Bank determines that it is unlawful for such Bank to
maintain any Offshore Rate Loan, Company shall, upon receipt of notice of such
fact and demand from such Bank (with a copy to Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 3.4, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to
36
<PAGE>
maintain such Offshore Rate Loans. If Company is required to so prepay any
Offshore Rate Loan, then concurrently with such prepayment, Company shall borrow
from the affected Bank, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, Company may elect, by giving notice
to the Bank through Agent that all Loans which would otherwise be made by the
Bank as Offshore Rate Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Bank determines that, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation, or (ii)
the compliance by that Bank with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans in an amount deemed material by
such Bank, then Company shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to Agent), pay to Agent for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation; affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased in an amount
deemed material by such Bank as a consequence of its loans, credits or
obligations under this Agreement, then, upon request of such Bank (with a copy
to Agent), Company shall immediately pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
3.4 Funding Losses. Company agrees to reimburse each Bank and to hold
--------------
each Bank harmless from any loss, cost or expense which the Bank may sustain or
incur as a consequence of:
(a) any failure of Company to make, on a timely basis, any payment
or prepayment of principal of any Offshore Rate Loan (including payments made
after any acceleration thereof);
(b) any failure of Company to continue or convert a Loan after
Company has given (or are deemed to have given) a Notice of
Conversion/Continuation;
(c) any failure of Company to make any prepayment after Company has
given a notice in accordance with Section 2.5;
37
<PAGE>
(d) any prepayment of an Offshore Rate Loan on a day which is not
the last day of the Interest Period with respect thereto; or
(e) any conversion pursuant to Section 2.4 of any Offshore Rate Loan
to a Base Rate Loan on a day that is not the last day of the relevant Interest
Period; or including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained.
3.5 Inability to Determine Rates. If Agent or Majority Banks shall have
----------------------------
determined that for any reason adequate and reasonable means do not exist for
ascertaining the Offshore Base Rate for any requested Interest Period with
respect to a proposed Offshore Rate Loan or that the Offshore Base Rate or the
Offshore Rate applicable pursuant to Section 2.8 for any requested Interest
Period with respect to a proposed Offshore Rate Loan does not adequately and
fairly reflect the cost to Banks of funding such Loan, Agent will forthwith give
notice of such determination to Company and each Bank. Thereafter, the
obligation of Banks to make or maintain Offshore Rate Loans hereunder shall be
suspended until Agent upon the instruction of Majority Banks revokes such notice
in writing. Upon receipt of such notice, Company may revoke any Notice of
Conversion/Continuation then submitted by Company. If Company does not revoke
such notice, Banks shall make, convert or continue the Loans, as proposed by
Company, in the amount specified in the applicable notice submitted by Company,
but such Loans shall be converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
3.6 Reserves on Offshore Rate Loans. Company shall pay to each Bank, as
-------------------------------
long as such Bank shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to actual costs of such reserves allocated to such Loan by the
Bank (as determined by the Bank in good faith, which determination shall be
conclusive) (without duplication for such costs included in the computation of
the Offshore Rate), payable on each date on which interest is payable on such
Loan provided Company shall have received at least 15 days' prior written notice
--------
(with a copy to Agent) of such additional sums from the Bank. Each such notice
from a Bank shall set forth in reasonable detail (as determined by the Bank) the
basis for such additional sums. If a Bank fails to give notice 15 days prior to
the relevant Interest Payment Date, such additional sums shall be payable 15
days from receipt of such notice.
3.7 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation pursuant to this Article shall deliver to Company (with a copy to
Agent) a certificate setting forth in reasonable detail the amount payable to
the Bank hereunder and such certificate shall be conclusive and binding on
Company in the absence of manifest error. Each certificate submitted under this
Section may not claim reimbursement or compensation for a period earlier than 30
days prior to the date of such certificate unless interpretation of the law or
regulation or the guideline or request in question is retroactive in effect in
which case the certificate can cover such retroactive period.
3.8 Substitution of Banks. Upon receipt by Company from any Bank of a
---------------------
claim for compensation under Section 3.1, 3.2, 3.3 or 3.6 (each such Bank an
"Affected Bank"), Company
-------------
38
<PAGE>
may: (a) request the Affected Bank to use its reasonable efforts without
incurring any material expense to obtain a Replacement Bank; (b) request one or
more of the other Banks to acquire and assume all or part of such Affected
Bank's Loans and Commitment; or (c) designate a Replacement Bank. Any assignment
to a Replacement Bank pursuant to this Section shall be pursuant to an
Assignment and Acceptance in compliance with Section 10.8 including payment of
the processing fee to Agent (except to the extent that there is any conflict
between the provisions of this Section and Section 10.8, in which case the
provisions of this Section shall control). If Bank of America is the Affected
Bank, it may, at its sole option, resign as Agent or Collateral Agent.
Notwithstanding the provisions of Section 9.9 or 9.10, any resignation as Agent
or Collateral Agent by Bank of America under this Section shall take effect upon
delivery of Bank of America's written resignation to Company and Banks without
necessity of further action or lapse of time.
3.9 Survival. The agreements and obligations of Company in this Article
--------
shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1 Condition to Closing. The effectiveness of this Agreement is subject
--------------------
to the following conditions:
(a) Agent shall have received, on or before the Closing Date, all of
the following documents, in form and substance reasonably satisfactory to Agent
and Majority Banks:
(i) Loan Documents. Originals of the Loan Documents to which
--------------
Company is a party executed by Company.
(ii) Organization Documents. Copies of the Organization
----------------------
Documents of each Borrower Party, certified by the Secretary of State
of its jurisdiction of organization or, if such document is of a type
that may not be so certified, certified by the secretary or similar
officer of the applicable Borrower Party, together with a good standing
certificate from the Secretary of State of its jurisdiction of
organization and each other state in which such Person is qualified to
do business and, to the extent generally available, a certificate or
other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each dated a recent date prior to the
Closing Date.
(iii) Resolutions; Incumbency.
-----------------------
(A) Copies of the resolutions of the board of directors
of each Borrower Party (or an authorized committee thereof) approving
and authorizing the execution, delivery, and performance by such
Borrower Party of the Loan Documents to which such Borrower Party is
a party, certified as of the Closing Date by the Secretary or an
Assistant Secretary of such Borrower Party.
39
<PAGE>
(B) A certificate of the Secretary or an Assistant
Secretary of each Borrower Party certifying, as of the Closing Date,
the names and true signatures of the officers of such Borrower Party
authorized to execute and deliver, as applicable, this Agreement, and
all other Loan Documents to be delivered hereunder.
(iv) Opinions. Opinions of Wachtell, Lipton, Rosen, & Katz,
--------
special counsel to Company, Albert F. Moreno Esq., Senior Vice President
and General Counsel of Company, and Legal Strategies Group, dated the
Closing Date, and addressed to Agent and Banks, in form and substance
reasonably satisfactory to Banks.
(v) Closing Certificates from Company. A certificate from
---------------------------------
the president, the chief financial officer, or the treasurer of Company,
dated as of the Closing Date, substantially in the form of Exhibit IV.
----------
(vi) No Material Adverse Effect. There has occurred since
--------------------------
November 28, 1999, as reflected in the draft consolidated financial
statements delivered on January 24, 2000 and the accompanying draft notes,
no event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(vii) Security Interests in Collateral. Evidence satisfactory
--------------------------------
to Agent that Borrower Parties shall have taken or caused to be taken all
such actions, executed and delivered or caused to be executed and delivered
all such agreements, documents and instruments, and made or caused to be
made all such filings and recordings (other than the filing or recording of
items described in subsections (B), (C) and (D) below) that may be
necessary or, in the opinion of Agent, desirable in order to create in
favor of Agent, for the benefit of Banks, a valid and (upon such filing and
recording) perfected Lien on the Collateral. Such actions shall include the
following:
(A) Stock Certificates and Instruments. Delivery to
----------------------------------
Agent of (1) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Agent) representing
all Capital Stock pledged pursuant to the Pledge and Security
Agreement and (2) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Agent)
evidencing any Collateral;
(B) Lien Searches and UCC Termination Statements.
--------------------------------------------
Delivery to Agent of (1) the results of a recent search, by a Person
satisfactory to Agent, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have
been made with respect to any personal or mixed property of any
Borrower Party, together with copies of all such filings disclosed by
such search, and (2) UCC termination statements duly executed by all
applicable Persons for filing in all applicable jurisdictions as may
be necessary to terminate any effective UCC financing statements or
fixture filings disclosed in such search (other than any such
financing statements or fixture filings in respect
40
<PAGE>
of Liens permitted to remain outstanding pursuant to the terms of this
Agreement);
(C) UCC Financing Statements and Fixture Filings. Delivery to
--------------------------------------------
Agent of UCC financing statements and, where appropriate, fixture
filings, duly executed by each applicable Borrower Party with respect
to all personal and mixed property Collateral of such Borrower Party,
for filing in all jurisdictions as may be necessary or, in the opinion
of Agent, desirable to perfect the security interests created in such
Collateral pursuant to the Collateral Documents; and
(D) Intellectual Property Filings. Delivery to Agent of all
-----------------------------
cover sheets or other documents or instruments required to be filed with
the United States Patent and Trademark Office in order to create or perfect
Liens in respect of any IP Collateral.
(viii) Foreign Subsidiaries. Copies of the Organization Documents of
--------------------
each Pledged Foreign Subsidiary.
(ix) Financial Statements. A copy of a draft of the unaudited (A)
--------------------
consolidated and consolidating balance sheets of Company and its Subsidiaries as
at the end of the fiscal year ended November 28, 1999, (B) related consolidated
and consolidating statements of income of Company and its Subsidiaries for such
fiscal year, and (C) related consolidated statement of cash flows of Company and
its Subsidiaries for such fiscal year.
(x) Evidence of Insurance. A certificate from Company's insurance
--------------------- -----------
broker or other evidence satisfactory to Agent that all insurance required to be
maintained pursuant to Sections 5.16 and 6.6 is in full force and effect.
(xi) Financial Plan. A consolidated plan and financial forecast for
--------------
fiscal years 2000 and 2001 including (A) forecasted consolidated balance sheets
and forecasted consolidated statements of income and cash flows of Company and
its Subsidiaries for each such fiscal year and for each month of fiscal year
2000 and each quarter of fiscal year 2001, together with a pro forma calculation
of compliance with Sections 7.6, 7.7 and 7.8 for each quarter of each such
fiscal year, and (B) such other information as Agent may reasonably request.
(xii) Intercreditor Agreement. Executed copies of the Intercreditor
-----------------------
Agreement.
(xiii) Other Credit Facilities. Executed copies of the Bridge Credit
-----------------------
Agreement, the Amended and Restated 1999 180 Day Credit Agreement, and the 1997
Second Amended and Restated Credit Agreement, together with evidence
satisfactory to Agent that all conditions precedent to the effectiveness of such
agreements have been satisfied.
(xiv) Other Documents. Such other approvals, opinions, documents or
---------------
materials as Agent or any Bank may reasonably request.
41
<PAGE>
(b) Representations and Warranties. The representations and
------------------------------
warranties made by Company herein, or which are contained in any certificate,
document or financial or other statement furnished at any time under or in
connection herewith or therewith, shall be correct on and as of the Closing
Date.
(c) Existing Receivables Facility. On the Closing Date, LSFLLC shall
-----------------------------
have (i) repurchased all accounts receivable sold under the Existing Receivables
Purchase Agreement, (ii) terminated any commitments to purchase any accounts
receivable or make other extensions of credit thereunder, and (iii) delivered to
Agent all documents or instruments necessary to assign to LSFLLC all financing
statements filed in respect of transactions under the Existing Receivables
Purchase Agreement. In addition, the Levi Strauss Receivables Transfer Agreement
dated as of April 28, 1999 among Company, Levi Strauss Financial Center
Corporation and Levi Strauss Funding Corp. shall have been terminated.
(d) Payment of Fees. On the Closing Date, Agent shall have received
---------------
evidence of payment by Company of all accrued and unpaid fees, costs and
expenses to the extent then due and payable on the Closing Date pursuant to the
terms of this Agreement, together with Professional Costs of Bank of America, to
the extent invoiced prior to or on the Closing Date; including any such costs,
fees and expenses arising under or referenced in Sections 2.9 and 10.4
(e) LSFLLC. LSFLLC shall have entered into a Receivables Transfer
------
Agreement with Levi Strauss Financial Center Corporation similar to the
Receivables Transfer Agreement between Levi Strauss Financial Center Corporation
and Levi Strauss Funding Corp. and Agent shall have received duly executed UCC
financing statements for filing in all appropriate jurisdictions.
4.2 Conditions Subsequent. No later than the day following the Closing
---------------------
Date, Agent shall have received all of the following documents, in form and
substance satisfactory to Agent and Majority Banks:
(a) Loan Documents. Originals of the Guaranty and the Pledge and
--------------
Security Agreement executed by all Material Domestic Subsidiaries; and
(b) Opinions. An opinion of Wachtell, Lipton, Rosen & Katz, special
--------
counsel to Company, and Albert F. Moreno, Esq., Senior Vice President and
General Counsel of Company, dated the Subsequent Closing Date, addressed to
Agent and Banks, in form and substance reasonably satisfactory to Banks.
42
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Company represents and warrants to Agent and each Bank that:
5.1 Organization, Powers, Good Standing, Business, Ownership of
-----------------------------------------------------------
Subsidiaries and Capitalization.
- -------------------------------
(a) Organization and Powers. Each Borrower Party is a corporation
-----------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1(a) and has all
---------------
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to enter
into each Loan Document, to issue the Notes (in the case of Company) and to
carry out the transactions contemplated hereby and thereby.
(b) Good Standing. Each Borrower Party is duly qualified to do
-------------
business and is in good standing wherever necessary to carry on its respective
present business and operations, except in jurisdictions in which the failure to
be so qualified or to be in good standing has not had and will not have a
Material Adverse Effect.
(c) Conduct of Business. Company and its Subsidiaries, considered
-------------------
together, are engaged only in businesses related or incidental to the
manufacture and sale of clothing and accessories and the LOS/DOS Business.
(d) Common Stock of Company. All of the issued and outstanding
-----------------------
shares of Capital Stock of Company and each of its Subsidiaries have been duly
and validly issued and are fully paid and non-assessable.
(e) Restricted Subsidiaries. As of the Closing Date, the only
-----------------------
Restricted Subsidiaries are those listed on Schedule 5.1(e).
---------------
(f) Organizational Structure. As of the Closing Date, the
------------------------
organizational structure of Company and its Subsidiaries is set forth on
Schedule 5.1(f).
- ---------------
(g) Material Subsidiaries. As of the Closing Date, all Material
---------------------
Subsidiaries are listed on Schedule 5.1(g). As of the end of each fiscal
---------------
quarter, the aggregate gross revenues of the Subsidiaries of Company not
constituting Material Subsidiaries for the preceding four fiscal quarter period
shall not be more than 1% of the aggregate gross revenues of Company and its
Subsidiaries on a consolidated basis for such period.
5.2 Authorization of Borrowing, etc.
--------------------------------
(a) Authorization of Borrowing. The execution, delivery and
--------------------------
performance by each Borrower Party of each Loan Document to which it is a party
and the issuance, delivery and payment of the Notes by Company as contemplated
herein have been duly authorized by all necessary corporate action by such
Borrower Party. Each of the Loan Documents (other than the Notes) to which any
Borrower Party is a party has been duly executed and delivered by such
43
<PAGE>
Borrower Party, and the Notes, when executed and delivered, will be duly
executed and delivered by Company.
(b) No Conflict. The execution, delivery and performance by each
-----------
Borrower Party of each Loan Document to which it is a party and the issuance,
delivery and performance of the Notes by Company do not and will not (i) violate
any Borrower Party's Organization Documents or any order, judgment or decree of
any court or other Governmental Authority binding on any Borrower Party, (ii)
conflict with, result in a breach of, constitute a default under, or require the
termination of, any Contractual Obligation of any Borrower Party, except where
such conflicts, breaches, defaults and terminations, in the aggregate, would not
have a Material Adverse Effect, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any of the properties or
assets of any Borrower Party (other than pursuant to the Collateral Documents),
or (iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of any Borrower Party except for such
approvals or consents which will be obtained on or before the Closing Date or
where the failure to obtain such approvals and consents would not, in the
aggregate, have a Material Adverse Effect.
(c) Governmental Consents. The execution, delivery and performance
---------------------
by Borrower Parties of the Loan Documents, the application of the proceeds of
the Loans and the issuance, delivery and performance of the Notes by Company do
not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any Governmental Authority except
actions which are required due to a change in applicable law after the date
hereof and which have been or will be duly taken within the time period
prescribed by any such law.
(d) Binding Obligation. Each of the Loan Documents (other than the
------------------
Notes) to which any Borrower Party is a party is, and the Notes, when executed
and delivered, will be, the legally valid and binding obligations of such
Borrower Party, enforceable against such Borrower Party in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability, whether
enforcement is sought in a proceeding at law or in equity.
5.3 Financial Condition. On January 24, 2000, Company delivered to Agent
-------------------
a draft of its unaudited financial statements for its fiscal year ending
November 28, 1999 and the accompanying draft notes. The foregoing financial
statements were prepared in conformity with GAAP, and fairly present, in all
material respects, the consolidated financial position of Company and its
Subsidiaries as of the date thereof and the consolidated results of operations
and cash flows of Company and its Subsidiaries for the period covered thereby,
subject, to changes resulting from audit and normal year-end adjustments. As of
the date of this Agreement, Company and its Subsidiaries, taken as a whole, have
no material contingent obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in the unaudited financial statements for its fiscal year ending
November 28, 1999, the notes thereto, or the most recent financial statements
delivered pursuant to Section 6.1 (if any), and which is required by GAAP to be
reflected therein. Since November 28, 1999, there has been no event or
circumstance which has a Material Adverse Effect.
44
<PAGE>
5.4 Title to Properties; Liens. Each of Company and its Subsidiaries has
--------------------------
good, sufficient and legal title to all of its respective properties and assets
reflected in the balance sheets referred to in Section 5.3 or in the most recent
financial statements delivered pursuant to Section 6.1 (if any), except for
assets acquired or disposed of in the ordinary course of business since the date
of such balance sheet and assets disposed of where such disposition would not be
prohibited by Sections 7.3 and 7.4 and except for those imperfections of title
which would not in the aggregate have a Material Adverse Effect. Except as
permitted under Section 7.2, all such properties and assets are free and clear
of Liens. As of the Closing Date, the only Principal Properties are those listed
on Schedule 5.4. As of the Closing Date, all domestic real property that is
------------
owned or leased by Company and its Subsidiaries is listed on Schedule 5.4.
------------
5.5 Litigation; Adverse Facts. Except as to any confidential governmental
-------------------------
proceeding of which Borrower Parties are unaware, there is no action, suit,
proceeding, claim or dispute (whether or not purportedly on behalf of Company or
any of its Subsidiaries) at law or in equity or before or by any Governmental
Authority, pending or, to the knowledge of any Borrower Party, threatened in
writing against or affecting Company or any of its Subsidiaries or any property
of Company or any of its Subsidiaries, which any Borrower Party reasonably
expects to (a) result in any Material Adverse Effect, or (b) materially and
adversely affect the ability of any Borrower Party to perform the Obligations or
the ability of Banks to enforce the Obligations. Neither Company nor any of its
Subsidiaries is (i) in violation of any applicable Requirement of Law which (as
to all such violations in the aggregate) would have a Material Adverse Effect,
or (ii) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any Governmental Authority, domestic
or foreign, which (as to all such matters in the aggregate) would have a
Material Adverse Effect. There is no action, suit or proceeding pending or, to
the knowledge of any Borrower Party, threatened in writing against or affecting
Company or any of its Subsidiaries which challenges the validity or the
enforceability of this Agreement, the Notes or the other Loan Documents.
5.6 Payment of Taxes. All federal and state tax returns and reports of
----------------
Company and each of its Subsidiaries required to be filed by such Person, where
the failure to file such returns or reports would have a Material Adverse
Effect, have been timely filed, and all taxes, assessments, fees and other
governmental charges upon such Persons and upon their respective properties,
assets, income and franchises which are due and payable, where the failure to
pay such amounts when due and payable would in the aggregate have a Material
Adverse Effect, have been paid when due and payable. No Borrower Party knows of
any proposed tax assessment against Company or any of its Subsidiaries that
would have a Material Adverse Effect which is not being actively contested in
good faith by the applicable corporation to the extent affected thereby (and as
to which any provision therefor required pursuant to Section 6.5 has been made).
5.7 Materially Adverse Agreements; Performance.
------------------------------------------
(a) Agreements. Neither Company nor any of its Subsidiaries is a
----------
party to or subject to any material agreement or instrument or charter or other
internal restriction which (in the aggregate as to all such matters) would have
a Material Adverse Effect.
45
<PAGE>
(b) Performance. Neither Company nor any of its Subsidiaries is in
-----------
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation of Company or
any of its Subsidiaries, nor will any default result from the consummation of
this Agreement or any of the other Loan Documents, and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or indirect, of such
default or defaults, if any, would not have a Material Adverse Effect.
5.8 Governmental Regulation. Neither Company nor any of its Material
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, any state public utilities code or to any federal or state
statute or regulation limiting its ability to incur Indebtedness for money
borrowed.
5.9 ERISA Compliance. Except as specifically disclosed in Schedule 5.9:
---------------- ------------
(a) And except as would not have a Material Adverse Effect, each
Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of any Borrower Party, nothing has
occurred which would cause the loss of such qualification. Company and each
ERISA Affiliate have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the best knowledge of any Borrower
Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event that requires notice to be given to the PBGC
has occurred or is reasonably expected to occur; (ii) no Pension Plan has a
Funded Current Liability Percentage of less than 90%; (iii) neither Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); and (iv) neither Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan.
5.10 Environmental Matters. Company and each of its Subsidiaries conducts
---------------------
in the ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business, operations
and properties, and as a result thereof each Borrower Party has reasonably
concluded that, except as specifically disclosed in Schedule 5.10,
-------------
46
<PAGE>
such Environmental Laws and Environmental Claims are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect.
5.11 Compliance With Laws. Each of Company and its Subsidiaries is in
--------------------
compliance with all Requirements of Law applicable to their properties, assets
and business where the failure to so comply would (as to all such failures to
comply in the aggregate) have a Material Adverse Effect. There are no
proceedings pending or, to the knowledge of any Borrower Party, threatened in
writing, to terminate or modify any license, permit or other approval issued by
a Governmental Authority, the termination or modification of which (in the
aggregate as to all such matters) would have a Material Adverse Effect.
5.12 Regulation U. None of Company nor any of its Subsidiaries is engaged
------------
principally, nor as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. No
part of the proceeds of the Loans will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. No part of the proceeds of the Loans will be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X of the Federal Reserve Board.
5.13 Disclosure. No representation or warranty of any Borrower Party
----------
contained in this Agreement or any other document, certificate or written
statement furnished to Agent or any Bank by any Borrower Party for use in
connection with any transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits to state or will omit
to state a material fact known to such Borrower Party necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
5.14 Matters Relating to Collateral.
------------------------------
(a) The execution and delivery of the Collateral Documents by
Borrower Parties, together with (i) the actions taken on or prior to the date
hereof pursuant to Sections 4.1(a)(vii) and 4.1(a)(viii), (ii) the actions taken
pursuant to Sections 6.9 and 6.11, and (iii) the delivery to Agent of any
Pledged Collateral not delivered to Agent at the time of execution and delivery
of the applicable Collateral Document (all of which Pledged Collateral has been
so delivered) are effective to create in favor of Agent for the benefit of
Banks, as security for the respective Secured Obligations (as defined in the
applicable Collateral Document in respect of any Collateral), a valid and
perfected Lien on all of the Collateral, a security interest in which may be
perfected by filing in the United States or possession, and all filings and
other actions necessary or desirable to perfect and maintain the perfection of
such Liens have been duly made or taken and remain in full force and effect,
other than the filing of any UCC financing statements delivered to Agent for
filing (but not yet filed) and the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of
Agent.
(b) No authorization, approval or other action by, and no notice to
or filing with, any Government Authority in the United States is required for
either (i) the pledge or grant by any Borrower Party of the Liens purported to
be created in favor of Agent pursuant to any of the Collateral Documents, or
(ii) the exercise by Agent of any rights or remedies in respect of
47
<PAGE>
any Collateral (whether specifically granted or created pursuant to any of the
Collateral Documents or created or provided for by applicable law), except for
filings or recordings contemplated by Section 5.14(a) and except as may be
required, in connection with the disposition of any Pledged Collateral, by laws
generally affecting the offering and sale of securities.
(c) The pledge of the Pledged Collateral pursuant to the Collateral
Documents does not violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
(d) All information supplied to Agent by or on behalf of any
Borrower Party with respect to any of the Collateral (in each case taken as a
whole with respect to any particular Collateral) is accurate and complete in all
material respects.
5.15 Intangible Assets. Company and its Subsidiaries own, or possess the
-----------------
right to use, all trademarks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intangible assets that are used in the conduct of
their respective businesses as now operated, and none of such items, to the best
knowledge of any Borrower Party, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such failure to own or possess or such conflict has a Material
Adverse Effect.
5.16 Insurance. The properties of Company and its Subsidiaries are insured
---------
with financially sound and reputable insurance companies not Affiliates of
Company or with Majestic Insurance International Ltd., a wholly-owned Subsidiary
of Company, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Company and its Subsidiaries operate.
From and after the date that is 30 days following the Closing Date, property,
general liability, business interruption and automobile insurance policies shall
name Collateral Agent for the benefit of Banks as an additional insured
thereunder as its interests may appear and, in the case of property insurance,
contain a loss payable subsection or endorsement, satisfactory in form and
substance to Agent, that names Collateral Agent for the benefit of Banks as the
loss payee thereunder for any covered loss with respect to the Collateral, as
appropriate. Insurance policies shall provide for at least 30 days prior written
notice to Agent of any material modification or cancellation of such policy.
5.17 Year 2000. Company has (a) initiated a review and assessment of all
---------
areas within its and each of its Subsidiaries' business and operations
(including those affected by customers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by Company or
any of its Subsidiaries (or their respective customers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (b) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(c) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, Company believes that all computer applications and devices
containing imbedded computer chips (including those of its and its Subsidiaries'
customers and vendors) that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and
48
<PAGE>
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so does not have a Material Adverse Effect.
5.18 Solvency. Each Borrower Party is and, upon the incurrence of any
--------
Obligations by such Borrower Party on any date on which this representation is
made, will be, Solvent.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall (except in the case of Company's reporting covenants)
cause each of its Subsidiaries to, perform and comply with all covenants in this
Article.
6.1 Financial Statements and Other Reports.
--------------------------------------
(a) Company shall maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP and in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Company or any of its subsidiaries. Company shall deliver to
Agent for distribution to Banks:
(i) as soon as practicable and in any event within 30 days
after the end of each fiscal month, a copy of the consolidated and
consolidating balance sheets of Company and its Subsidiaries, as at the
end of such period, the related consolidated and consolidating
statement of income of Company and its Subsidiaries for such fiscal
month and for the fiscal year to date, and the related consolidated
statement of cash flows of Company and its Subsidiaries for such fiscal
month and for the fiscal year to date, certified by the chief financial
officer, treasurer or controller of Company as fairly presenting the
financial condition of Company and its Subsidiaries in all material
respects as at the dates indicated and the results of their operations
and changes in cash flows for the periods indicated in accordance with
GAAP, except for the absence of footnotes and subject to changes
resulting from audit and normal year-end adjustment;
(ii) as soon as practicable and in any event within 45 days
after the end of each of the first three fiscal quarters of the fiscal
year, a copy of the consolidated and consolidating balance sheets of
Company and its Subsidiaries, as at the end of such period, the related
consolidated and consolidating statement of income of Company and its
Subsidiaries for such fiscal quarter and for the fiscal year to date,
and the related consolidated statement of cash flows of Company and its
Subsidiaries for such fiscal quarter and for the fiscal year to date,
certified by the chief financial officer, treasurer or controller of
Company as fairly presenting the financial condition of Company and its
Subsidiaries in all material respects as at the dates indicated and the
results of their operations and changes in cash flows for the periods
indicated in accordance with GAAP, except for the absence of footnotes
and subject to changes resulting from audit and normal year-end
adjustment;
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(iii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a copy of the consolidated and
consolidating balance sheets of Company and its Subsidiaries, as at the
end of such year, the related consolidated and consolidating statements
of income of Company and its Subsidiaries for such fiscal year and the
related consolidated statements of stockholders' equity and cash flows
of Company and its Subsidiaries for such fiscal year, accompanied by a
report thereon of and a letter from Arthur Andersen LLP or other
independent public accountants of recognized national standing selected
by Company and satisfactory to Majority Banks substantially in the form
of Exhibit VIII, which report shall be unqualified as to going concern
------------
and scope of audit and shall state that such consolidated financial
statements present fairly in all material respects the financial
position of Company and its Subsidiaries as at the dates indicated and
the results of operations and cash flows for the periods indicated in
conformity with GAAP (except as otherwise stated therein) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards;
(iv) together with each delivery of any financial statements
pursuant to Section 6.1(a)(ii) or 6.1(a)(iii) a Compliance Certificate
from Company executed by a Responsible Officer, stating that the signer
does not have knowledge of the existence as at the date of such
certificate, of any condition or event which constitutes a Default or
Event of Default, or, if any such condition or event existed at such
date or exists, specifying the nature and period of existence thereof
and what action Company has taken, is taking and proposes to take with
respect thereto, and demonstrating in reasonable detail compliance
during or at the end of such accounting periods, as applicable, with
Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.11 and 7.16; and, should there
be any material change in GAAP as in effect as of the Closing Date,
such Compliance Certificate shall include computations setting forth
reconciliation of the items used in computing compliance with the
covenants under this Agreement by reason of the differences between
GAAP used in the preparation of such financial statements and GAAP as
in effect as of the Closing Date;
(v) concurrently with the delivery of the financial
statements referred to in Section 6.1(a)(iii), a certificate of
Company's independent certified public accountants certifying such
financial statement and stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of
Default hereunder or, if any such Default or Event of Default shall
exist, stating the nature and status of such event;
(vi) as soon as practicable and in any event no later than 10
Business Days after the end of each fiscal month, a cash flow forecast
for Company and its Subsidiaries for the then following 13 weeks and a
report setting forth the cash flows of Company and its Subsidiaries for
the prior 13 weeks, together with an explanation of any material
variance between those results and the results previously projected for
those 13 weeks;
(vii) (A) as soon as practicable and in any event no later than
10 Business Days after the end of each fiscal month, (1) a report
setting forth the details
50
<PAGE>
of (y) any Lender Derivative/FX Contract to which Company or FinServ is
a party, including the Termination Value of any such Lender
Derivative/FX Contract, and (z) all other outstanding unsecured
Indebtedness of Company or any of its Subsidiaries (including any
letters of credit (other than Lender Letters of Credit) issued for the
benefit of Company and its Subsidiaries) incurred in accordance with
Section 7.1(r), and (2) information with respect to all other
Derivative/FX Contracts to which Company or any of its Subsidiaries is
a party, and (B) promptly upon request, any other information
concerning such Derivative/FX Contracts reasonably requested by Agent;
(viii) as soon as practicable and in any event no later than 30
days after the end of fiscal year 2000, a consolidated plan and
financial forecast for fiscal year 2001 including (A) forecasted
consolidated balance sheets and forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for such fiscal
year and for each month of such fiscal year, together with a pro forma
--- -----
calculation of compliance with Sections 7.6, 7.7 and 7.8 for each
quarter of such fiscal year and an explanation of the major assumptions
on which such forecasts are based, and (B) such other information as
Agent may reasonably request;
(ix) promptly after the same are available, copies of each
annual report or proxy statement sent to the stockholders of Company,
and copies of all annual, regular, periodic and special reports and
registration statements which Company may file or, if Company were
subject to the Exchange Act, would be required to file with the
Securities and Exchange Commission under Sections 13 or 15(d) of the
Exchange Act, and not otherwise required to be delivered to Agent
pursuant hereto;
(x) promptly upon any Responsible Officer of Company
obtaining knowledge of any condition or event which constitutes a
Default or Event of Default, or becoming aware that any Bank has given
any written notice of a claimed Default or Event of Default, a
certificate from Company, executed by a Responsible Officer of Company,
specifying the nature and period of existence of any such condition or
event, or specifying the notice given or action taken, and the nature
of such claimed Default or Event of Default, event or condition, and
what action Company has taken, is taking, and proposes to take with
respect thereto;
(xi) promptly upon any Responsible Officer of Company
obtaining knowledge of (A) the institution of, or non-frivolous threat
of, any material action, suit, proceeding or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company
or any of its Subsidiaries not previously disclosed in writing by
Company to Agent, or (B) any material development in any action, suit,
proceeding or arbitration already disclosed, and in each case Company
reasonably expects such institution, threat, or material development to
result in any Material Adverse Effect or materially and adversely to
affect the ability of Company and its Subsidiaries, taken as a whole,
to perform the Obligations or the ability of Banks to enforce the
Obligations, Company shall promptly give notice thereof to Agent and
provide such other information (excluding communications covered by the
attorney-client privilege) as may be reasonably requested by Agent or a
Bank to enable their counsel to evaluate such matters;
51
<PAGE>
(xii) promptly upon any Responsible Officer of Company becoming
aware of its occurrence, notice of any of the following events
affecting Company or any ERISA Affiliate (but in no event more than 10
days after such event), and such Responsible Officer shall also deliver
to Agent and each Bank a copy of any notice with respect to such event
that is filed with a Governmental Authority and any notice delivered by
a Governmental Authority to Company or any ERISA Affiliate with respect
to such event:
(A) an ERISA Event;
(B) a decrease in the Funded Current Liability
Percentage for any Pension Plan at the end of any fiscal quarter to
less than 90%; or
(C) any significant change in the status of any item
disclosed on Schedule 5.9;
------------
(xiii) promptly upon receipt thereof, copies of any detailed
audit reports, management letters or recommendations submitted to the
board of directors (or the audit committee of the board of directors)
of Company by independent accountants in connection with the accounts
or books of Company or any of its Subsidiaries, or any audit of any of
them;
(xiv) promptly upon any discovery or determination that any
computer application (including those of its suppliers and vendors)
that is material to the business and operations of Company or any of
its Subsidiaries will not be Year 2000 Compliant on a timely basis,
except to the extent that such failure does not have a Material Adverse
Effect, a notice thereof; and
(xv) promptly upon any Responsible Officer of Company becoming
aware of its occurrence, a notice of any material change in accounting
policies or financial reporting practices by Company or any of its
Subsidiaries.
(b) Company will deliver to Agent for distribution to each Bank
together with the Compliance Certificate required under subsection (iv) of
subsection (a) of this Section, a copy of all press releases and other
statements made available generally by Company to the public during the period
covered by the Compliance Certificate. The press releases and such other
statements covered by this subsection are those which concern material
developments in the business of Company and its Subsidiaries taken as a whole.
(c) Company will deliver to Agent for distribution to each Bank
copies of material financial and other information as Agent or Majority Banks
may reasonably request from time to time.
6.2 Corporate Existence, etc. Except as permitted by Section 7.4, Company
-------------------------
shall, and shall cause each of its Subsidiaries to, at all times preserve and
keep in full force and effect its corporate existence and rights and franchises
material to its business and its goodwill except where the failure to do so
would not in the aggregate have a Material Adverse Effect.
52
<PAGE>
6.3 Compliance With Laws, etc. Company shall, and shall cause each of its
--------------------------
Subsidiaries to, comply with the requirements of each applicable Requirement of
Law, including all laws relating to environmental, health, safety and land use
matters applicable to any property, except where the failure to do so would not
in the aggregate have a Material Adverse Effect.
6.4 Compliance with Agreements. Company shall, and shall cause each of
--------------------------
its Subsidiaries to, promptly and fully comply with all Contractual Obligations
to which any one or more of them is a party, except for any such Contractual
------
Obligations (a) the performance of which would cause a Default or Event of
Default, (b) then being contested by any of them in good faith by appropriate
proceedings, or (c) if the failure to comply therewith does not have a Material
Adverse Effect.
6.5 Payment of Taxes and Claims. Company shall, and shall cause each of
---------------------------
its Subsidiaries to pay, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges not exceeding
$5,000,000 in the aggregate) imposed upon any of them or any of their properties
or assets or in respect of any of their franchises, business, income or property
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
(other than claims not exceeding $5,000,000 in the aggregate) which have become
due and payable and which by law have or may become a Lien upon any of their
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such governmental charge or
--------
claim need be paid if it is being contested in good faith by appropriate
proceedings and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
6.6 Maintenance of Properties; Insurance.
------------------------------------
(a) Company shall, and shall cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
all properties used or useful in the business of Company and its Subsidiaries
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof, if the failure to perform such actions would
in the aggregate have a Material Adverse Effect. Company shall, and shall cause
each of its Subsidiaries to, maintain or cause to be maintained, through self-
insurance or with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations, if the failure
to do so would (as to all such failures in the aggregate) have a Material
Adverse Effect. From and after the date that is 30 days following the Closing
Date, property, general liability, business interruption and automobile
insurance policies shall (i) name Collateral Agent for the benefit of Banks as
an additional insured thereunder with respect to all Collateral as its interests
may appear and, in the case of property insurance, (ii) contain a loss payable
subsection or endorsement, satisfactory in form and substance to Agent, that
names Collateral Agent for the benefit of Banks as the loss payee thereunder for
any covered loss with respect to all Collateral, as appropriate. Insurance
policies shall provide for at least 30 days prior written notice to Agent of any
material modification or cancellation of such policy.
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(b) Upon receipt by Company or any of its Subsidiaries of any
insurance proceeds constituting Net Insurance Proceeds, (i) so long as no Event
of Default shall have occurred and be continuing, Company or such Subsidiary may
retain and apply such Net Insurance Proceeds for working capital purposes, in
the case of business interruption insurance proceeds, or to pay or reimburse the
costs of repairing, restoring or replacing the assets or substantially similar
assets in respect of which such Net Insurance Proceeds were received or, to the
extent not so applied, as provided in Section 2.6, and (ii) if an Event of
Default shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance Proceeds as provided in Section 2.6.
6.7 Inspection.
----------
(a) Company shall, and shall cause each of its Subsidiaries to, (i)
permit any authorized representatives designated by a Bank, at the expense of
that Bank, to visit and inspect any of the properties of Company or any of its
Subsidiaries, including their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss their affairs, finances and
accounts with their officers and independent public accountants, all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested, and (ii) following the occurrence and
during the continuation of an Event of Default, permit any authorized
representatives designated by a Bank, at the expense of Company, to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
their financial and accounting records, and to make copies and take extracts
therefrom, and to discuss their affairs, finances and accounts with their
officers and independent public accountants, immediately upon request by Agent.
(b) Company shall, and shall cause each of its Subsidiaries to, permit
E & Y Restructuring LLC and its affiliates, at the expense of Company, to have
access to and review their financial and accounting records in connection with
the services to be performed by E & Y Restructuring LLC for Banks and to discuss
their affairs, finances and accounts. The scope of such services shall be
determined by Banks from time to time and shall include a monthly review during
the first six months following the Closing Date (including a review of all
Derivative/FX Contracts) and a quarterly review thereafter. Banks agree that
provided no Event of Default has occurred and is continuing, the Professional
- --------
Costs for the services of E & Y Restructuring LLC for which Company shall be
liable shall not exceed $600,000 in the aggregate plus all related expenses.
----
Information acquired by a Bank pursuant to this Section shall be subject to the
confidentiality provisions of Section 10.9.
6.8 Use of Proceeds. Company shall use the proceeds of the Loans for
---------------
working capital and other general corporate purposes and not in contravention of
any applicable Requirement of Law.
6.9 Execution of Guaranty and Collateral Documents by Additional
------------------------------------------------------------
Subsidiaries.
- ------------
(a) In the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will notify Agent of that fact and
cause such Material Domestic Subsidiary to execute and deliver to Agent a
counterpart of the Guaranty and the Pledge and Security Agreement, and to take
all such further actions and execute such further documents and
54
<PAGE>
instruments as may be necessary or, in the opinion of Agent, desirable to create
in favor of Collateral Agent, for the benefit of Banks, a valid and perfected
Lien on the assets of such Material Domestic Subsidiary described in the
applicable Collateral Documents within 30 days of such Person becoming a
Material Domestic Subsidiary; provided, however, that neither Company nor any of
-------- -------
its Subsidiaries shall be required to grant Liens on any Principal Property, the
Capital Stock of a Restricted Subsidiary or any Indebtedness of or issued by a
Restricted Subsidiary.
(b) Company shall deliver to Agent, together with such Loan
Documents, (i) certified copies of such Subsidiary's Organization Documents,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its organization and each other state in which such Person is
qualified to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to Agent,
(ii) a certificate executed by the secretary or similar officer of such
Subsidiary as to (A) the fact that the attached resolutions of the board of
directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Loan Documents are in full force and effect and have not
been modified or amended and (B) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iii) a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to Agent and
its counsel, as to (A) the due organization and good standing of such
Subsidiary, (B) the due authorization, execution and delivery by such Subsidiary
of such Loan Documents, (C) the enforceability of such Loan Documents against
such Subsidiary, and (D) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Agent and its counsel.
(c) In the event that (i) Company or any Material Domestic Subsidiary
acquires any fee interest or leasehold interest in real property after the date
hereof or (ii) at the time any Person becomes a Material Domestic Subsidiary,
such Person owns or holds any fee interest or leasehold interest in real
property, Company or such Material Domestic Subsidiary will notify Agent of that
fact and deliver, or cause such Material Domestic Subsidiary to, execute and
deliver to Agent, within 30 days of such Person acquiring such Property or
becoming a Material Domestic Subsidiary, as the case may be, a fully executed
and notarized Mortgage, in proper form for recording in all appropriate places
in all applicable jurisdictions, encumbering the interest of such Borrower Party
in such Property, and the opinions, appraisals, documents, title insurance,
environmental reports described in Section 6.11(a) or that may be reasonably
required by Agent; provided, however, that neither Company nor any of its
-------- --------
Subsidiaries shall be required to grant Liens on any Principal Property.
6.10 Compliance with ERISA. Company shall and shall cause each of its
---------------------
Subsidiaries and their respective ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code.
55
<PAGE>
6.11 Post Closing Actions.
--------------------
(a) Real Estate.
-----------
(i) On or prior to the date that is 60 days after the
Closing Date, Company shall have delivered to Agent:
(A) Fully executed and notarized Mortgages in proper
form for recording in all appropriate places in all applicable
jurisdictions, encumbering the Property listed on Schedule
--------
6.11(a)(i);
----------
(B) An opinion of counsel (which counsel shall be
reasonably satisfactory to Agent) in each state in which any such
Property is located with respect to the enforceability of the
form(s) of Mortgages to be recorded in such state and such other
matters as Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Agent;
(C) (1) ALTA mortgagee title insurance policies or
unconditional commitments therefor issued by a title company
satisfactory to Agent with respect to the Property listed on
Schedule 6.11(a)(i), in amounts not less than the respective
-------------------
amounts designated therein with respect to any particular
Property, insuring fee simple title to each such Property vested
in Company and assuring Agent that the applicable Mortgage
creates valid and enforceable mortgage Liens on the respective
Property encumbered thereby subject only to a standard survey
exception, which policies (y) shall include an endorsement for
mechanics' liens, for future advances under this Agreement and
for any other matters reasonably requested by Agent and (z) shall
provide for affirmative insurance and such reinsurance as Agent
may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to Agent; and (2) evidence
satisfactory to Agent that Company has delivered to the title
company all certificates and affidavits required by the title
company in connection with the issuance of the policies and paid
to the title company or to the appropriate governmental
authorities all expenses and premiums of the title company in
connection with the issuance of the policies and all recording
and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Mortgages in the
appropriate real estate records;
(D) With respect to each Property listed on Schedule
--------
6.11(a)(i), a title report issued by the title company with
----------
respect thereto, dated not more than 30 days prior to the Closing
Date and satisfactory in form and substance to Agent;
(E) Copies of all recorded documents listed as
exceptions to title or otherwise referred to in the policies or
in the title reports delivered pursuant to subsection (D); and
(F) (1) Evidence, which may be in the form of a letter
from an insurance broker or a municipal engineer, as to whether
any Property is a Flood Hazard Property and the community in
which any such Flood Hazard Property is
56
<PAGE>
located is participating in the National Flood Insurance Program;
(2) if there are any such Flood Hazard Properties, Company's
written acknowledgement of receipt of written notification from
Agent (y) as to the existence of each such Flood Hazard Property
and (z) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood
Insurance Program; and (3) in the event that any such Flood
Hazard Property is located in a community that participates in
the National Flood Insurance Program, evidence that Company has
obtained flood insurance in respect of such Flood Hazard Property
to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System.
(ii) In the event that the pending sale of any
of the Properties listed on Schedule 6.11(a)(ii) is not
--------------------
consummated on or prior to the date that is 90 days after the Closing
Date, Company will notify Agent of that fact and promptly execute and
deliver to Agent a fully executed and notarized Mortgage, in proper
form for recording in all appropriate places in all applicable
jurisdictions encumbering the interest of Company in such Property and
the opinions, appraisals, documents, title insurance and environmental
reports described in Section 6.11(a)(i) or that may be reasonably
required by Agent.
(iii) In the event that a contract of sale is not
entered into by Company within 120 days after the Closing Date with
respect to any of the Properties listed on Schedule 6.11(a)(iii),
Company will notify Agent of that fact and promptly execute and
deliver to Agent a fully executed and notarized Mortgage, in proper
form for recording in all appropriate places in all applicable
jurisdictions encumbering the interest of Company in such Property and
the opinions, appraisals, documents, title insurance and environmental
reports described in Section 6.11(a)(i) or that may be reasonably
required by Agent; provided, however, that in the event a contract of
-------- -------
sale is entered into with respect to any such Property during such
period and a sale is not consummated on or prior to the date that is
60 days after the execution of any such contract, Company will notify
Agent of that fact and promptly take the actions described above with
respect to such Property.
Notwithstanding the foregoing, in the event that any Property listed
on Schedule 6.11(a)(ii) or Schedule 6.11(a)(iii) becomes a Principal Property
-------------------- ---------------------
prior to the date on which a Mortgage with respect to such Property is required
to be delivered, Company shall have no obligation to make the deliveries or take
the actions set forth above with respect to such Property.
(b) Insurance. On or prior to the date that is 30 days after the
---------
Closing Date, Company shall have delivered to Collateral Agent a certificate
from Company's insurance broker or other evidence satisfactory to Collateral
Agent that Collateral Agent on behalf of Banks has been named as additional
insured and/or loss payee under all insurance policies to the extent required
under Sections 5.16 and 6.6.
(c) Derivative/FX Contracts. On or prior to the date that is 60
-----------------------
days after the Closing Date, Company shall have delivered to Agent executed
copies of amendments to the existing master agreements pursuant to which Lender
Derivative/FX Contracts are issued
57
<PAGE>
providing that the obligations of Company and FinServ under such agreements will
be secured by the Collateral Documents (as defined in the Bridge Credit
Agreement).
(d) Foreign Collateral. Company shall use its best efforts to take or
-----------------
cause to be taken all such actions, execute and deliver or cause to be executed
and delivered all such agreements, documents and instruments and make or cause
to be made all such filings and recordings that may be necessary or, in the
opinion of Agent, desirable in order to create in favor of Collateral Agent, for
the benefit of Banks, a valid and perfected security interest in all foreign
registrations of IP Collateral and 65% of the Capital Stock owned by Company or
any Domestic Subsidiary of all Material Foreign Subsidiaries (other than the
Capital Stock of Restricted Subsidiaries).
(e) Intercompany Transactions. On or prior to the date that is 10
-------------------------
Business Days after the Closing Date, Company shall deliver a certificate
setting forth (i) all Indebtedness of Company to any of its Subsidiaries and of
any of its Subsidiaries to Company or any of its other Subsidiaries, and (ii)
all Investments by Company in any of its Subsidiaries and Investments of any of
its Subsidiaries in Company or any of its other Subsidiaries. On or prior to the
date that is 30 days after the Closing Date, Company shall deliver a fully
executed copy of an intercompany note evidencing all Indebtedness of Foreign
Subsidiaries to Domestic Subsidiaries that are Guarantors.
6.12 Transfer of Receivables. LSFCC shall sell to LSFLLC all accounts
-----------------------
receivable purchased by it from Company immediately upon consummation of such
purchase.
ARTICLE VII
NEGATIVE COVENANTS
------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall cause each of its Subsidiaries to, perform and comply
with all covenants in this Article.
7.1 Indebtedness; Derivative/FX Contracts. Company shall not, and shall
-------------------------------------
not suffer or permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Indebtedness or Derivative/FX Contracts,
except
(a) Indebtedness of Company outstanding on the Closing Date and listed
on Schedule 7.1 and any refinancing of the industrial revenue bond obligations
------------
listed on Schedule 7.1 provided there is no increase in the aggregate principal
------------ --------
amount of such obligations;
(b) Indebtedness under the Loan Documents;
(c) Indebtedness arising from the honoring of a check, draft or
similar instrument against insufficient funds;
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(d) Guaranty Obligations of Company guaranteeing the Indebtedness of
Material Foreign Subsidiaries permitted under Section 7.1(r);
(e) Indebtedness of Company and the other Borrower Parties under the
1997 Second Amended and Restated Credit Agreement and the related loan
documents;
(f) Indebtedness of Company in respect of Capital Leases not
exceeding $5,000,000 in the aggregate at any time;
(g) Indebtedness of Company to any wholly-owned Subsidiary that is a
Guarantor and Indebtedness of any wholly-owned Domestic Subsidiary that is a
Guarantor to Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor; provided that (i) all such intercompany Indebtedness shall be
--------
evidenced by promissory notes pledged to Agent on behalf of Banks, (ii) all such
intercompany Indebtedness owed by Company to any of its Subsidiaries shall be
subordinated in right of payment to the payment in full of the Obligations in
any Insolvency Proceeding pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, (iii) any payment by any
Subsidiary of Company under any guaranty of the Obligations shall result in a
pro tanto reduction of the amount of any intercompany Indebtedness owed by such
Subsidiary to Company or any of its Subsidiaries for whose benefit such payment
is made;
(h) Indebtedness of Pledged Foreign Subsidiaries to other Pledged
Foreign Subsidiaries;
(i) Indebtedness of Unpledged Foreign Subsidiaries to Pledged Foreign
Subsidiaries or other Unpledged Foreign Subsidiaries;
(j) Indebtedness of Company and its Subsidiaries (other than LSFCC or
LSFLLC) to FinServ and Indebtedness of FinServ to Company and its other
Subsidiaries (other than LSFCC or LSFLLC) in the ordinary course of business;
(k) other Indebtedness of Company to any of its Subsidiaries and
other Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries incurred after the date hereof; provided, however, that the sum of
-------- -------
(i) the aggregate principal amount of all such Indebtedness incurred after the
date hereof plus (ii) the aggregate Investments permitted by Section 7.11(j),
----
plus (iii) the aggregate Dispositions permitted by Section 7.3(j) shall not
- ----
exceed $50,000,000 in the aggregate during fiscal year 2000 or $100,000,000 in
the aggregate during fiscal year 2001;
(l) Derivative/FX Contracts between Company or FinServ and FinServ
and the other Subsidiaries of Company (other than LSFCC or LSFLLC) in the
ordinary course of business;
(m) Indebtedness of Company in the form of Securities issued in a
Capital Markets Transaction; provided (i) Company makes the prepayments required
--------
pursuant to Section 2.8, (ii) the stated maturity date of such Indebtedness is
not earlier than five years from the issuance thereof, and (iii) such
Indebtedness is unsecured;
59
<PAGE>
(n) Indebtedness of Company and its Material Subsidiaries (other than
LSFCC or LSFLLC) secured by Liens permitted under Section 7.2(h) not exceeding
$25,000,000 in the aggregate at any time;
(o) Indebtedness of Company and its Subsidiaries in the form of
Permitted Receivables Purchase Facilities, provided Company and its Subsidiaries
--------
make the prepayment required pursuant to Section 2.6;
(p) Indebtedness of Company and its Subsidiaries in the form of Real
Estate Financing Transactions not exceeding the limitations in Section 7.2(m) at
any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.6;
(q) Indebtedness of Company and its Subsidiaries in the form of
Equipment Financing Transactions not exceeding the limitations in Section 7.2(m)
at any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.6;
(r) (i) Indebtedness under the Bridge Credit Agreement and the
Amended and Restated 1999 180 Day Credit Agreement, (ii) unsecured Indebtedness
of Company and its Subsidiaries (other than LSFCC and LSFLLC), (iii) unsecured
reimbursement obligations of Company and its Subsidiaries (other than LSFCC and
LSFLLC) under letters of credit (other than Lender Letters of Credit), and (iv)
obligations of Company and its Subsidiaries (other than LSFCC and LSFLLC) under
secured and unsecured Ordinary Course Derivative/FX Contracts (other than Lender
Derivative/FX Contracts and intercompany Ordinary Course Derivative/FX
Contracts) not exceeding $750,000,000 in the aggregate at any time; provided,
--------
however, that the amount of the obligation under any Ordinary Course
- -------
Derivative/FX Contract for purposes of this subsection 7.1(r) shall be the
Termination Value thereof times the Exposure Factor minus the undrawn face
----- -----
amount of any outstanding Lender Letter of Credit issued with respect to such
Ordinary Course Derivative/FX Contract;
(s) Indebtedness of Company to any of its Subsidiaries and other
Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries outstanding on the Closing Date and set forth on the certificate
delivered pursuant to Section 6.11(e); and
(t) other Indebtedness of Company and its Subsidiaries not exceeding
$5,000,000 in the aggregate at any time.
7.2 Limitation on Liens and Negative Pledges. Company shall not, and shall
----------------------------------------
not suffer or permit any of its Subsidiaries to, directly or indirectly, incur,
assume or suffer to exist any Lien or Negative Pledge upon any of their
Property, whether now owned or hereafter acquired, except:
(a) any Lien or Negative Pledge existing on the property of Company
or its Subsidiaries on the Closing Date and listed on Schedule 7.2;
------------
(b) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.5;
60
<PAGE>
(c) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the Property subject thereto
or if such reserve or other appropriate provision, if any, required by GAAP
shall have been made therefor;
(d) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens securing (i) the performance of tenders, bids, trade
contracts (other than for borrowed money), government contracts, leases,
statutory obligations, and performance and return-of-money bonds, (ii)
contingent obligations on surety and appeal bonds, and (iii) other obligations
of a like nature; in each case, incurred in the ordinary course of business;
(f) Liens consisting of judgment or judicial attachment liens,
provided that the judgment secured by any such Lien shall, within 45 days after
- --------
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall have been discharged within 45 days after the expiration of any
such stay and such Liens do not constitute an Event of Default;
(g) easements, rights-of-way, restrictions and other similar
encumbrances that do not interfere with the ordinary conduct of the businesses
of Company and its Subsidiaries;
(h) purchase money mortgages (including chattel mortgages) or other
purchase money liens or conditional sale or other title retention or security
agreements incurred by Company or any of its Material Subsidiaries (other than
LSFCC or LSFLLC) in connection with the acquisition or construction of any real
or personal property, or mortgages or liens or conditional sale or other title
retention agreements or security agreements existing on any such property at the
time of acquisition or construction or placed thereon within one year of the
acquisition or completion of construction thereof and any extension, renewal or
replacement of any such purchase money mortgage or lien in respect of all or
part of the same property; provided that the aggregate outstanding amount of
--------
Indebtedness secured by such Liens does not exceed $25,000,000 in the aggregate
at any time; provided still further that every such mortgage, lien or agreement
-------- ----- -------
shall apply only to the property originally subject thereto and fixed
improvements, if any, then existing or thereafter erected thereon;
(i) any interest or title of a lessor under any Capital or Operating
Lease permitted hereunder (other than any Equipment Financing Transaction);
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
--------
dedicated cash collateral account and is not subject to restrictions against
access by Company or any of its Subsidiaries owning the affected deposit account
or other funds maintained with a creditor depository institution in excess of
those set forth by regulations
61
<PAGE>
promulgated by the Federal Reserve Board, and (ii) such deposit account is not
intended by Company or any of its Subsidiaries to provide collateral to the
depository institution;
(k) leases or subleases granted to others in the ordinary course of
business not interfering with the ordinary conduct of the business of the
grantor thereof;
(l) Liens attaching to ownership interests in joint ventures (whether
in partnership, corporate or other form) engaged in the LOS/DOS Business or
attaching to intellectual property rights relating to the LOS/DOS Business;
(m) Liens created in connection with (i) Equipment Financing
Transactions and (ii) Real Estate Financing Transactions so long as (A) the
aggregate amount of all such transactions permitted by this Section 7.2(m) at
any time outstanding (as measured by the sum of all Indebtedness secured by such
Liens then outstanding or to be so created or assumed) shall not exceed
$175,000,000 and (B) Company shall cause, in connection therewith, the
prepayments of Loans required by Section 2.6;
(n) Liens created pursuant to applications or reimbursement
agreements pertaining to documentary letters of credit which encumber documents
and other property relating to such documentary letters of credit and the
products and proceeds thereof;
(o) Liens granted pursuant to the Collateral Documents;
(p) Liens securing (i) Indebtedness under the Bridge Credit
Agreement, the Amended and Restated 1999 180 Day Credit Agreement, and the 1997
Second Amended and Restated Credit Agreement, and (ii) obligations under Lender
Derivative/FX Contracts;
(q) Liens securing Ordinary Course Derivative/FX Contracts permitted
by Section 7.1(r);
(r) other Liens so long as the aggregate outstanding amount of
Indebtedness secured by such Liens does not exceed $2,000,000 at any time;
(s) Negative Pledges on accounts receivables of Foreign Subsidiaries
and the associated assets of Foreign Subsidiaries in connection with Permitted
Foreign Receivable Purchase Facilities;
(t) Negative Pledges on Intellectual Property licensed from third
parties; and
(u) Negative Pledges with respect to specific property encumbered to
secure payment of particular Indebtedness permitted hereunder.
7.3 Dispositions. Company shall not, and shall not suffer or permit
------------
any of its Subsidiaries to, directly or indirectly, make any Dispositions,
except:
(a) Dispositions of obsolete or worn out property, whether now owned
or hereafter acquired, in the ordinary course of business;
62
<PAGE>
(b) Dispositions of inventory by Company or any of Subsidiaries to
Company or any of its Subsidiaries in ordinary course of business arm's length
transactions;
(c) Dispositions of inventory in the ordinary course of business;
(d) Dispositions of accounts receivable from Company to LSFCC and
from LSFCC to LSFLLC;
(e) Dispositions of Permitted Receivables pursuant to Permitted
Receivables Purchase Facilities, provided Company and its Subsidiaries make the
--------
prepayments required pursuant to Section 2.6;
(f) Dispositions of equipment pursuant to Equipment Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.6;
(g) Dispositions of real property pursuant to Real Estate Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.6;
(h) licenses of Intellectual Property in the ordinary course of
business;
(i) the Pending IceHouse Disposition;
(j) other Dispositions by Company to any of its Subsidiaries of
Property other than accounts receivable and other Dispositions by any of its
Subsidiaries to Company or any of its other Subsidiaries of Property other than
accounts receivable; provided, however, that the sum of (i) the fair market
-------- -------
value of the assets sold, transferred, licensed or otherwise disposed of plus
----
(ii) the aggregate principal amount of Indebtedness permitted by Section 7.1(k)
plus (iii) the aggregate Investments permitted by Section 7.11(j) shall not
- ----
exceed $50,000,000 in the aggregate during fiscal year 2000 or $100,000,000 in
the aggregate during fiscal year 2001;
(k) Asset Dispositions by Company and its Subsidiaries of Property
other than accounts receivable; provided that (i) at the time of any
--------
Disposition, no Event of Default shall exist or shall result from such
Disposition; (ii) the consideration received for such Disposition shall be in an
amount at least equal to the fair market value of the assets sold, transferred,
licensed or otherwise disposed of; (iii) the sole consideration received shall
be cash; (iv) the aggregate fair market value of all assets so sold,
transferred, licensed or otherwise disposed of by Company and its Subsidiaries
shall not exceed $50,000,000 in any fiscal year; and (v) Company and its
Subsidiaries make the prepayments required pursuant to Section 2.6;
(l) Dispositions of the Capital Stock of Domestic Subsidiaries that
are Guarantors to Company and wholly owned Domestic Subsidiaries that are
Guarantors; Dispositions of the Capital Stock of Pledged Foreign Subsidiaries to
Company, Domestic Subsidiaries that are Guarantors and other Pledged Foreign
Subsidiaries; and Dispositions of the Capital Stock of Unpledged Foreign
Subsidiaries to Company or any of its other Subsidiaries; and
63
<PAGE>
(m) Dispositions of accounts receivable to collection agencies the
aggregate face amount of which does not exceed $2,000,000.
7.4 Fundamental Changes. Company shall not and shall not suffer or permit
-------------------
its Subsidiaries to, merge or consolidate with or into any Person or liquidate,
wind-up or dissolve themselves, or permit or suffer any liquidation or
dissolution or sell all or substantially all of their respective assets, except
that so long as no Default or Event of Default exists or would result therefrom
(a) any Domestic Subsidiary may merge with or into Company or any other Domestic
Subsidiary that is a Guarantor or be liquidated, wound up or dissolved or all or
any part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of to Company or any other Domestic Subsidiary
that is a Guarantor, provided that, in the case of a merger, Company or such
--------
Guarantor, as the case may be, shall be the continuing or surviving corporation;
(b) any Pledged Foreign Subsidiary may merge with or into any other Pledged
Foreign Subsidiary or be liquidated, wound up or dissolved or all or any part of
its business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of to Company or any other Pledged Foreign Subsidiary; (c)
any Unpledged Foreign Subsidiary may merge with or into any other Unpledged
Foreign Subsidiary or any Pledged Foreign Subsidiary or be liquidated, wound up
or dissolved or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of to any other
Unpledged Foreign Subsidiary or a Pledged Foreign Subsidiary, provided that, in
--------
the case of a merger, such Pledged Foreign Subsidiary shall be the continuing or
surviving corporation; and (d) Company and its Subsidiaries may make Asset
Dispositions permitted by Section 7.3(k).
7.5 Use of Proceeds.
---------------
(a) Company shall not use any portion of the Loan proceeds directly
or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance Indebtedness of Company or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Sections 13 or 14 of the Exchange Act.
(b) Company shall not, directly or indirectly, use any portion of the
proceeds of the Loans (i) knowingly to purchase Ineligible Securities from the
Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of Company or any Affiliate of Company. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in certain Ineligible
Securities.
64
<PAGE>
7.6 Leverage Ratio. Company shall not permit the Leverage Ratio on the
--------------
last day of any period set forth below to be more than the correlative amount
indicated:
<TABLE>
<CAPTION>
PERIOD LEVERAGE RATIO
------ --------------
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 6.00 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
Fiscal Year 2000 5.75 to 1.00
Four Fiscal Quarter Period ending on the last day of the First Fiscal Quarter of 5.25 to 1.00
Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second Fiscal Quarter 5.00 to 1.00
of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third Fiscal Quarter of 4.50 to 1.00
Fiscal Year 2001
Fiscal Year 2001 4.25 to 1.00
</TABLE>
7.7 Interest Coverage Ratio. Company shall not permit the Interest
-----------------------
Coverage Ratio for any period set forth below to be less than the correlative
amount indicated:
<TABLE>
<CAPTION>
PERIOD INTEREST
------ COVERAGE RATIO
--------------
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 1.6 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 1.6 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 1.7 to 1.00
Fiscal Year 2000 1.8 to 1.00
Four Fiscal Quarter Period ending on the last day of the First Fiscal 1.9 to 1.00
Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second Fiscal 2.0 to 1.00
Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third Fiscal 2.1 to 1.00
Quarter of Fiscal Year 2001
Fiscal Year 2001 2.2 to 1.00
</TABLE>
65
<PAGE>
7.8 Minimum Consolidated EBITDA. Company shall not permit Consolidated
---------------------------
EBITDA for any period set forth below to be less than the correlative amount
indicated:
<TABLE>
<CAPTION>
PERIOD MINIMUM
------ CONSOLIDATED EBITDA
-------------------
($ in millions)
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 $ 102
First Two Fiscal Quarter Period of Fiscal Year 2000 $ 205
First Three Fiscal Quarter Period of Fiscal Year 2000 $ 320
Fiscal Year 2000 $ 440
Four Fiscal Quarter Period ending on the last day of the First Fiscal $ 465
Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second Fiscal $ 490
Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third Fiscal $ 510
Quarter of Fiscal Year 2001
Fiscal Year 2001 $ 540
</TABLE>
7.9 Change in Business. Company shall not, and shall not suffer or permit
------------------
any of its Subsidiaries to, engage in any business not related or incidental to
the manufacture and sale of clothing and accessories. The LOS/DOS Business is a
business that is related or incidental to the manufacture and sale of clothing
within the meaning of the preceding sentence. Company shall not suffer or permit
LSFLLC to engage in any business other than the purchase and holding of accounts
receivable and shall not suffer or permit LSFCC to engage in any business other
than the purchase and servicing of accounts receivable generated by Company, the
processing of accounts payable of Company and its Subsidiaries, and other
accounting and general customer relationship functions.
7.10 ERISA. Company shall not, and shall not permit or suffer any of its
-----
Subsidiaries or ERISA Affiliates to:
(a) engage in any transaction in connection with which Company or any
of its Subsidiaries or any of their respective ERISA Affiliates would be subject
to either a civil penalty assessed pursuant to Section 502(i) or 502(l) of ERISA
or a tax imposed by Section 4975 of the Code, in either case in an amount in
excess of $5,000,000;
(b) fail to make full payment within five Business Days after the
date when due of all amounts exceeding $5,000,000 which, under the provisions of
any Pension Plan, Company or any of its Subsidiaries or any of their respective
ERISA Affiliates is required to pay as contributions thereto, or (as to any
Subsidiary organized under the laws of any of the United States) permit to exist
any accumulated funding deficiency, whether or not waived, with respect to any
Pension Plan in an aggregate amount greater than $5,000,000;
66
<PAGE>
(c) permit the Funded Current Liability Percentage for any Pension
Plan to be less than 90%; or
(d) fail to make any payments in an aggregate amount greater than
$5,000,000 to any Multiemployer Plan that Company or any of its Subsidiaries, or
any of their respective ERISA Affiliates may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto.
As used in this Section, the term "accumulated funding deficiency" has
the meaning specified in Section 3(23) of ERISA and Section 412 of the Code and
the term "accrued benefit" has the meaning specified in Article 3 of ERISA.
7.11 Investments. Company shall not, and shall not suffer or permit any of
-----------
its Subsidiaries to, directly or indirectly, make any Investments, or acquire,
by purchase or otherwise, all or substantially all the business, property or
fixed assets of, or stock or other ownership interest of any Person, or any
division or line of business of, any Person except:
------
(a) Investments existing on the Closing Date and listed on Schedule
--------
7.11;
- ----
(b) cash and cash equivalents;
(c) advances to officers, directors and employees of Company or any
of their respective Subsidiaries for travel, entertainment, relocation and
analogous ordinary business purposes;
(d) extensions of credit to customers or suppliers of Company or any
of its Subsidiaries in the ordinary course of business and any Investments
received in satisfaction or partial satisfaction thereof;
(e) Investments permitted by Section 7.4;
(f) intercompany loans permitted by Sections 7.1(g), 7.1(h), 7.1(i),
and 7.1(j);
(g) Investments by Company in any wholly-owned Subsidiary that is a
Guarantor and Investments of any wholly-owned Domestic Subsidiary that is a
Guarantor in Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor;
(h) Investments by Pledged Foreign Subsidiaries in other Pledged
Foreign Subsidiaries;
(i) Investments by Unpledged Foreign Subsidiaries in other Unpledged
Foreign Subsidiaries;
(j) other Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries made after the date hereof; provided, however, that (i) such
-------- -------
Investments plus (ii) the aggregate principal amount of Indebtedness permitted
----
by Section 7.1(k) plus (iii) the aggregate Dispositions permitted by Section
----
7.3(j) shall not exceed $50,000,000 in the aggregate during fiscal year 2000 or
67
<PAGE>
$100,000,000 in the aggregate during fiscal year 2001; provided further that
-------- -------
Investments in Subsidiaries of Company that are not Solvent immediately prior to
the making of any such Investment shall not exceed $10,000,000 in the aggregate
in any fiscal year;
(k) Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries on the Closing Date and set forth on the certificate delivered
pursuant to Section 6.11(e); and
(l) other Investments not exceeding $25,000,000 at any time.
7.12 Restricted Payments. Company shall not, and shall not permit or suffer
-------------------
any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Payment other than (a) payments of
Indebtedness in connection with Asset Dispositions as contemplated by the
definition of Net Asset Disposition Proceeds or Equipment Financing Transactions
as contemplated by the definition of Net Equipment Financing Proceeds and (b)
repayments and prepayments of Indebtedness under the Bridge Credit Agreement,
the Amended and Restated 1999 180 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement.
7.13 Operating Lease Obligations. Company shall not, and shall not suffer
---------------------------
or permit any of its Subsidiaries to, directly or indirectly, create or suffer
to exist any obligations for the payment of rent for any property under
Operating Leases, except:
------
(a) Operating Leases in existence on the Closing Date; and
(b) Operating Leases entered into or assumed by Company or any
Subsidiary after the date hereof in the ordinary course of business.
7.14 Transactions with Affiliates. Company shall not, and shall not suffer
----------------------------
or permit any of its Subsidiaries to directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of Company
other than arm's-length transactions with Affiliates that are otherwise not
prohibited hereunder.
7.15 Amendments of Documents Relating to Indebtedness and Receivables.
----------------------------------------------------------------
(a) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of any Indebtedness (other
than Indebtedness under the Bridge Credit Agreement, the Amended and Restated
1999 180 Day Credit Agreement or the 1997 Second Amended and Restated Credit
Agreement), or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate or make less onerous any such event or default or increase any grace
period related thereto), change the redemption, prepayment or defeasance
provisions thereof, or change any collateral therefor (other than to release
such collateral), or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder or to confer any
68
<PAGE>
additional rights on the holders of such Indebtedness (or a trustee or other
representative on their behalf) which would be materially adverse to Company or
to Banks. Company shall not amend or otherwise change the terms of the Bridge
Credit Agreement, the Amended and Restated 1999 180 Day Credit Agreement or the
1997 Second Amended and Restated Credit Agreement without the written consent of
Majority Banks if the effect of such amendment is to extend the stated maturity
date thereof or increase the aggregate commitments thereunder. Company shall not
amend or otherwise change the terms of the Bridge Credit Agreement, the Amended
and Restated 1999 180 Day Credit Agreement or the 1997 Second Amended and
Restated Credit Agreement to provide for an earlier stated maturity date unless
this Agreement is amended to provide for the same maturity date.
(b) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of the Receivables Transfer
Agreements other than amendments to extend the term thereof or to preserve the
arm's length nature of the purchase and sale effected thereby.
7.16 Consolidated Capital Expenditures. Company shall not, and shall not
---------------------------------
suffer or permit any of its Subsidiaries to make or incur Consolidated Capital
Expenditures, in any fiscal year indicated below, in an aggregate amount in
excess of the corresponding amount set forth below opposite such fiscal year:
Maximum Capital
Fiscal Year Expenditures
----------- ------------
2000 $60,000,000
2001 $60,000,000
7.17 Materially Adverse Agreements. Company shall not, and shall not suffer
-----------------------------
or permit any of its Subsidiaries to, become a party to or become subject to any
material agreement or instrument or charter or other internal restriction which
(in the aggregate as to all such matters) would have a Material Adverse Effect.
7.18 Limitations on Upstreaming. Company shall not, and shall not suffer or
--------------------------
permit any of its Subsidiaries to, agree to any restriction or limitation on the
making of Restricted Payments or transferring of assets from any Subsidiary to
its parent except pursuant to this Agreement, the Bridge Credit Agreement, the
Amended and Restated 1999 180 Day Credit Agreement, and the 1997 Second Amended
and Restated Credit Agreement.
7.19 Change in Auditors. Company shall not terminate the certified public
------------------
accountants auditing the books of Company or any of its Subsidiaries unless
Company shall have informed Agent of the reason for the termination and selected
new certified public accountants of recognized national standing and reasonably
satisfactory to Agent.
7.20 Restricted Subsidiaries. Company shall not permit any of its
-----------------------
Subsidiaries existing as of the Closing Date to become a Restricted Subsidiary
other than as a result of a change in Consolidated Net Tangible Assets.
69
<PAGE>
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.1 Event of Default. Any of the following shall constitute an "Event of
----------------
Default":
(a) Non-Payment. Company fails to pay, (i) when and as required to be
-----------
paid herein, any amount of principal of any Loan or (ii) within three Business
Days after the same becomes due, any other interest, fee or any other amount
payable hereunder or under any other Loan Document; or
(b) Cross Default. Failure of Company or any of its Subsidiaries to
-------------
pay, or any default in the payment of, any principal, interest or any other
amount on any Indebtedness or Derivative/FX Contract beyond any period of grace
provided; or breach or default with respect to any other material term of any
evidence of any Indebtedness or Derivative/FX Contract, or of any loan
agreement, mortgage, indenture or other agreement relating thereto, if such
breach or default continues beyond any applicable period of grace provided, if
and for so long as the effect of such failure, default or breach is to cause or
permit the holder or holders of that Indebtedness or Derivative/FX Contract (or
a trustee on behalf of such holder or holders) to cause, with or without the
giving of notice, that Indebtedness or Derivative/FX Contract to become or be
declared due prior to its stated maturity; provided, however, that this
-------- -------
subsection shall not apply with respect to Indebtedness and Derivative/FX
Contracts, the aggregate principal amount of which or the Termination Value of
which, as the case may be, does not exceed $25,000,000 in the aggregate; or
(c) Representation or Warranty. Any representation or warranty made
--------------------------
by any Borrower Party herein or in any other Loan Document or any representation
or warranty in any statement or certificate at any time given by any Borrower
Party in writing pursuant to any of the Loan Documents or in connection herewith
shall be false in any material respect on the date as of which made; or
(d) Specific Defaults. Failure to perform or observe any term,
-----------------
covenant or agreement contained in Section 6.8 or Article VII; or
(e) Other Defaults. Failure to perform or observe any term, covenant
--------------
or agreement contained in this Agreement or any other Loan Document and such
default shall not have been remedied or waived within 30 days after receipt of
notice from Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction shall enter a decree or order
for relief in respect of Company or any of its Material Subsidiaries in an
involuntary case under any applicable Debtor Relief Laws, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable Debtor Relief Laws; or
(ii) A decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer
70
<PAGE>
having similar powers over Company or any of its Material Subsidiaries or
over all or a substantial part of their property, shall have been entered;
or the involuntary appointment of an interim receiver, trustee or other
custodian of Company or any of its Material Subsidiaries for all or a
substantial part of their property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of
the property of Company or any of its Material Subsidiaries, and the
continuance of any such events described in this subsection (f)(ii) for 60
days unless stayed, dismissed, bonded or discharged; or
(iii) an involuntary case under any applicable Debtor Relief
Laws shall have been commenced against Company or any of its Material
Subsidiaries and shall not have been dismissed within 60 days after the
commencement of such case; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Company or
--------------------------------------------------
any of its Material Subsidiaries shall commence a voluntary case under any
applicable Debtor Relief Laws, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such Debtor Relief Laws, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of their property; the making by Company or any of
its Material Subsidiaries of any assignment for the benefit of creditors; or the
inability or failure of Company or any of its Material Subsidiaries or the
admission by Company or any of its Material Subsidiaries in writing of their
inability to pay their debts as such debts become due; or the Board of Directors
of Company or any of its Material Subsidiaries (or any committee thereof) adopts
any resolution or otherwise authorizes action to approve any of the foregoing;
or
(h) Judgments and Attachments. Any money judgment, writ or warrant of
-------------------------
attachment, or similar process involving in any case an amount in excess of
$10,000,000 in excess of available insurance coverage as to which the insurer
has not denied coverage shall be entered or filed against Company or any of its
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded and unstayed for a period of 45 days or in any
event later than five days prior to the date of any proposed sale thereunder; or
(i) Unfunded ERISA Liabilities. Any Pension Plan maintained by
--------------------------
Company or any of its ERISA Affiliates shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan, or the PBGC (or any
successor thereto) shall institute proceedings to terminate any Pension Plan or
to appoint a trustee to administer any Pension Plan, and, in each case,
Company's or any such ERISA Affiliate's liability (after giving effect to the
tax consequences thereof) as of the date thereof to the PBGC (or any successor
thereto) for unfunded guaranteed vested benefits under such Pension Plan or
Company's obligations to contribute to any Pension Plan in order to voluntarily
terminate such Pension Plan exceed $20,000,000 (or in the case of a termination
involving Company or any of its ERISA Affiliates as a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA) the withdrawing employer's proportionate
share of such liability shall exceed such amount); or
(j) Withdrawal Liability Under Multiemployer Plan. Company or any of
---------------------------------------------
its ERISA Affiliates as employer under a Multiemployer Plan shall have made a
complete or partial
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withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an amount exceeding $20,000,000;
or
(k) Change of Control. (i) Any person or two or more persons
-----------------
(other than Permitted Transferees) acting in concert shall acquire beneficial
ownership, directly or indirectly, of Securities of Company or Voting Trust
Certificates issued under the Voting Trust Agreement (or other securities
convertible into such securities) representing 30% or more of the combined
voting power of all Securities of Company entitled to vote (or would be entitled
to vote in the absence of the Voting Trust Agreement) in the election of
directors (except that the provisions of this subsection (i) shall not apply to
Voting Trustees serving in their capacities as such under the Voting Trust
Agreement); or (ii) during any period of up to 12 consecutive months, commencing
after the Closing Date, individuals who at the beginning of such 12 month period
were directors of Company shall cease for any reason to constitute a majority of
the Board of Directors of Company unless the persons replacing such individuals
were nominated by the Board of Directors of Company, by Permitted Transferees or
by any of the Voting Trustees; or
(l) Failure to Deliver Certain Loan Documents; Invalidity of
--------------------------------------------------------
Guaranties; Failure of Security; Repudiation of Obligations. The Guaranty or the
- -----------------------------------------------------------
Pledge and Security Agreement shall not be executed and delivered by the
Material Domestic Subsidiaries on or prior to the day following the Closing
Date. At any time after the execution and delivery thereof, (i) any Guaranty for
any reason, other than the satisfaction in full of all Obligations, shall cease
to be in full force and effect (other than in accordance with its terms) or
shall be declared to be null and void, (ii) any Collateral Document shall cease
to be in full force and effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the satisfaction in
full of the Obligations or any other termination of such Collateral Document in
accordance with the terms hereof or thereof) or shall be declared null and void
by a court of competent jurisdiction, or Collateral Agent shall not have or
shall cease to have a valid and perfected Lien in any Collateral (other than
Inventory in the possession or control of Company's agents or processors)
purported to be covered thereby having a fair market value, individually or in
the aggregate, exceeding $5,000,000, in each case for any reason other than the
failure of Agent or any Bank to take any action within its control, or (iii) any
Borrower Party shall contest the validity or enforceability of any Loan Document
in writing or deny in writing that it has any further liability, including with
respect to future advances by Banks, under any Loan Document to which it is a
party.
8.2 Remedies. If any Event of Default occurs, Agent shall, at the request
--------
of, or may, with the consent of, Majority Banks,
(a) declare the Commitment of each Bank to be terminated, whereupon
such Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable;
without presentment, demand, request, protest or other notice of any kind, all
of which are hereby expressly waived by Company;
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(c) exercise on behalf of itself and Banks all rights and remedies
available to it and Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in Section
- -------- -------
8.1(f) or (g) above (after the expiration of any grace or cure period provided
therein), the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable
without further act of Agent or any Bank.
8.3 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
No Bank may exercise any rights or remedies with respect to the Obligations
without the consent of Majority Banks in their sole and absolute discretion. The
order and manner in which Agent's and Banks' rights and remedies are to be
exercised shall be determined by Majority Banks in their sole and absolute
discretion. Regardless of how a Bank may treat payments for the purpose of its
own accounting, for the purpose of computing the Obligations hereunder, payments
shall be applied first, to costs and expenses (including Professional Costs)
incurred by Agent and each Bank, second, to the payment of accrued and unpaid
interest on the Loans to and including the date of such application, third, to
the payment of the unpaid principal of the Loans, and fourth, to the payment of
all other amounts (including fees) then owing to Agent and Banks under the Loan
Documents, in each case paid pro rata to each Bank in the same proportions that
the aggregate Obligations owed to each Bank under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all Banks, without
priority or preference among Banks. No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Agent and Banks hereunder or thereunder or at
law in equity.
ARTICLE IX
AGENT; COLLATERAL AGENT
-----------------------
9.1 Appointment and Authorization. Each Bank hereby irrevocably (subject
-----------------------------
to Section 9.9) appoints, designates and authorizes Agent and Collateral Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, neither Agent nor Collateral Agent
shall have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent or Collateral Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent or
Collateral Agent. Without limiting the generality of the foregoing sentence, the
use of the term "agent" in this Agreement with reference to Agent or Collateral
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead,
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such term is used merely as a matter of market custom, and is intended to create
or reflect only an administrative relationship between independent contracting
parties.
9.2 Delegation of Duties. Agent and Collateral Agent may execute any of
--------------------
their respective duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. Neither Agent nor
Collateral Agent shall be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.
9.3 Liability of Agent or Collateral Agent. No Agent-Related Person or
--------------------------------------
Collateral Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any of Banks
for any recital, statement, representation or warranty made by any Borrower
Party or any Subsidiary or Affiliate of any Borrower Party, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent or Collateral Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower Party or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person or Collateral Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Properties, books or records of any
Borrower Party, or any of Company's Subsidiaries or Affiliates.
9.4 Reliance by Agent and Collateral Agent.
--------------------------------------
(a) Agent and Collateral Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to Company), independent accountants and other
experts selected by Agent or Collateral Agent. Agent and Collateral Agent shall
be fully justified in failing or refusing to take any action under any Loan
Document unless Agent or Collateral Agent, as the case may be, shall first
receive such advice or concurrence of Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of Majority
Banks (or all of Banks if required hereunder) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of Banks.
Where this agreement expressly permits or prohibits an action unless Majority
Banks otherwise determine,
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and in all other instances, Agent or Collateral Agent, as the case may be, may,
but shall not be required to, initiate any solicitation for the consent or a
vote of Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
either sent by Agent or Collateral Agent to such Bank for consent, approval,
acceptance, or satisfaction, required thereunder to be consented to or approved
by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. Neither Agent nor Collateral Agent shall be deemed
-----------------
to have knowledge or notice of the occurrence of any Default or Event of
Default, except that Agent shall be deemed to have knowledge with respect to
defaults in the payment of principal, interest and fees required to be paid to
Agent for the account of Banks, unless Agent shall have received written notice
from a Bank or Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". Agent
will notify Banks of its receipt of any such notice. Agent shall take such
action with respect to such Default or Event of Default as may be directed by
Majority Banks in accordance with Article VIII; provided, however, that unless
-------- -------
and until Agent has received any such direction, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of Banks.
9.6 Credit Decision; Disclosure of Information by Agent and Collateral
------------------------------------------------------------------
Agent. Each Bank acknowledges that no Agent-Related Person or Collateral Agent-
- -----
Related Person has made any representation or warranty to it, and that no act by
Agent or Collateral Agent hereinafter taken, including any consent to and
acceptance of any assignment or review of the affairs of Company or any of its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person or Collateral Agent-Related Person to any
Bank as to any matter, including whether Agent-Related Persons or Collateral
Agent-Related Persons have disclosed material information in their possession.
Each Bank, including any Bank by assignment, represents to Agent that it has,
independently and without reliance upon any Agent-Related Person or Collateral
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Company and its Subsidiaries and Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person or Collateral
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decision in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business prospects, operations, property, financial
and other condition and creditworthiness of Company and its Subsidiaries and
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to Banks by Agent or Collateral Agent herein, neither Agent or
Collateral Agent shall have any duty or responsibility to provide any Bank with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Company or any of
its
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Subsidiaries or Affiliates which may come into the possession of any Agent
Related Person or any Collateral Agent-Related Person.
9.7 Indemnification of Agent and Collateral Agent. Whether or not the
---------------------------------------------
transactions contemplated hereby are consummated, Banks shall indemnify upon
demand each Agent-Related Person and each Collateral Agent-Related Person (to
the extent not reimbursed by or on behalf of any Borrower Party and without
limiting the obligation of any Borrower Party to do so), pro rata, and hold
harmless each Agent Related Person and each Collateral Agent-Related Person from
and against any and all Indemnified Liabilities incurred by it; provided,
--------
however, that no Bank shall be liable for the payment to any Agent-Related
- -------
Person or any Collateral Agent-Related Person of any portion of such Indemnified
Liabilities resulting from such Person's gross negligence or willful misconduct;
provided, however, that no action taken in accordance with the directions of
- -------- -------
Majority Banks shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Bank shall reimburse Agent and Collateral Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Professional Costs)
incurred by Agent and Collateral Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or financial
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent or Collateral Agent is not reimbursed for such expenses
by or on behalf of Company. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of Agent
or Collateral Agent.
9.8 Agent in Individual Capacity. Bank of America and its Affiliates may
----------------------------
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with Company and its
Subsidiaries and Affiliates as though Bank of America were not Agent or
Collateral Agent hereunder and without notice to or consent of Banks. Banks
acknowledge that as of the date of execution of this Agreement, Bank of America
has outstanding unsecured loans to Company that will be refinanced from the
proceeds of loans made under the Bridge Credit Agreement. In addition, Banks
acknowledge that Bank of America has been appointed administrative agent and
collateral agent under the Bridge Credit Agreement, the Amended and Restated
1999 180 Day Credit Agreement, and the 1997 Second Amended and Restated Credit
Agreement and that the lenders party to those agreements have been granted a
Lien on the Collateral that is subordinated to the Lien granted to Banks
pursuant to the Intercreditor Agreement. Bank of America or its Affiliates may
receive information regarding Company and its Subsidiaries and Affiliates
(including information that may be subject to confidentiality obligations in
favor of Company, such Subsidiary or such Affiliate) or information relating to
the Bridge Credit Agreement, the Amended and Restated 1999 180 Day Credit
Agreement or the 1997 Second Amended and Restated Credit Agreement) as a result
of the activities described above and Banks acknowledge that Agent or Collateral
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not Agent or Collateral Agent, and the terms "Bank" and "Banks" shall
include Bank of America in its individual capacity.
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9.9 Successor Agent. Agent may, and at the request of Majority Banks
---------------
shall, resign as Agent upon 30 days' notice to Company and Banks. If Agent
resigns under this Agreement, Majority Banks shall appoint from among Banks a
successor agent for Banks which successor agent shall be consented to by Company
at all times other than during the existence of an Event of Default (which
approval of Company shall not be unreasonably withheld or delayed). If no
successor agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with Banks and Company, a successor
agent from among Banks. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and Banks shall perform all of the duties of Agent hereunder until such time, if
any, as Majority Banks appoint a successor agent as provided for above.
Notwithstanding the foregoing, Bank of America may not be removed as Agent at
the request of Majority Banks unless Bank of America shall also simultaneously
be replaced as "Collateral Agent" hereunder pursuant to documentation in form
and substance reasonably satisfactory to Bank of America.
9.10 Successor Collateral Agent. Collateral Agent may, and at the request
--------------------------
of Majority Banks shall, resign as Collateral Agent upon 30 days' notice to
Company and Banks. If Collateral Agent resigns under this Agreement, Majority
Banks shall appoint from among Banks a successor collateral agent for Banks
which successor collateral agent shall be consented to by Company at all times
other than during the existence of an Event of Default (which approval of
Company shall not be unreasonably withheld or delayed). If no successor
collateral agent is appointed prior to the effective date of the resignation of
Collateral Agent, Collateral Agent may appoint, after consulting with Banks and
Company, a successor collateral agent from among Banks. Upon the acceptance of
its appointment as successor collateral agent hereunder, such successor
collateral agent shall succeed to all the rights, powers and duties of the
retiring Collateral Agent and the term "Collateral Agent" shall mean such
successor collateral agent and the retiring Collateral Agent's appointment,
powers and duties as Collateral Agent shall be terminated. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions of
this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement. If no successor collateral agent has accepted appointment as
Collateral Agent by the date which is 30 days following a retiring Collateral
Agent's notice of resignation, the retiring Collateral Agent's resignation shall
nevertheless thereupon become effective and Banks shall perform all of the
duties of Collateral Agent hereunder until such time, if any, as Majority Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
Bank of America may not be removed as Collateral Agent at the request of
Majority Banks unless Bank of America shall also simultaneously be replaced as
"Agent" hereunder pursuant to documentation in form and substance reasonably
satisfactory to Bank of America.
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9.11 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of Agent, to deliver to Agent and Company:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 (or any successor form)
before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two
properly completed and executed copies of IRS Form 4224 (or any
successor form) before the payment of any interest is due in the first
taxable year of such Bank and in each succeeding taxable year of such
Bank during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 (or any
successor form) and such Bank sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Company to such Bank, such
Bank agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Company to such Bank. To the extent of
such percentage amount, Agent will treat such Bank's IRS Form 1001 (or any
successor form) as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 (or any successor form) with Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
of Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Bank an
amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.
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(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered or was not properly executed, or because such
Bank failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify Agent fully for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including Professional
Costs). The obligation of Banks under this subsection shall survive the payment
of all Obligations and the resignation or replacement of Agent.
9.12 Co-Agents; Managing Agents. None of the Banks identified on the
--------------------------
facing page or signature pages of this Agreement as a "Senior Managing Agent", a
"Managing Agent", or a "Co-Agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Banks as such. Without limiting the foregoing, none of Banks
so identified as a "Senior Managing Agent", a "Managing Agent", or a "Co-Agent"
shall have or be deemed to have any fiduciary relationship with any Bank. Each
Bank acknowledges that it has not relied, and will not rely, on any of the Banks
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
9.13 Collateral Documents, Guaranties and Intercreditor Agreement. Each
------------------------------------------------------------
Bank hereby further authorizes Collateral Agent, on behalf of and for the
benefit of Banks, to enter into each Collateral Document as secured party and
hereby authorizes Agent, on behalf of and for the benefit of Banks, to enter
into each Guaranty and the Intercreditor Agreement, and each Bank agrees to be
bound by the terms of each Collateral Document, each Guaranty and the
Intercreditor Agreement; provided, however, that neither Agent nor Collateral
-------- -------
Agent shall (a) enter into or consent to any material amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
Guaranty or (b) release any Collateral without the prior consent of Majority
Banks, Requisite Banks or all Banks, as provided in Section 10.20; provided,
--------
however, that, without further written consent or authorization from Banks,
- -------
Agent or Collateral Agent, as the case may be, may execute any documents or
instruments necessary to (i) release any Lien encumbering any item of Collateral
that is the subject of a Capital Lease, Equipment Financing Transaction, Real
Estate Financing Transaction, Permitted Receivables Purchase Facility or sale or
other disposition of assets permitted by Section 7.3, (ii) release any Guarantor
from a Guaranty if all of the Capital Stock of such Guarantor is sold to any
Person (other than an Affiliate of Company) pursuant to a sale or other
disposition permitted by Section 7.3, or (iii) subordinate the Liens of
Collateral Agent, on behalf of Banks, to any Lien permitted hereunder. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Company,
Agent, Collateral Agent and each Bank hereby agree that (A) no Bank shall have
any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce any Guaranty, it being understood and agreed
that all powers, rights and remedies under the Collateral Documents and the
Guaranties may be exercised solely by Agent or Collateral Agent for the benefit
of Banks in accordance with the terms thereof, and (B) in the event of a
foreclosure by Collateral Agent on any of the Collateral pursuant to a public or
private sale, Agent, Collateral Agent or any Bank may be the purchaser of any or
all of such Collateral at any such sale and Agent, as agent for and
representative of Banks (but not any Bank or Banks in its or their respective
individual capacities unless Majority Banks shall otherwise
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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 Obligations
as a credit on account of the purchase price for any collateral payable by Agent
at such sale.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Banks and the Company and acknowledged by the Agent, and
then such waiver, amendment or consent shall be effective only in the specific
instance and for the specific purpose for which given, except that written
agreement from all of the Banks is required for any waiver, amendment, or
consent which does any of the following:
(a) increases or extends the Commitment of any Bank or reinstates any
Commitment terminated pursuant to Section 8.2;
(b) postpones, extends or delays any date fixed for any payment of
principal, interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any Loan Document;
(c) reduces the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or under
any Loan Document or any mandatory reduction of the Aggregate Commitment
pursuant to Section 2.6;
(d) changes the Commitment Percentage or the aggregate unpaid
principal amount of the Loans which shall be required for the Banks or any of
them to take any action hereunder;
(e) changes the definition of Majority Banks or the number of Banks
required to take any action under this Agreement; or
(f) amends this Section 10.1 or Sections 2.11 or 2.12 or 2.13;
and, provided that no amendment, waiver or consent shall, unless in writing and
--------
signed by the Agent in addition to the Majority Banks or all the Banks, as the
case may be, affect the rights or duties of the Agent under this Agreement or
any other Loan Document.
10.2 Notices.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission shall be followed promptly by a
hard copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
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transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to Company or Agent, to such other
address as shall be designated by such party in a written notice to the other
parties, and as to each other party, at such other address as shall be
designated by such party in a written notice to Company and Agent.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery, except that notices
pursuant to Articles II or IX shall not be effective until actually received by
Agent.
(c) Company acknowledges and agrees that any agreement of Agent and
Banks in Article II to receive certain notices by telephone and facsimile is
solely for the convenience and at the request of Company. Agent and Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by Company to give such notice and Agent and Banks shall not have any
liability to Company or other Person on account of any action taken or not taken
by Agent and Banks in reliance upon such telephonic or facsimile notice. The
obligation of Company to repay the Loans shall not be affected in any way or to
any extent by any failure by Agent and Banks to receive written confirmation of
any telephonic or facsimile notice or the receipt by Agent and Banks of a
confirmation which is at variance with the terms understood by Agent and Banks
to be contained in the telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of Agent or any Bank, 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.
10.4 Costs and Expenses. Company agrees to:
------------------
(a) Whether or not the transactions contemplated hereby are
consummated, pay or reimburse Bank of America (including in its capacity as
Agent) promptly after demand, for all reasonable costs and expenses incurred by
Bank of America (including in its capacity as Agent) in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Professional Costs and
other professional fees incurred by Bank of America (including in its capacity
as Agent) with respect thereto;
(b) Subject to the limitations set forth therein, pay or reimburse
Agent promptly after demand, for all reasonable costs and expenses incurred by
Agent (including the fees, expenses and disbursements of any auditors,
accountants, advisors and agents employed or retained by Agent or its counsel)
in connection with obtaining and reviewing the information provided under
Section 6.1 or 6.7;
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(c) Pay or reimburse Agent, Collateral Agent, the Arranger and each
Bank within five Business Days after demand, for all costs and expenses
(including Professional Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding);
(d) Pay or reimburse Agent and Collateral Agent promptly after
demand, for all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Collateral Agent on behalf of Banks pursuant to any
Collateral Document, including filing and recording fees, expenses and taxes,
stamp or documentary taxes, search fees, title insurance premiums, and
reasonable fees, expenses and disbursements of counsel to Agent and Collateral
Agent and of counsel providing any opinions that Agent, Collateral Agent or
Majority Banks may request in respect of the Collateral Documents or the Liens
created pursuant thereto; and
(e) Pay or reimburse Collateral Agent promptly after demand, for all
reasonable costs and expenses incurred by Collateral Agent in connection with
the custody and preservation of the Collateral.
10.5 Company's Indemnification. Whether or not the transactions
-------------------------
contemplated hereby are consummated, Company shall indemnify, defend and hold
Agent-Related Persons, Collateral Agent-Related Persons and each Bank and each
of its respective officers, directors, employees, counsel, agents, attorneys-in-
fact and Affiliates (each, an "Indemnified Person") harmless from and against
------------------
any and all claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Professional Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of Agent or Collateral Agent or replacement of any
Bank) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement, or any document contemplated by or
referred to herein, or the transactions contemplated hereby or thereby, or any
action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that Company
----------------------- --------
shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that Company makes a payment to
------------------
Agent or Banks, or Agent or Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full
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force and effect as if such payment had not been made or such set-off had not
occurred, and (b) each Bank severally agrees to pay to Agent upon demand its pro
rata share of any amount so recovered from or repaid by Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
permitted (and those arising by operation of law) successors and assigns, except
that Company may not assign or transfer any rights or obligations under this
Agreement without the prior written consent of Agent and each Bank and no Bank
may assign or transfer any of its rights or obligations under this Agreement
except in accordance with Section 10.8 and by operation of law.
10.8 Assignments, Participations, etc.
--------------------------------
(a) Any Bank may, with the written consent of Agent (which consent
shall not be unreasonably withheld), at any time, assign and delegate to one or
more Eligible Assignees (provided that no written consent of Agent shall be
--------
required in connection with (i) any assignment and delegation by a Bank to an
Affiliate of such Bank or (ii) to another Bank) (each an "Assignee") all, or any
--------
ratable part of all, of the Loans, and the other rights and obligations of such
Bank hereunder, in a minimum amount of $5,000,000; provided, however, that:
-------- -------
(A) a Bank may enter into an assignment and delegation of
less than $5,000,000 if such assignment and delegation consists of
such Bank's entire interest;
(B) the assignment shall provide that any claims made by
any Assignee under Sections 3.1, 3.2, 3.3, and 3.6 shall not exceed
the claims the assigning Bank could have made on the interests
assigned if the assigning Bank had retained such interests; provided,
--------
however, that this subsection shall not apply when the assignment is
-------
made by a Bank in favor of another Bank which was a Bank on the
Closing Date; and
(C) Company and Agent may continue to deal solely and
directly with such Bank in connection with the interest so assigned to
an Assignee until (A) written notice of such assignment, together with
payment instructions, addresses and related information with respect
to the Assignee, shall have been given to Company and Agent by such
Bank and the Assignee; (B) such Bank and its Assignee shall have
delivered to Company and Agent an Assignment and Acceptance and any
Note or Notes subject to such assignment; and (C) the assignor Bank or
Assignee has paid Agent a processing fee of $3,500.
(b) From and after the date that Agent notifies the assignor Bank
that it has provided its consent to and received an executed Assignment and
Acceptance and payment of the processing fee of $3,500, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its
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rights (other than any rights of indemnity) and be released from its obligations
under the Loan Documents.
(c) Within five Business Days after its receipt of notice by Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee, Company shall execute and deliver to Agent, new Notes evidencing
such Assignee's assigned Loans and, if the assignor Bank has retained a portion
of its Loans, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its payment
under the Assignment and Acceptance, this Agreement, shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee. If an assignor Bank has not retained a portion of its Loans,
such Bank shall mark its Notes "superseded" and return such Notes to Agent for
delivery to Company.
(d) Any Bank may at any time sell to one or more Eligible Assignees
(a "Participant") participating interests in any Loans and the other interests
-----------
of that Bank (the "Originator") hereunder and under the other Loan Documents;
----------
provided, however, that (i) the Originator's obligations under this Agreement
- -------- -------
shall remain unchanged, (ii) the Originator shall remain solely responsible for
the performance of such obligations, (iii) Company and Agent shall continue to
deal solely and directly with the Originator in connection with the Originator's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Bank shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent as
described in Section 10.1 or 10.20. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by Company hereunder shall be determined
as if such Originator had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement (and the Notes held by it) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board or U.S. Treasury Regulation 31 CFR (S) 203.14, and may assign all
or any portion of its rights under or interests in this Agreement (and the Notes
held by it) to any Affiliate for purposes of creating such a security interest
or pledge, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.9 Confidentiality. Each Bank agrees to take and to cause its
---------------
Affiliates, directors and employees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to it by Company or any Subsidiary of Company, or by Agent or
Collateral Agent on Company's or such Subsidiary's behalf or obtained by a Bank
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pursuant to such Bank's exercise of its rights under Section 6.7, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with Company or any
Subsidiary of Company; except to the extent such information (a) was or becomes
generally available to the public other than as a result of disclosure by the
Bank or (b) was or becomes available on a non-confidential basis from a source
other than Company, provided that such source is not bound by a confidentiality
--------
agreement with Company known to the Bank; provided, however, that Agent,
-------- -------
Collateral Agent, and any Bank may disclose such information (i) at the request
or pursuant to any requirement of any Governmental Authority to which the Bank
is subject or in connection with an examination of such Bank by any such
authority; (ii) pursuant to subpoena or other court process; (iii) when required
to do so in accordance with the provisions of any applicable Requirement of Law;
(iv) to the extent reasonably required in connection with any litigation or
proceeding to which Agent, Collateral Agent, any Bank, or their respective
Affiliates may be party; (v) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (vi)
to such Bank's Affiliates or any of their Subsidiaries or their Affiliates'
directors, officers, employees, auditors, counsel, advisors, or representatives
whom it determines need to know such information for the purposes set forth in
this Section, provided that such Person agrees to keep such information
--------
confidential to the same extent required by Banks hereunder; (vii) to any bank
or financial institution or other entity to which such Bank has assigned or
desires to assign an interest or participation in the Loan Documents or the
Obligations, provided that such Person agrees to keep such information
--------
confidential to the same extent required by Banks hereunder; (viii) to any Bank
or its Affiliate, as expressly permitted under the terms of any other document
or agreement regarding confidentiality to which Company or any Subsidiary of
Company is party or is deemed party with such Bank or such Affiliate; and (ix)
to its Affiliates in connection with any such Affiliate's business with Company.
10.10 Set-off. In addition to any rights and remedies of Banks provided by
-------
law, if an Event of Default exists (after the giving of any required notice and
the expiration of any grace period required to make the relevant event an Event
of Default), each Bank is authorized at any time and from time to time, without
prior notice to Company, any such notice being waived by Company to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owed by, such Bank or, in the case of Citicorp U.S.A.,
Inc., Citibank, N.A., to or for the credit or the account of Company against any
and all Obligations owing to such Bank or Citibank, N.A., now or hereafter
existing, irrespective of whether or not Agent or such Bank shall have made a
request for payment under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured and Citibank, N.A. is hereby
irrevocably authorized to permit such setoff and application. Each Bank
severally agrees promptly to notify Company and Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
-------- -------
notice shall not affect the validity of such set-off and application. The rights
of each Bank under this Section are in addition to the other rights and remedies
(including other rights of set-off) which the Bank may have.
10.11 Notification of Addresses, Lending Offices, etc. Each Bank shall
-----------------------------------------------
notify Agent and Company in writing of any changes in the address to which
notices to the Bank should be
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directed, of addresses of each of its Lending Offices, of payment instructions
in respect of all payments to be made to it hereunder and of such other
administrative information as Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties shall be lodged
with Company and Agent.
10.13 Severability. The illegality or unenforceability of any provision of
------------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of Company, Banks, Agent, Collateral
Agent, Agent-Related Persons and Collateral Agent-Related Persons and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
None of Agent, Collateral Agent, any Bank, any Agent-Related Persons and any
Collateral Agent-Related Persons shall have any obligation to any Person not a
party to this Agreement or other Loan Documents.
10.15 Change in Accounting Principles. If any change in GAAP occurs or
-------------------------------
takes effect after the Closing Date which would result in a change in any
quantity reported to Banks hereunder which provides the basis for any covenant,
performance obligation or standard of measurement used in this Agreement, the
parties hereto agree to enter into negotiations in order to amend such covenant,
performance obligation or standard of performance so as to reflect such change
with the result that the criteria for evaluating compliance with such covenant,
performance obligation or standard of performance shall be the same after the
change as if the change had not been made. Until the parties hereto agree to
such amendment, all covenants, performance obligations and standards of
performance shall be calculated without giving effect to the change in GAAP.
10.16 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES; PROVIDED THAT AGENT, COLLATERAL AGENT,
BANKS, AND COMPANY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY
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EXECUTION AND DELIVERY OF THIS AGREEMENT, COMPANY, AGENT, COLLATERAL AGENT, AND
BANKS EACH CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. COMPANY, AGENT, COLLATERAL AGENT, AND
BANKS EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
--------------------
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
COMPANY, AGENT, COLLATERAL AGENT, AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
10.17 Interpretation. This Agreement is the result of negotiations between
--------------
and has been reviewed by counsel to Agent, Company and other parties, and is the
product of all parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against Company, Banks, or Agent merely because
of their involvement in the preparation of such documents and agreements.
10.18 Representation of Banks. Each Bank party to and as of the date of
-----------------------
this Agreement severally and only with respect to itself and to its status as a
Bank represents that it is entitled to receive interest payments from Company
free and clear of and without deduction for any U.S. taxes collected by way of
withholding that are in effect as of the date of this Agreement. Each Bank party
to and as of the date of this Agreement severally and only with respect to
itself represents that it is either (a) a corporation, company or association,
incorporated or organized in or under the laws of the U.S. or a state of the
U.S. (a "U.S. corporation"); (b) a non-U.S. corporation lending through its U.S.
branch, which will treat the interest income as effectively connected with its
U.S. trade or business; or (c) a non-U.S. corporation, resident in a country
that has a treaty with the U.S. that exempts interest payments by Company from
withholding taxes.
10.19 Waiver of Jury Trial. COMPANY, BANKS, AGENT AND COLLATERAL AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, COLLATERAL AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. COMPANY, BANKS, COLLATERAL AGENT AND AGENT EACH AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
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SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
10.20 Amendments and Waivers Regarding Collateral. Written agreement from
-------------------------------------------
Requisite Banks is required for any waiver, amendment, or consent which releases
any Lien granted in favor of Collateral Agent other than the release of (a) any
Lien encumbering any item of Collateral that is the subject of a Capital Lease,
Equipment Financing Transaction, Real Estate Financing Transaction, Permitted
Receivables Purchase Facility or sale or other disposition of assets permitted
by Section 7.3 or (b) any Guarantor from a Guaranty other than in connection
with a sale of all of the Capital Stock of such Guarantor to any Person (other
than an Affiliate of Company) pursuant to a sale or other disposition permitted
by Section 7.3; and written agreement from all Banks is required for any waiver,
amendment, or consent which releases any Lien granted in favor of Collateral
Agent with respect to all or substantially all of the Collateral.
ARTICLE XI
GENERAL RELEASE
---------------
11.1 Except with respect to the matters, rights and obligations specified
in Section 11.2, Company for itself and on behalf of its parent, subsidiary and
controlled affiliate corporations, past or present, and each of them, as well as
each of their respective directors, officers, agents, servants, representatives,
attorneys, administrators, executors, heirs, assigns, predecessors and
successors in interest, and each of them (collectively, the "Releasors") hereby
---------
release and forever discharge Agent, Collateral Agent and Banks and each of
their respective parents, subsidiaries and affiliates, past or present, and each
of them, as well as each of their respective directors, officers, agents,
servants, employees, shareholders, representatives, attorneys, administrators,
executors, heirs, assigns, predecessors and successors in interest, and all
other persons, firms or corporations with whom any of the former have been, are
now, or may hereafter be affiliated, and each of them (collectively, the
"Releasees"), from and against any and all claims, demands, liens, agreements,
---------
contracts, covenants, actions, suits, causes of action in law or equity,
obligations, controversies, debts, costs, expenses, damages, judgments, orders
and liabilities of whatever kind or nature in law, equity or otherwise, whether
known or unknown, fixed or contingent, suspected or unsuspected by the
Releasors, and whether concealed or hidden, which Releasors now own or hold or
have at any time heretofore owned or held, which are based upon or arise out of
or in connection with any matter, cause or thing existing at any time prior to
the date hereof or anything done, omitted or suffered to be done or omitted at
any time prior to the date hereof in connection with the Existing Credit
Agreement, this Agreement and the other Loan Documents (collectively the
"Released Matters").
----------------
11.2 Notwithstanding anything hereunder to the contrary, this Article XI
shall not release or alter any obligation arising subsequent to the date hereof
to comply with the terms and conditions of this Agreement and the other Loan
Documents. It is expressly understood and agreed that it is the intent of
Company to forever release certain claims against Agent, Collateral Agent and
Banks, including, but not limited to, any claims related to the actions and
omissions of Releasees prior to the date hereof, but that nothing herein shall
affect the obligations of the
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Releasees arising subsequent to the date hereof, including, but not by way of
limitation, compliance subsequent to the date hereof with all terms and
conditions of this Agreement and the other Loan Documents.
11.3 Without limiting the generality of the foregoing, Company for itself
and on behalf of the other Releasors expressly releases any and all past,
present and future claims in connection with the Released Matters, about which
the Releasors do not know or suspect to exist in their favor, whether through
ignorance, oversight, error, negligence or otherwise, and which, if known, would
materially affect Company's decision to enter into this release, and to this end
Company for itself, and on behalf of each of the other Releasors, waives all
rights under Section 1542 of the Civil Code of California, which states in full
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."
Company knowingly and willingly waives the provisions of Section 1542 and
acknowledges and agrees that this waiver is an essential and material term of
this release. Company has reviewed this release with Company's legal counsel,
and Company understands and acknowledges the significance and consequence of
this release and of the specific waiver of Section 1542 of the Civil Code of
California.
11.4 Company represents, warrants and agrees that in executing and
entering into this release, Company is not relying and has not relied upon any
representation, promise or statement made by anyone which is not recited,
contained or embodied in this Agreement or the other Loan Documents. Company
understands and expressly assumes the risk that any fact not recited, contained
or embodied therein may turn out hereafter to be other than, different from, or
contrary to the facts now known to Company or believed by Company to be true.
Nevertheless, Company intends by this release to release fully, finally and
forever all Released Matters and agrees that this release shall be effective in
all respects notwithstanding any such difference in facts, and shall not be
subject to termination, modification or rescission by reason of any such
difference in facts.
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EXHIBIT 10.7
Exhibit V
---------
[FORM OF] PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of
---------
January 31, 2000 and entered into by and among Levi Strauss & Co., a Delaware
corporation ("Company"), each of the undersigned direct and indirect
-------
Subsidiaries of Company (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively, "Subsidiary Grantors") and each
- ------------------- -------------------
Additional Grantor that may become a party hereto after the date hereof in
accordance with Section 20 hereof (Company, each Subsidiary Grantor, and each
Additional Grantor being a "Grantor" and collectively, "Grantors") and Bank of
------- --------
America, N.A. as Collateral Agent for and representative of (in such capacity
herein called "Secured Party") Agent and the several financial institutions
-------------
("Banks") from time to time party to the Credit Agreement referred to below.
-----
PRELIMINARY STATEMENTS
----------------------
A. Pursuant to the Amended and Restated 1997 364 Day Credit
Agreement dated as of January 31, 2000 (said Amended and Restated 1997 364 Day
Credit Agreement, as amended to the date hereof, and as it may hereafter be
further amended, modified, or supplemented from time to time, being the "Credit
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Agreement"; the terms defined therein and not otherwise defined herein being
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used herein as therein defined), by and among Company, the several financial
institutions from time to time party thereto (collectively, "Banks"); the
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several financial institutions party thereto as Senior Managing Agents;, the
several financial institutions party thereto as Managing Agents; the several
financial institutions party thereto as Co-Agents; Bank of America, N.A. as
Agent (in such capacity, "Agent"); and Bank of America, N.A. as Collateral Agent
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(in such capacity, "Collateral Agent"), Banks have made certain commitments,
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subject to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company.
B. Subsidiary Grantors have executed and delivered that certain
Guaranty dated the date hereof (said Guaranty, as amended to the date hereof,
and as it may hereafter be further amended, modified, or supplemented from time
to time, being the "Guaranty") in favor of Secured Party for the benefit of
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Banks and Agent, pursuant to which each Subsidiary Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that 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 Banks to enter into the Credit Agreement, each Grantor hereby
agrees with Secured Party as follows:
Section 1. Grant of Security. Each Grantor hereby assigns to Secured
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Party, and hereby grants to Secured Party a security interest in, all of such
Grantor's right, title and
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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"):
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(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");
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(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 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
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without limitation 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");
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(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles 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, general
intangibles or other obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, general intangibles and other obligations
being the "Accounts", and any and all such security agreements, leases and other
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contracts being the "Related Contracts");
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(d) all deposit accounts ("Deposit Accounts"), together with (i) all
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amounts on deposit from 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 listed on Schedule 1(d);
(e) the "Securities Collateral", which term means:
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(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 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 owned on the date hereof and described on
Schedule 1(e)(i), 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
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Shares"), and all dividends, distributions, returns of capital, cash,
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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
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from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Pledged Shares; provided, that if
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the issuer of any of such Pledged Shares is a controlled foreign
corporation (used hereinafter as such term is defined in Section 957(a) or
a successor provision of the Internal Revenue Code), the Pledged Shares
shall not include any shares of stock of such issuer in excess of the
number of shares of such issuer possessing up to but not exceeding 65% of
the voting power of all classes of Capital Stock entitled to vote of such
issuer, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged
Shares;
(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, including the indebtedness described on Schedule 1(e)(ii) and
issued by the obligors named therein, and the instruments evidencing such
indebtedness (the "Pledged Debt"), and all interest, cash, instruments and
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other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Pledged Debt; and
(iii) all other investment property as that term is defined
in the Uniform Commercial Code ("UCC") of any relevant jurisdiction, of
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such Grantor;
(f) the "Intellectual Property Collateral", which term means:
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(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, without limitation, the trademarks specifically
identified in Schedule 1(f)(i), as the same may be amended pursuant hereto
from time to time) (collectively, the "Trademarks"), all registrations that
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have been or may hereafter be issued or applied for thereon in the United
States and any state thereof and in foreign countries (including, without
limitation, the registrations and applications specifically identified in
Schedule 1(f)(i), as the same may be amended pursuant hereto from time to
time) (the "Trademark Registrations"), all common law and other rights in
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and to the Trademarks in the United States and any state thereof and in
foreign countries (the "Trademark Rights"), and all goodwill of such
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Grantor's business symbolized by the Trademarks and associated therewith
(the "Associated Goodwill");
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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,
without limitation, the patents and patent
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applications listed in Schedule 1(f)(ii), as the same may be amended
pursuant hereto from time to time), all rights corresponding thereto
(including, without limitation, the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to sue for
past, present and future infringements in the name of such Grantor or in
the name of Secured Party or Banks), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all
of the foregoing being collectively referred to as the "Patents"); and
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(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,
without limitation, the registered works listed on Schedule 1(f)(iii), as
the same may be amended pursuant hereto from time to time) (collectively,
the "Copyrights"), all copyright registrations issued to such Grantor and
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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 listed
on Schedule 1(f)(iii), as the same may be amended pursuant hereto from time
to time) (collectively, the "Copyright Registrations"), all common law and
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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
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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 to sue for past,
present and future infringements of the Copyrights and Copyright Rights;
(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 other general intangibles (including tax refunds, rights to payment or
performance, choses in action 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
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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 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
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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 (i) 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 or any of its rights or interests in other property 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) or any Negative Pledge permitted
under the Credit Agreement on such rights or interests; provided, that
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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 and (ii) any real property leasehold, unless
a Grantor has executed a leasehold mortgage or leasehold deed of trust covering
such real property leasehold.
Notwithstanding anything herein to the contrary, neither Company 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 or (iii) any
Pledged Debt of or issued by any Restricted Subsidiary.
Section 2. Security for Obligations.
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(a) 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 without limitation 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:
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(i) with respect to Company, all obligations and
liabilities of every nature of Company now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other
Loan Documents, and
(ii) 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;
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in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
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 Secured
Party, Agent or any Bank as a preference, fraudulent transfer or otherwise, and
all obligations of every nature of Grantors now or hereafter existing under this
Agreement.
(b) Any and all security interests, liens, rights and interest
of Secured Party in and to any or all of the Collateral are subordinated to any
and all security interests, liens, rights and interest of the several financial
institutions party to the Bridge Credit Agreement from time to time in and to
any or all of the Collateral pursuant to the Intercreditor 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 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) 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
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
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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 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
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and Inventory is, as of the date hereof, or in the case of each Additional
Grantor, the date of the applicable counterpart entered into pursuant to Section
20 hereof (each, a "Counterpart") located at the places specified in Schedule
4(b), except for 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
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locations specified in Schedule 4(b), (iii) from a supplier or a Grantor to a
processor, or (iv) to customers of a Grantor.
(c) Office Locations. The chief place of business, the chief
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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 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);
(d) Names. No Grantor (or predecessor by merger or otherwise of
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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 listed in Schedule 4(d) annexed hereto.
(e) Delivery of Certain Collateral. Except as permitted by
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Section 6.11 of the Credit Agreement, all certificates or instruments (excluding
checks) evidencing, comprising or representing the Collateral (including,
without limitation, the Securities Collateral) have been delivered to Secured
Party duly endorsed or accompanied by duly executed instruments of transfer or
assignment in blank.
(f) Securities Collateral. (i) All of the Pledged Shares
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described on Schedule 1(e)(i) have been duly authorized and validly issued and
are fully paid and non-assessable; (ii) all of the Pledged Debt described on
Schedule 1(e)(ii) 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) the Pledged Shares 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 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 Shares; (iv) the Pledged Debt 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) sets forth all of the Pledged Shares owned by each Grantor on
the date hereof; and (vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt
in existence on the date hereof.
(g) Intellectual Property Collateral.
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(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 in
Schedule 1(f)(i);
(ii) a true and complete list of all Patents owned by
such Grantor, in whole or in part, that are material to such Grantor's
business is set forth in Schedule 1(f)(ii);
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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, is set forth in Schedule 1(f)(iii);
(iv) after reasonable inquiry, such Grantor is not
aware of any pending or threatened claim by any third party that any of the
Intellectual Property Collateral owned, held or used by such Grantor is
invalid or unenforceable that is reasonably likely to have a Material
Adverse Effect; and
(v) no effective security interest or other Lien
covering all or any part of the Intellectual Property 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
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to Secured Party for the ratable benefit of Banks and Agent hereunder constitute
valid security interests in the Collateral, securing the payment of the Secured
Obligations. Upon (i) the filing of UCC financing statements naming each Grantor
as "debtor", naming Secured Party as "secured party" and describing the
Collateral in the filing offices with respect to such Grantor set forth on
Schedule 4(h), (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 Secured Party, in each case duly endorsed or accompanied by duly
executed instruments of assignment or transfer in blank, (iii) in the case of
the Intellectual Property 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,
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substantially in the form of Exhibit II, with the United States Patent and
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Trademark Office and the filing of a Grant of Copyright Security Interest,
substantially in the form of Exhibit III, with the United States Copyright
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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 Secured Party for
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the ratable benefit of Banks and Agent will constitute perfected security
interests therein, to the extent such security interests may be perfected by
filing in the United States or 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
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the expense of 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 Secured Party may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable 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
Secured Party, mark conspicuously each item of chattel paper included in the
Accounts, each Related Contract and, at the reasonable request of Secured Party,
each of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to Secured Party, indicating that such Collateral is
subject to the security
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interest granted hereby, (ii) at the reasonable request of Secured
Party, deliver and pledge to 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
Secured Party, (iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
furnish to 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 Secured Party may reasonably request, all in reasonable
detail, (v) if requested by Co-Agents, 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 Company, deliver to 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 Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (viii) at Secured Party's request, appear in and defend any
action or proceeding that may affect such Grantor's title to or Secured Party's
security interest in all or any part of the Collateral. Each Grantor hereby
authorizes 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
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the foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to 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 Shares
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or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to Secured Party, the representations and warranties
contained in subsections (i)-(iv) of Section 4(g) 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 Secured
Party to attach each Pledge Supplement to this Agreement and agrees that all
Pledged Shares or Pledged Debt 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 Pledge Supplement with respect
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to any additional Pledged Shares or Pledged Debt pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
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(c) Intellectual Property Collateral. Without limiting the
generality of the foregoing Section 5(a), if any Grantor shall hereafter obtain
rights to any new Intellectual Property Collateral or become entitled to the
benefit of (i) 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 (ii) any Copyright Registration, application for
Copyright Registration or renewals or extension of any Copyright, 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
Company, notify 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, and of (i) any Trademark Registrations issued or application
for a Trademark Registration or application for a Patent made, and (ii) any
Copyright Registrations issued or applications for Copyright Registration made,
in any such case, after the date hereof. Within 45 days after the end of each
fiscal quarter of Company during which any Grantor files an application for any
(1) Trademark Registration; (2) Patent; and (3) Copyright Registration, each
Grantor shall execute and deliver to Secured Party and record in all places
where a Grant is recorded an IP Supplement, substantially in the form of Exhibit
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V (an "IP Supplement"), pursuant to which such Grantor shall grant to Secured
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Party a security interest to the extent of its interest in such Intellectual
Property Collateral; provided, if, in the reasonable judgment of such Grantor,
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after due inquiry, granting such interest would result in the grant of a
Trademark Registration or Copyright Registration in the name of Secured Party,
such Grantor shall give written notice to Secured Party on the day on which such
Grantor would otherwise be required to record the IP Supplement and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration or
Copyright Registration, as the case may be. Upon delivery to Secured Party of an
IP Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) 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 Intellectual Property Collateral or
any Intellectual Property Collateral included on Schedule A to such IP
Supplement. Each Grantor hereby authorizes 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 Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
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failure of any Grantor to execute an IP Supplement with respect to any
additional Intellectual Property Collateral pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
Section 6. Certain Covenants of Grantors.
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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;
V-1O
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(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days of such change;
(c) give 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;
(d) if Secured Party gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes; and
(e) except as otherwise not prohibited by the Credit Agreement,
pay promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral.
Section 7. Special Covenants With Respect to Equipment and
--------------------------------------------------------------
Inventory.
- ----------
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at
the places therefor specified on Schedule 4(b), or upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable 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 permitted by Section 6.6 of 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. Each Grantor shall promptly furnish to Secured Party a statement
respecting any material loss or damage to 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,
and such Grantor's cost therefor;
(d) if any Inventory is in the possession or control of any of
such Grantor's agents or processors, within 30 days of the Closing Date (with
respect to existing agents or processors) and promptly after any such Inventory
comes into the possession or control of such Grantor's agents or processors
(with respect to future agents or processors), instruct such agent or processor
to hold all such Inventory for the account of Secured Party and subject to the
instructions of Secured Party, and use commercially reasonable efforts, but at
no out-of-pocket cost to such Grantor, to obtain waivers or bailee letters in
form and substance reasonably
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satisfactory to Collateral Agent from all public warehouses in which Inventory
is maintained and all such agents or processors; and
(e) each Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms of the
Credit 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) or, upon
30 days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable 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
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 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 Secured Party, each Grantor shall deliver to Secured Party complete
and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than three (3) 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 Secured Party's
direction, shall take) such action as such Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; provided, however, that 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 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 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 Secured Party and, upon such
notification and at the expense of 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 Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
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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
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to 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 16 hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Account, 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 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 Secured Party. 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 (i) not, except as otherwise
----------
not prohibited by the Credit Agreement, permit any issuer of Pledged Shares 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 Shares which is a controlled
foreign corporation is a controlled foreign corporation, 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 Shares not to issue any stock, other equity interests or other
securities in addition to or in substitution for the Pledged Shares 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
Shares; (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 subsection (iv) to the contrary, such Grantor shall
only be required to pledge the outstanding Capital Stock of a controlled foreign
corporation possessing up to but not exceeding 65% of the voting power of all
classes of Capital Stock of such controlled foreign corporation 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 Debt; provided,
--------
notwithstanding anything contained in this subsection (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
V-13
<PAGE>
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 subsection (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 Secured Party of any event of which such Grantor becomes
aware causing loss or depreciation in the value of the Securities Collateral
that has a Material Adverse Effect; and (viii), at the request of Secured Party,
promptly execute and deliver to Secured Party an agreement providing for the
control, as that term is defined in the UCC, by 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 Secured Party shall have
notified such Grantor that, in Secured Party's reasonable judgment, such action
would have a Material Adverse Effect; and provided further, such Grantor shall
----------------
give 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 Shares for or such Grantor's consent to
the election of directors or other members of a governing body of an issuer of
Pledged Shares 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, and no notice of any such voting or consent need be
given to 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 Secured
Party to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) 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 subsection (i) above and to receive the dividends, distributions,
principal or interest payments which it is authorized to receive and retain
pursuant to subsection (ii) above.
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<PAGE>
Upon the occurrence and during the continuation of an Event of Default, (i)
upon written notice from 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 Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights; (ii) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (iii) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of subsection (ii)
of the immediately preceding paragraph or subsection (ii) above shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of such Grantor and shall forthwith be paid over to Secured Party as
Securities Collateral in the same form as so received (with any necessary
endorsements).
In order to permit 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 Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (ii) without limiting the effect of subsection (i)
above, each Grantor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares 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 Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares 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.
(d) Investment Property. Company shall not maintain any investment
-------------------
property with any financial or other institution unless such institution has
executed a control agreement in form and substance reasonably satisfactory to
Collateral Agent.
Section 10. Special Covenants With Respect to the Intellectual
--------------------------------------------------
Property Collateral.
- -------------------
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the
Intellectual Property 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
V-15
<PAGE>
assignment of, such Grantor's rights and interests in any property included
within the definitions of any Intellectual Property 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 Intellectual Property Collateral,
including, without limitation, 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 Intellectual Property Collateral, except where the failure to
give such notice would not have a Material Adverse Effect;
(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 Secured Party from time to time at Secured
Party's reasonable request statements and schedules further identifying and
describing any Intellectual Property 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 Intellectual Property 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
Secured Party's reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, 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 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 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 Intellectual Property
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to 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 16 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.
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<PAGE>
(c) Each Grantor shall have the duty diligently, through counsel
reasonably acceptable to 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 Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), 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 Intellectual Property 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 Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by Grantors.
Subject to the foregoing, each Grantor shall give Secured Party written notice
of any abandonment of any Intellectual Property Collateral registered with a
Governmental Authority or any pending patent application or any Patent within 45
days after the end of each fiscal quarter of Company.
(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
Intellectual Property Collateral. Secured Party shall provide, at such
Grantor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party. Each Grantor shall, within 45 days after the end of each
fiscal quarter of Company, notify Secured Party of the institution of, or of
any adverse determination 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
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto requested by 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 Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral and any other
collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable 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 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 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
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<PAGE>
requirement that any monetary payment whatsoever be made to such Grantor. In
addition, each Grantor hereby grants to 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
Intellectual Property 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. To the extent that
the Credit Agreement permits any Grantor to license the Intellectual Property
Collateral, 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 Intellectual Property Collateral permitted
hereunder in form and substance reasonably satisfactory to Secured Party
pursuant to which (i) 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 (ii) such licensee shall
acknowledge and agree that the Intellectual Property Collateral licensed to it
is subject to the security interest created in favor of Secured Party and the
other terms of this Agreement.
Section 11. Secured Party Appointed Attorney-in-Fact.
----------------------------------------
Each Grantor hereby irrevocably appoints 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, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(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 Agent under the Credit Agreement;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(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 Sections 11(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
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) except as otherwise permitted by Section 6.5 of 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 Secured Party in its
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<PAGE>
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to 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
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and 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 12. Secured Party May Perform.
-------------------------
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Grantors under Section 17(b) hereof.
Section 13. Standard of Care.
----------------
The powers conferred on 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, 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. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
Section 14. Remedies.
--------
(a) Generally. If any Event of Default (as defined in the Credit
----------
Agreement) shall have occurred and be continuing, 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 Secured Party
forthwith, assemble all or part of the Collateral as directed by Secured Party
and make it available to Secured Party at a place to be designated by 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 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
V-19
<PAGE>
such Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding subsection (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 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 Secured Party may deem commercially reasonable, (vi) exercise
dominion and control over and refuse to permit further withdrawals from any
Deposit Account maintained with Secured Party or any Bank constituting a part of
the Collateral and (vii) without notice to any Grantor, transfer to or to
register in the name of Secured Party or any of its nominees any or all of the
Securities Collateral. Secured Party or any Bank may be the purchaser of any or
all of the Collateral at any such sale and Secured Party, as agent for and
representative of Banks (but not any Bank in its individual capacity unless
Majority Banks 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 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.
Secured Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
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 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 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, Grantors shall be jointly and
severally liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency. Each Grantor further agrees that a
breach of any of the covenants contained in this Section will cause irreparable
injury to Secured Party, that 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 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 regulations
promulgated thereunder, (the "Securities Act") and applicable state
--------------
securities laws, 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
V-20
<PAGE>
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
Secured Party by such Grantor pursuant hereto, each Grantor agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner and that 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 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 Shares to be sold hereunder from time to time to
furnish to Secured Party all such information as 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 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.
(ii) If Secured Party shall determine to exercise its right to
sell all or any of the Securities Collateral pursuant to this Section, each
Grantor agrees that, upon request of Secured Party (which request may be
made by 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 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 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 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 reasonable costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this Section.
V-21
<PAGE>
(iii) Without limiting the generality of Sections 10.4 and 10.5
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) Secured Party
and each Bank 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
Secured Party and such other Persons for any legal or other expenses
reasonably incurred by 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 Secured Party and such other Persons and counsel for
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 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 Secured Party or such
Persons within the meaning of the Securities Act.
Section 15. Additional Remedies for Intellectual Property Collateral.
--------------------------------------------------------
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Sections 10.4 and 10.5 of
the Credit Agreement and Section 17 hereof, as applicable, in connection with
the exercise of its rights under this Section, and, to the extent that Secured
Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Intellectual Property 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
Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property 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
V-22
<PAGE>
Obligations outstanding only to the extent that Secured Party (or any Bank)
receives cash proceeds in respect of the sale of, or other realization upon, the
Intellectual Property Collateral; and (iv) within five Business Days after
written notice from Secured Party, each Grantor shall make available to 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 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 Secured Party's behalf and
to be compensated by 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 Secured Party of any rights, title and interests in and to the
Intellectual Property 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, 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 Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
--------
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of 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
Secured Party and Liens expressly permitted by the Credit Agreement.
Section 16. Application of Proceeds.
-----------------------
Except as expressly provided elsewhere in this Agreement and in the
Intercreditor Agreement, all proceeds received by Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Grantors, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the exercise of any
right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) and, as to obligations arising
under the Credit Agreement, as provided in the Credit Agreement; and
V-23
<PAGE>
THIRD: To the payment to or upon the order of Company, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
Section 17. Indemnity and Expenses.
----------------------
(a) Grantors jointly and severally agree to indemnify Secured Party
and each Bank 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 without limitation enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Bank's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Subject to Section 6.7 of the Credit Agreement, Grantors jointly
and severally agree to pay to Secured Party upon demand (i) the amount of any
and all reasonable costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with the administration of this Agreement or the failure by
any Grantor to perform or observe any of the provisions hereof and (ii) the
amount of any and all costs and expenses, including the fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with the exercise or enforcement of any of the rights of Secured
Party hereunder.
(c) The obligations of Grantors in this Section 17 shall (i) survive
the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, 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 18. 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 Secured Obligations and the cancellation or termination of the
Commitments, (ii) be binding upon Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing subsection (iii), but
subject to the provisions of Sections 10.7 and 10.8 of the Credit Agreement, any
Bank 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 Banks herein or otherwise.
(b) Upon the payment in full of all Secured Obligations and the
cancellation or termination of the Commitments, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantors. Upon any such termination Secured Party will, at Grantors'
expense, execute and deliver to Grantors such documents as Grantors shall
reasonably request to evidence such termination. 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 Secured
V-24
<PAGE>
Party, such Grantor shall deliver an officers' certificate (i) stating that the
Collateral subject to such disposition is being sold, transferred or otherwise
disposed of in compliance with the terms of the Credit Agreement, and (ii)
specifying the Collateral being sold, transferred or otherwise disposed of in
the proposed transaction. Upon the receipt of such officers' certificate,
Secured Party shall, at such Grantor's expense, so long as Secured Party has no
reason to believe that the officers' certificate delivered by such Grantor with
respect to such sale is not true and correct, execute and deliver such releases
of its security interest in such Collateral which is to be so sold, transferred
or disposed of, as may be reasonably requested by such Grantor.
Section 19. Secured Party as Agent.
----------------------
(a) Secured Party has been appointed to act as Secured Party
hereunder by Banks. 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
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
--------
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 14 hereof in accordance with the instructions of Majority Banks.
(b) Secured Party shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute notice of resignation as Secured Party under this Agreement; removal
of Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor collateral agent pursuant to Section 9.10 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
Section 9.10 of the Credit Agreement by a successor collateral agent, that
successor collateral agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed 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 or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed collateral agent's resignation or
removal hereunder as 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 Secured Party hereunder.
Section 20. Additional Grantors.
-------------------
The initial Subsidiary Grantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto as additional Grantors (each an
V-25
<PAGE>
"Additional Grantor"), by executing a counterpart substantially in the form of
------------------
Exhibit VI to this Agreement. Upon delivery of any such counterpart to Secured
- ----------
Party, notice of which is hereby waived by 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 Agent not to cause any Subsidiary of Company 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 21. 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 Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided this Agreement may be modified by the execution of a counterpart by an
- --------
Additional Grantor in accordance with Section 20 hereof and 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 22. Notices.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
applicable signature page hereof, and (ii) shall be followed promptly by a hard
copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to any Grantor or Collateral Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as to each other party, at such other address as shall
be designated by such party in a written notice to each Grantor and Collateral
Agent.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery.
Section 23. Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or
V-26
<PAGE>
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
Section 24. Severability.
------------
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 25. Headings.
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
Section 26. Governing Law; Terms; Rules of Construction.
-------------------------------------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. 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 Section 1.2 of the Credit Agreement shall be applicable to this
Agreement mutatis mutandis.
Section 27. Consent to Jurisdiction and Service of Process.
----------------------------------------------
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GRANTOR, SECURED PARTY, AGENT AND BANKS EACH CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH GRANTOR, SECURED PARTY, AGENT AND BANKS EACH IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GRANTOR, SECURED PARTY, AGENT
AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
V-27
<PAGE>
Section 28. Waiver of Jury Trial.
--------------------
EACH GRANTOR, BANKS, AGENT AND SECURED PARTY EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, COLLATERAL AGENT-
RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GRANTOR, BANKS, AGENT AND SECURED PARTY
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 29. Counterparts.
------------
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but 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.
[Remainder of page intentionally left blank]
V-28
<PAGE>
IN WITNESS WHEREOF, Grantors and 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 STRAUSS & CO.
By: _________________________________
Name:________________________________
Title:_______________________________
Each of the entities listed on Schedule A annexed
----------
hereto
By: _________________________________
on behalf of each of the entities listed on
Schedule A annexed hereto
----------
Name:________________________________
Title:_______________________________
BANK OF AMERICA, N.A., as Collateral
Agent, as Secured Party
By:__________________________________
Name:________________________________
Title:_______________________________
V-29
<PAGE>
Schedule A
----------
Name Notice Address for each Subsidiary
- ---- ----------------------------------
Grantor
-------
V-Sch. A-1
<PAGE>
Schedule 1(d) to
----------------
Pledge and Security Agreement
-----------------------------
Deposit Accounts
- ----------------
V-Sch. 1(d)-1
<PAGE>
Schedule 1(e)(i) to
-------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
PERCENTAGE OF
CLASS STOCK NUMBER OUTSTANDING
OF STOCK OR REGISTERED CERTIFICATE PAR OF SHARES
STOCK ISSUER EQUITY INTEREST OWNER NOS. VALUE SHARES PLEDGED
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
V-Sch. 1(e)(i)-1
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
PERCENTAGE OF
CLASS STOCK NUMBER OUTSTANDING
OF STOCK OR REGISTERED CERTIFICATE PAR OF SHARES
STOCK ISSUER EQUITY INTEREST OWNER NOS. VALUE SHARES PLEDGED
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
V-Sch. 1(e)(i)-2
<PAGE>
Schedule 1(e)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
AMOUNT OF
DEBT ISSUER PAYEE INDEBTEDNESS
========================================================================================================
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
V-Sch. 1(e)(ii)-1
<PAGE>
Schedule 1(f)(i) to
-------------------
Pledge And Security Agreement
-----------------------------
U.S. Trademarks:
- ---------------
<TABLE>
<CAPTION>
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
<S> <C> <C> <C>
Foreign Trademarks:
- ------------------
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
</TABLE>
V-Sch. 1(f)(i)-1
<PAGE>
Schedule 1(f)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
U.S. Patents Issued:
- -------------------
<TABLE>
<CAPTION>
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
---------- ---------- --------- -------- -----
<S> <C> <C> <C> <C>
</TABLE>
U.S. Patents Pending:
- --------------------
<TABLE>
<CAPTION>
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- --------
<S> <C> <C> <C> <C>
</TABLE>
Foreign Patents Issued:
- ----------------------
<TABLE>
<CAPTION>
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
---------- ---------- --------- -------- -----
<S> <C> <C> <C> <C>
</TABLE>
V-Sch. 1(f)(ii)-1
<PAGE>
Foreign Patents Pending:
- -----------------------
<TABLE>
<CAPTION>
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- ----------
<S> <C> <C> <C> <C>
</TABLE>
V-Sch. 1(f)(ii)-2
<PAGE>
Schedule 1(f)(iii) to
---------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
U.S. Copyrights:
- ---------------
Title Registration No. Date of Issue Registered Owner
- ----- ---------------- ------------- ----------------
<S> <C> <C> <C>
</TABLE>
Foreign Copyright Registrations:
- -------------------------------
<TABLE>
<CAPTION>
Country Title Registration No. Date of Issue Registered Owner
- ------- ----- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
Pending U.S. Copyright Registrations & Applications:
- ----------------------------------------------------
<TABLE>
<CAPTION>
Title Reference No. Date of Application Copyright Claimant
- ----- ------------- ------------------- ------------------
<S> <C> <C> <C>
</TABLE>
Pending Foreign Copyright Registrations & Applications:
- --------------------------------------------------------
<TABLE>
<CAPTION>
Country Title Registration No. Date of Issue [Registered Owner]
- ------- ----- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
V-Sch. 1(f)(iii)-1
<PAGE>
Schedule 4(b) to
----------------
Pledge and Security Agreement
-----------------------------
Locations of Equipment and Inventory
------------------------------------
<TABLE>
<CAPTION>
Name of Grantor Locations of Equipment and Inventory
- --------------- ------------------------------------
<S> <C>
</TABLE>
V-Sch. 4(b)-1
<PAGE>
Schedule 4(c) to
----------------
Pledge and Security Agreement
-----------------------------
Office Locations
----------------
<TABLE>
<CAPTION>
Name of Grantor Office Locations
- --------------- ----------------
<S> <C>
</TABLE>
V-Sch. 4(c)-1
<PAGE>
Schedule 4(d) to
----------------
Pledge and Security Agreement
-----------------------------
Other Names
-----------
<TABLE>
<CAPTION>
Name of Grantor Other Names
- --------------- -----------
<S> <C>
</TABLE>
V-Sch. 4(d)-1
<PAGE>
Schedule 4(h) to
----------------
Pledge and Security Agreement
-----------------------------
Filing Offices
--------------
<TABLE>
<CAPTION>
Grantor Filing Offices
- ------- --------------
<S> <C>
</TABLE>
V-Sch. 4(h)-1
<PAGE>
Exhibit I to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
Amended and Restated 1997 364 Day Credit Agreement dated as of January 31, 2000
(said Amended and Restated 1997 364 Day Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Senior Managing
- ------
Agents; the several financial institutions party thereto as Managing Agents; the
several financial institutions party thereto as Co-Agents; Bank of America, N.A.
as Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Agent, pursuant to which Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by agreements
governing such license or other use) in and to all trademarks, service
marks, designs, logos, indicia, tradenames,
V-I-1
<PAGE>
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, without limitation,
the trademarks specifically identified in Schedule A) (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, without limitation, the registrations and
applications specifically identified in Schedule A) (the "Trademark
---------
Registrations"), all common law and other rights (but in no event any of
-------------
the obligations) 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"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 is intentionally left blank.]
V-I-2
<PAGE>
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 _______, 2000.
[NAME OF GRANTOR]
By:_____________________________
Name:___________________________
Title:__________________________
V-I-3
<PAGE>
Schedule A to
-------------
Grant of Trademark Security Interest
------------------------------------
United States
Trademark Registration Registration
Registered Owner Description Number Date
- ---------------- ----------- ------ ----
V-Sch. A-1
<PAGE>
Exhibit II to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns and
-------
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, Levi Strauss & Co., a Delaware corporation, has entered into the
Amended and Restated 1997 364 Day Credit Agreement dated as of January 31, 2000
(said Amended and Restated 1997 364 Day Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Senior Managing
- ------
Agents; the several financial institutions party thereto as Managing Agents; the
several financial institutions party thereto as Co-Agents; Bank of America, N.A.
as Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Agent, pursuant to which Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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"):
-----------------
(i) all rights, title and interest (including rights acquired pursuant to a
license or otherwise but only to the extent permitted by agreements
governing such license or other use) in and to all patents and patent
applications and rights and interests in patents and
V-II-1
<PAGE>
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,
without limitation, the patents and patent applications listed in Schedule
--------
A), all rights (but not obligations) corresponding thereto to sue for past,
-
present and future infringements and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all
of the foregoing being collectively referred to as the "Patents"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 intentionally left blank.]
V-II-2
<PAGE>
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 ____________, 2000.
[NAME OF GRANTOR]
By:__________________________
Name:________________________
Title:_______________________
V-II-3
<PAGE>
Schedule A to
-------------
Grant of Patent Security Interest
---------------------------------
Patents Issued:
- --------------
Patent No. Issue Date Invention Inventor Registered Owner
---------- ---------- --------- -------- ----------------
Patents Pending:
- ---------------
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
V-Sch. A-1
<PAGE>
Exhibit III to
--------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
Amended and Restated 1997 364 Day Credit Agreement dated as of January 31, 2000
(said Amended and Restated 1997 364 Day Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Senior Managing
-----
Agents; the several financial institutions party thereto as Managing Agents; the
several financial institutions party thereto as Co-Agents; Bank of America, N.A.
as Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Agent, pursuant to which Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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 "Copyright Collateral"):
--------------------
(i) all rights, title and interest (including rights acquired pursuant to a
license or otherwise but only to the extent permitted by agreements
governing such license or other use) under copyright in various published
and unpublished works of authorship including,
V-III-1
<PAGE>
without limitation, computer programs, computer data bases, other computer
software layouts, trade dress, drawings, designs, writings, and formulas
(including, without limitation, the works listed on Schedule A, as the same
----------
may be amended pursuant hereto from time to time) (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 in the United States and any state thereof
and in foreign countries (including, without limitation, the registrations
listed on Schedule A, 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, without
----------------
limitation, 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 (but not the obligation) to renew and extend such Copyright
Registrations and Copyright Rights and to register works protectable by
copyright and the right (but not the obligation) to sue in the name of such
Grantor or in the name of Secured Party or Banks for past, present and
future infringements of the Copyrights and Copyright Rights; 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Copyright
Collateral granted hereby are
V-III-2
<PAGE>
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 intentionally left blank.]
V-III-3
<PAGE>
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 ___________, 2000.
[NAME OF GRANTOR]
By:______________________________
Name:____________________________
Title:___________________________
V-III-4
<PAGE>
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
- ----- ------------- ------------------- -------------------
V-Sch. A-1
<PAGE>
Exhibit IV to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] PLEDGE SUPPLEMENT
This Pledge Supplement, dated __________________, is delivered pursuant to
the Pledge and Security Agreement, dated January 31, 2000, between Levi Strauss
& Co., a Delaware corporation, the other Grantors named therein, and Bank of
America, N.A. (as it may be from time to time amended, modified, or
supplemented, the "Pledge and Security Agreement"). Capitalized terms used
-----------------------------
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Pledge and Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt] listed on
the schedule attached hereto shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] 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:______________________________
Name:____________________________
Title:___________________________
V-IV-1
<PAGE>
Exhibit V to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] IP SUPPLEMENT
This IP SUPPLEMENT, dated _____________, is delivered pursuant to and
supplements (i) the Pledge and Security Agreement, dated as of January 31, 2000
(as it may be from time to time amended, modified, or supplemented, the "Pledge
------
and Security Agreement"), among Levi Strauss & Co., a Delaware corporation, the
- ----------------------
other Grantors named therein, and Bank of America, N.A., as Secured Party, and
(ii) the [Grant of Trademark Security Interest] [Grant of Patent Security
Interest] [Grant of Copyright Security Interest] dated as of ___________, 2000
(the "Grant") executed by Grantor. Capitalized terms used herein not otherwise
-----
defined herein shall have the meanings ascribed thereto in the Grant.
["Grantor"] grants to Secured Party a security interest in all of Grantor's
right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed 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-V-1
<PAGE>
Exhibit VI to
-------------
Pledge And Security Agreement
-----------------------------
[FORM OF] COUNTERPART
This COUNTERPART (this "Counterpart"), dated _______, is delivered pursuant
-----------
to Section 20 of the Pledge and Security Agreement referred to below. The
undersigned hereby agrees that this Counterpart may be attached to the Pledge
and Security Agreement, dated as of January 31, 2000 (as it may be from time to
time amended, modified, or supplemented, the "Pledge and Security Agreement";
-----------------------------
capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed therein), among Levi Strauss & Co., a Delaware corporation,
the other Grantors named therein, and Bank of America, N.A., as Secured Party.
The undersigned by executing and delivering this Counterpart hereby becomes a
Grantor under the Pledge and Security Agreement in accordance with Section 20
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;
(ii) agrees that all Collateral of the undersigned, including the
items of property described 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:___________________________
V-VI-1
<PAGE>
EXHIBIT 10.8
Exhibit VI
----------
[FORM OF] GUARANTY
This GUARANTY is entered into as of February 1, 2000 by the
undersigned (each a "Guarantor", and together with any future Subsidiaries
---------
executing this Guaranty, being collectively referred to herein as the
"Guarantors") in favor of and for the benefit of Bank of America, N.A., as agent
----------
for and representative of (in such capacity herein called "Guarantied Party")
----------------
Collateral Agent and the several financial institutions ("Banks") from time to
-----
time party to the Credit Agreement referred to below, and for the benefit of the
other Beneficiaries (as hereinafter defined).
PRELIMINARY STATEMENTS
----------------------
A. Levi Strauss & Co., a Delaware corporation ("Company") has entered
-------
into that certain Amended and Restated 1997 364 Day Credit Agreement dated as of
January 31, 2000 with Banks; the several financial institutions party thereto as
Senior Managing Agents; the several financial institutions party thereto as
Managing Agents; the several financial institutions party thereto as Co-Agents;
and Guarantied Party, as Agent and Collateral Agent for Banks (said Amended and
Restated 1997 364 Day Credit Agreement, as it may hereafter be amended,
modified, or supplemented from time to time, being the "Credit Agreement";
----------------
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined).
B. Guarantied Party, Banks and Collateral Agent are sometimes referred to
herein as "Beneficiaries".
-------------
C. A portion of the proceeds of the Loans may be advanced to Guarantors,
and thus the Guarantied Obligations (as hereinafter defined) are being incurred
for and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Company's obligations thereunder be guarantied by Guarantors.
E. Guarantors are willing irrevocably and unconditionally to guaranty
such obligations of Company.
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 Banks and Guarantied Party to enter into the Credit
Agreement, Guarantors hereby agree as follows:
1. Guaranty. (a) In order to induce Banks to extend credit to Company
--------
pursuant to the Credit Agreement, Guarantors jointly and severally irrevocably
and unconditionally guaranty, as primary obligors and not merely as sureties,
the due and punctual payment in full of all
VI-1
<PAGE>
Guarantied Obligations (as hereinafter defined) when the same shall become due,
whether at stated maturity, by acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term
"Guarantied Obligations" is used herein in its most comprehensive sense and
----------------------
includes any and all Obligations of Company, now or hereafter made, incurred or
created, whether absolute or contingent, liquidated or unliquidated, whether due
or not due, and however arising under or in connection with the Credit
Agreement, this Guaranty and the other Loan Documents, including those arising
under successive borrowing transactions under the Credit Agreement which shall
either continue the Obligations of Company or from time to time renew them after
they have been satisfied.
Each Guarantor acknowledges that a portion of the Loans may be advanced to
it, that Lender Letters of Credit may be issued for the benefit of its business
and that the Guarantied Obligations are being incurred for and will inure to its
benefit.
Any interest on any portion of the Guarantied Obligations that accrues
after the commencement of any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company (or, if interest on any portion of the Guarantied
Obligations ceases to accrue by operation of law by reason of the commencement
of said proceeding, such interest as would have accrued on such portion of the
Guarantied Obligations if said proceeding had not been commenced) shall be
included in the Guarantied Obligations because it is the intention of each
Guarantor and Guarantied Party that the Guarantied Obligations should be
determined without regard to any rule of law or order that may relieve Company
of any portion of such Guarantied Obligations.
In the event that all or any portion of the Guarantied Obligations is paid
by Company, the obligations of each Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) is rescinded or recovered directly
or indirectly from Guarantied Party or any other Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments that are so rescinded or
recovered shall constitute Guarantied Obligations.
Subject to the other provisions of this Section 1, upon the failure of
Company to pay any of the Guarantied Obligations when and as the same shall
become due, each Guarantor will upon demand pay, or cause to be paid, in cash,
to Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the aggregate of the unpaid Guarantied Obligations.
(b) Anything contained in this Guaranty to the contrary notwithstanding,
the obligations of each Guarantor under this Guaranty shall be limited to a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
----------
Transfer Laws"), in each case after giving effect to all other liabilities of
- -------------
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (i) in respect of intercompany indebtedness
VI-2
<PAGE>
to Company or other affiliates of Company to the extent that such indebtedness
would be discharged in an amount equal to the amount paid by such Guarantor
hereunder and (ii) under any guaranty which contains a limitation as to maximum
amount similar to that set forth in this Section 1(b), pursuant to which the
liability of such Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving effect as assets to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement, indemnification or
contribution of such Guarantor pursuant to applicable law or pursuant to the
terms of any agreement.
(c) Each Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Credit Agreement (the "Related Guaranties")
------------------
that contain a contribution provision similar to that set forth in this Section
1(c), together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
-----------------------
arising under this Guaranty and the Related Guaranties. Accordingly, in the
event any payment or distribution is made on any date by a Guarantor under this
Guaranty or a guarantor under a Related Guaranty, each such Guarantor or such
other guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Guarantied Obligations paid to Beneficiaries.
2. Guaranty Absolute; Continuing Guaranty. The obligations of each
--------------------------------------
Guarantor hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees that: (a) this Guaranty is a guaranty
of payment when due and not of collectibility; (b) Guarantied Party may enforce
this Guaranty upon the occurrence of an Event of Default under the Credit
Agreement notwithstanding the existence of any dispute between Company and any
Beneficiary with respect to the existence of such event; (c) the obligations of
each Guarantor hereunder are independent of the obligations of Company under the
Loan Documents and the obligations of any other Guarantor and a separate action
or actions may be brought and prosecuted against each Guarantor whether or not
any action is brought against Company or any of such other Guarantors and
whether or not Company is joined in any such action or actions; and (d) a
payment of a portion, but not all, of the Guarantied Obligations by one or more
Guarantors shall in no way limit, affect, modify or abridge the liability of
such or any other Guarantor for any portion of the Guarantied Obligations that
has not been paid. This Guaranty is a continuing guaranty and shall be binding
upon each Guarantor and its successors and assigns, and each Guarantor
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guarantied Obligations.
3. Actions by Beneficiaries. Any Beneficiary may from time to time,
------------------------
without notice or demand and without affecting the validity or enforceability of
this Guaranty or giving rise to any limitation, impairment or discharge of any
Guarantor's liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement
VI-3
<PAGE>
relating thereto and/or subordinate the payment of the same to the payment of
any other obligations, (c) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Guaranty or the
Guarantied Obligations, (d) release, exchange, compromise, subordinate or
modify, with or without consideration, any security for payment of the
Guarantied Obligations, any other guaranties of the Guarantied Obligations, or
any other obligation of any Person with respect to the Guarantied Obligations,
(e) enforce and apply any security now or hereafter held by or for the benefit
of any Beneficiary in respect of this Guaranty or the Guarantied Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that Guarantied Party or the other Beneficiaries, or any of them, may
have against any such security, as Guarantied Party in its discretion may
determine consistent with the Credit Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and (f) exercise any other rights available to
Guarantied Party or the other Beneficiaries, or any of them, under the Loan
Documents.
4. No Discharge. This Guaranty and the obligations of Guarantors
------------
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations, (b) any waiver or modification
of, or any consent to departure from, any of the terms or provisions of the
Credit Agreement, any of the other Loan Documents or any agreement or instrument
executed pursuant thereto, or of any other guaranty or security for the
Guarantied Obligations, (c) the Guarantied Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (d) the application of payments received from any
source to the payment of indebtedness other than the Guarantied Obligations,
even though Guarantied Party or the other Beneficiaries, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations, (e) any failure to perfect or continue perfection of a security
interest in any collateral which secures any of the Guarantied Obligations, (f)
any defenses, set-offs or counterclaims which Company may assert against
Guarantied Party or any Beneficiary in respect of the Guarantied Obligations,
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury, and (g) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the risk of a
Guarantor as an obligor in respect of the Guarantied Obligations.
5. Waivers. Each Guarantor waives, for the benefit of Beneficiaries: (a)
-------
any right to require Guarantied Party or the other Beneficiaries, as a condition
of payment or performance by such Guarantor, to (i) proceed against Company, any
other guarantor (including any other Guarantor) of the Guarantied Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any other guarantor of the Guarantied Obligations or any other
VI-4
<PAGE>
Person, (iii) proceed against or have resort to any balance of any deposit
account or credit on the books of any Beneficiary in favor of Company or any
other Person, or (iv) pursue any other remedy in the power of any Beneficiary;
(b) any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Guarantied Obligations or any agreement or instrument relating thereto or
by reason of the cessation of the liability of Company from any cause other than
payment in full of the Guarantied Obligations; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon Guarantied Party's or any other
Beneficiary's errors or omissions in the administration of the Guarantied
Obligations, except behavior that amounts to gross negligence or willful
misconduct; (e) (i) any principles or provisions of law, statutory or otherwise,
that are or might be in conflict with the terms of this Guaranty and any legal
or equitable discharge of such Guarantor's obligations hereunder, (ii) the
benefit of any statute of limitations affecting such Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any Lien or any property subject
thereto; (f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Guaranty, notices of default under the Credit Agreement or any agreement
or instrument related thereto, notices of any renewal, extension or modification
of the Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
Sections 3 and 4 hereof and any right to consent to any thereof; and (g) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
As used in this paragraph, any reference to "the principal" includes
Company, and any reference to "the creditor" includes Guarantied Party and each
other Beneficiary. In accordance with Section 2856 of the California Civil Code
(a) each Guarantor waives any and all rights and defenses available to it by
reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code, including without limitation any and all rights or defenses such
Guarantor may have by reason of protection afforded to the principal with
respect to any of the Guarantied Obligations, or to any other guarantor of any
of the Guarantied Obligations with respect to any of such guarantor's
obligations under its guaranty, in either case pursuant to the antideficiency or
other laws of the State of California limiting or discharging the principal's
indebtedness or such guarantor's obligations, including without limitation
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure; and
(b) each Guarantor waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a Guarantied Obligation,
has destroyed such Guarantor's rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of any other
guarantor of any of the Guarantied Obligations, has destroyed such Guarantor's
rights of contribution against such other guarantor. No other provision of this
VI-5
<PAGE>
Guaranty shall be construed as limiting the generality of any of the covenants
and waivers set forth in this paragraph. As provided below, this Guaranty shall
be governed by, and shall be construed and enforced in accordance with, the
internal laws of the State of New York, without regard to conflicts of laws
principles. This paragraph is included solely out of an abundance of caution,
and shall not be construed to mean that any of the above-referenced provisions
of California law are in any way applicable to this Guaranty or to any of the
Guarantied Obligations.
6. Guarantors' Rights of Subrogation, Contribution, Etc.; Subordination of
-----------------------------------------------------------------------
Other Obligations. Until the Guarantied Obligations shall have been paid in
- -----------------
full and the Commitments shall have terminated and all Lender Letters of Credit
shall have expired or been cancelled, no Guarantor shall exercise any claim,
right or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against Company or their respective assets in connection with
this Guaranty or the performance by such Guarantor of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under
contract, by statute (including without limitation under California Civil Code
Section 2847, 2848 or 2849), under common law or otherwise and including without
limitation (a) any right of subrogation, reimbursement or indemnification that
such Guarantor now has or may hereafter have against Company, (b) any right to
enforce, or to participate in, any claim, right or remedy that any Beneficiary
now has or may hereafter have against Company, and (c) any benefit of, and any
right to participate in, any collateral or security now or hereafter held by any
Beneficiary. Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights Guarantied Party or the other Beneficiaries may have
against Company, to all right, title and interest Guarantied Party or the other
Beneficiaries may have in any such collateral or security, and to any right
Guarantied Party or the other Beneficiaries may have against such other
guarantor.
Any indebtedness of Company now or hereafter held by any Guarantor is
subordinated in right of payment to the Guarantied Obligations, and any such
indebtedness of Company to a Guarantor collected or received by such Guarantor
after an Event of Default has occurred and is continuing, and any amount paid to
a Guarantor on account of any subrogation, reimbursement, indemnification or
contribution rights referred to in the preceding paragraph when all Guarantied
Obligations have not been paid in full, shall be held in trust for Guarantied
Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied
Party for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations.
7. Expenses. Guarantors jointly and severally agree to pay, or cause to
--------
be paid, on demand, and to save Guarantied Party and the other Beneficiaries
harmless against liability for, any and all costs and expenses (including fees
and disbursements of counsel and allocated costs of internal counsel) incurred
or expended by Guarantied Party or any other Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.
VI-6
<PAGE>
8. Financial Condition of Company. No Beneficiary shall have any
------------------------------
obligation, and each Guarantor waives any duty on the part of any Beneficiary,
to disclose or discuss with such Guarantor its assessment, or such Guarantor's
assessment, of the financial condition of Company or any matter or fact relating
to the business, operations or condition of Company. Each Guarantor has
adequate means to obtain information from Company on a continuing basis
concerning the financial condition of Company and its ability to perform its
obligations under the Loan Documents, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations.
9. Representations and Warranties. Each Guarantor makes, for the benefit
------------------------------
of Beneficiaries, each of the representations and warranties made in the Credit
Agreement by Company as to such Guarantor, its assets, financial condition,
operations, organization, legal status, business and the Loan Documents to which
it is a party.
10. Covenants. Each Guarantor agrees that, so long as any part of the
---------
Guaranteed Obligations shall remain unpaid or any Bank shall have any
Commitment, such Guarantor will, unless Majority Banks shall otherwise consent
in writing, perform or observe, and cause its Subsidiaries to perform or
observe, all of the terms, covenants and agreements that the Loan Documents
state that Company is to cause a Guarantor and such Subsidiaries to perform or
observe.
11. Set Off. In addition to any other rights any Beneficiary may have
-------
under law or in equity, if any amount shall at any time be due and owing by a
Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized
at any time or from time to time, without notice (any such notice being
expressly waived), to set off and to appropriate and to apply any and all
deposits (general or special, including but not limited to indebtedness evidence
by certificates of deposit, whether matured or unmatured) and any other
indebtedness of such Beneficiary owing to a Guarantor and any other property of
such Guarantor held by a Beneficiary to or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to any Beneficiary under this Guaranty.
12. Discharge of Guaranty Upon Sale of Guarantor. If all of the stock of
--------------------------------------------
a Guarantor or any of its successors in interest under this Guaranty shall be
sold or otherwise disposed of (including by merger or consolidation) in a sale
in compliance with the terms of the Credit Agreement, the obligations of such
Guarantor or such successor in interest, as the case may be, hereunder shall
automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such sale; provided
--------
that, if the sale of such stock constitutes a Disposition as a condition
precedent to such discharge and release, Guarantied Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Guarantied Party of the Net Asset Disposition Proceeds (if any)
as required by the Credit Agreement.
13. Amendments and Waivers. No amendment, modification, termination or
----------------------
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom,
VI-7
<PAGE>
shall in any event be effective without the written concurrence of Guarantied
Party and, in the case of any such amendment or modification, Guarantors. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
14. Miscellaneous. It is not necessary for Beneficiaries to inquire into
-------------
the capacity or powers of any Guarantor or Company or the officers, directors or
any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiaries by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiaries by virtue of any statute or rule of law or in
any of the Loan Documents or any agreement between one or more Guarantors and
one or more Beneficiaries or between Company and one or more Beneficiaries. Any
forbearance or failure to exercise, and any delay by any Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS, GUARANTIED
PARTY AND THE OTHER BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Guaranty shall inure to the benefit of Beneficiaries and their
respective successors and assigns.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR, GUARANTIED
PARTY, COLLATERAL AGENT AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR
VI-8
<PAGE>
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW
EACH GUARANTOR, COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR,
COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
15. Additional Guarantors. The initial Guarantor(s) hereunder shall be
---------------------
such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, Subsidiaries of
Company may become parties hereto, as additional Guarantors (each an "Additional
----------
Guarantor"), by executing a counterpart, a form of which is attached as Exhibit
- ---------
A, of this Guaranty. Upon delivery of any such counterpart to Guarantied Party,
notice of which is hereby waived by Guarantors, each such Additional Guarantor
shall be a Guarantor and shall be as fully a party hereto as if such Additional
Guarantor were an original signatory hereof. Each Guarantor expressly agrees
that its obligations arising hereunder shall not be affected or diminished by
the addition or release of any other Guarantor hereunder, nor by any election of
the Guarantied Party not to cause any Subsidiary of Company to become an
Additional Guarantor hereunder. This Guaranty shall be fully effective as to
any Guarantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor hereunder.
16. Counterparts; Effectiveness. This Guaranty may be executed in any
---------------------------
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by the Guaranteed Party of written or
telephonic notification of such execution and authorization of delivery thereof.
VI-9
<PAGE>
17. Guarantied Party as Agent.
-------------------------
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Banks. Guarantied 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, solely in
accordance with this Guaranty and the Credit Agreement.
(b) Guarantied Party shall at all times be the same Person that is
Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to Section 9.9 of the Credit Agreement shall also constitute notice of
resignation as Guarantied Party under this Guaranty; removal of Agent pursuant
to Section 9.9 of the Credit Agreement shall also constitute removal as
Guarantied Party under this Guaranty; and appointment of a successor agent
pursuant to Section 9.9 of the Credit Agreement shall also constitute
appointment of a successor Guarantied Party under this Guaranty. Upon the
acceptance of any appointment as agent under Section 9.9 of the Credit Agreement
by a successor agent, that successor agent shall thereupon succeed to become
vested with all the rights, powers, privileges and duties of the retiring or
removed Guarantied party under this Guaranty, and the retiring or removed
Guarantied Party under this Guaranty shall promptly (i) transfer to such
successor Guarantied Party all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Guarantied Party under this Guaranty, and (ii)
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Guarantied Party of the rights created
hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefits as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[The remainder of this page intentionally left blank.]
VI-10
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first written above.
BATTERY STREET ENTERPRISES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS FINANCIAL CENTER CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS FUNDING LLC
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS GLOBAL FULFILLMENT SERVICES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
VI-11
<PAGE>
LEVI STRAUSS GLOBAL OPERATIONS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Address: ___________________________
___________________________
___________________________
LEVI STRAUSS INTERNATIONAL
By:_________________________________
Name:_______________________________
Title:______________________________
Address: ___________________________
___________________________
___________________________
LEVI STRAUSS LATIN AMERICA, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Address: ___________________________
___________________________
___________________________
LEVI'S ONLY STORES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Address: ___________________________
___________________________
___________________________
VI-12
<PAGE>
NF INDUSTRIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
Address: ____________________________
____________________________
____________________________
ACKNOWLEDGED AND FOR PURPOSES
OF THE WAIVER OF JURY TRIAL SET
FORTH IN SECTION 14 ONLY, AGREED
AS OF THE DATE FIRST WRITTEN ABOVE
Bank of America, N.A., as Agent
By:_______________________________
Title: ___________________________
VI-13
<PAGE>
Exhibit A to
------------
Guaranty
--------
[FORM OF] COUNTERPART FOR ADDITIONAL GUARANTORS
This COUNTERPART (this "Counterpart"), dated _______, _____, is delivered
-----------
pursuant to Section 15 of the Guaranty referred to below. The undersigned
hereby agrees that this Counterpart may be attached to the Guaranty, dated as of
February 1, 2000 (as it may be from time to time amended, modified, or
supplemented, the "Guaranty"; capitalized terms used herein not otherwise
--------
defined herein shall have the meanings specified therein), among the Guarantors
named therein and Bank of America, N.A., as Guarantied Party. The undersigned,
by executing and delivering this Counterpart, hereby becomes an Additional
Guarantor under the Guaranty in accordance with Section 15 thereof and agrees to
be bound by all of the terms thereof.
IN WITNESS WHEREOF, the undersigned has caused this Counterpart to be
duly executed and delivered by its officer thereunto duly authorized as of
______________, ____.
[NAME OF ADDITIONAL GUARANTOR]
By:__________________________
Name:________________________
Title:_______________________
Address: ____________________
____________________
____________________
VIII-Sch. 1-1
<PAGE>
EXHIBIT 10.9
EXECUTION COPY
AMENDED AND RESTATED 1999 180 DAY CREDIT AGREEMENT
among
LEVI STRAUSS & CO.
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Co-Documentation Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Banks
and
BANK OF AMERICA, N.A.,
as Administrative Agent for Banks
and
BANK OF AMERICA, N.A.,
as Collateral Agent for Banks
dated as of January 31, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS
<S> <C> <C>
1.1 Defined Terms...................................................................... 1
1.2 Other Interpretive Provisions...................................................... 27
1.3 Accounting Principles.............................................................. 28
ARTICLE II
THE CREDIT
2.1 Amounts and Terms of Commitments; the Credit....................................... 28
2.2 Notes; Loan Accounts............................................................... 29
2.3 Procedure for Borrowing............................................................ 29
2.4 Conversion and Continuation Elections.............................................. 30
2.5 Lender 180 Day Letters of Credit................................................... 32
2.6 Voluntary Termination or Reduction of Aggregate 180 Day Commitment; Voluntary
Prepayments........................................................................ 37
2.7 Mandatory Prepayments and Reductions of Aggregate 180 Day Commitment............... 38
2.8 Repayment; Scheduled Reductions of Aggregate 180 Day Commitment.................... 40
2.9 Interest........................................................................... 40
2.10 Fees............................................................................... 41
2.11 Computation of Fees and Interest................................................... 42
2.12 Payments by Company................................................................ 43
2.13 Payments by the Banks to Administrative Agent...................................... 44
2.14 Sharing of Payments, etc........................................................... 44
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes............................................................................... 45
3.2 Illegality.......................................................................... 46
3.3 Increased Costs and Reduction of Return............................................. 47
3.4 Funding Losses...................................................................... 48
3.5 Inability to Determine Rates........................................................ 48
3.6 Reserves on Offshore Rate Loans..................................................... 48
3.7 Certificates of Banks............................................................... 49
3.8 Substitution of Banks............................................................... 49
3.9 Survival............................................................................ 49
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
ARTICLE IV
CONDITIONS PRECEDENT
<S> <C> <C>
4.1 Condition to Closing............................................................... 49
4.2 Conditions to Each Borrowing, Issuance of Lender 180 Day Letter of Credit.......... 53
4.3 Conditions Subsequent.............................................................. 53
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Good Standing, Business, Ownership of Subsidiaries and
Capitalization..................................................................... 54
5.2 Authorization of Borrowing, etc.................................................... 54
5.3 Financial Condition................................................................ 55
5.4 Title to Properties; Liens......................................................... 56
5.5 Litigation; Adverse Facts.......................................................... 56
5.6 Payment of Taxes................................................................... 56
5.7 Materially Adverse Agreements; Performance......................................... 56
5.8 Governmental Regulation............................................................ 57
5.9 ERISA Compliance................................................................... 57
5.10 Environmental Matters.............................................................. 57
5.11 Compliance With Laws............................................................... 58
5.12 Regulation U....................................................................... 58
5.13 Disclosure......................................................................... 58
5.14 Matters Relating to Collateral..................................................... 58
5.15 Intangible Assets.................................................................. 59
5.16 Insurance.......................................................................... 59
5.17 Year 2000.......................................................................... 59
5.18 Solvency........................................................................... 60
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements and Other Reports............................................. 60
6.2 Corporate Existence, etc........................................................... 63
6.3 Compliance With Laws, etc.......................................................... 64
6.4 Compliance with Agreements......................................................... 64
6.5 Payment of Taxes and Claims........................................................ 64
6.6 Maintenance of Properties; Insurance............................................... 64
6.7 Inspection......................................................................... 65
6.8 Use of Proceeds.................................................................... 65
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
6.9 Execution of Guaranty and Collateral Documents by Additional Subsidiaries.......... 66
6.10 Compliance with ERISA.............................................................. 67
6.11 Post Closing Actions............................................................... 67
6.12 Transfer of Receivables............................................................ 69
ARTICLE VII
NEGATIVE COVENANTS
7.1 Indebtedness; Derivative/FX Contracts.............................................. 69
7.2 Limitation on Liens and Negative Pledges........................................... 71
7.3 Dispositions....................................................................... 74
7.4 Fundamental Changes................................................................ 75
7.5 Use of Proceeds.................................................................... 75
7.6 Leverage Ratio..................................................................... 76
7.7 Interest Coverage Ratio............................................................ 76
7.8 Minimum Consolidated EBITDA........................................................ 77
7.9 Change in Business................................................................. 77
7.10 ERISA.............................................................................. 77
7.11 Investments........................................................................ 78
7.12 Restricted Payments................................................................ 79
7.13 Operating Lease Obligations........................................................ 79
7.14 Transactions with Affiliates....................................................... 79
7.15 Amendments of Documents Relating to Indebtedness and Receivables................... 79
7.16 Consolidated Capital Expenditures.................................................. 80
7.17 Materially Adverse Agreements...................................................... 80
7.18 Limitations on Upstreaming......................................................... 80
7.19 Change in Auditors................................................................. 80
7.20 Restricted Subsidiaries............................................................ 81
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default.................................................................... 81
8.2 Remedies............................................................................ 83
8.3 Rights Not Exclusive................................................................ 84
ARTICLE IX
ADMINISTRATIVE AGENT; COLLATERAL AGENT
9.1 Appointment and Authorization...................................................... 85
9.2 Delegation of Duties............................................................... 85
</TABLE>
iii
<PAGE>
TABLE OF CONTENT
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
9.3 Liability of Administrative Agent or Collateral Agent.............................. 85
9.4 Reliance by Administrative Agent and Collateral Agent.............................. 86
9.5 Notice of Default.................................................................. 86
9.6 Credit Decision; Disclosure of Information by Administrative Agent and Collateral
Agent.............................................................................. 86
9.7 Indemnification of Administrative Agent and Collateral Agent....................... 87
9.8 Administrative Agent in Individual Capacity........................................ 88
9.9 Successor Administrative Agent..................................................... 88
9.10 Successor Collateral Agent......................................................... 89
9.11 Withholding Tax.................................................................... 89
9.12 Co-Documentation Agents............................................................ 90
9.13 Collateral Documents, Guaranties and Intercreditor Agreement....................... 91
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers............................................................ 91
10.2 Notices........................................................................... 93
10.3 No Waiver; Cumulative Remedies.................................................... 93
10.4 Costs and Expenses................................................................ 93
10.5 Company's Indemnification......................................................... 94
10.6 Payments Set Aside................................................................ 95
10.7 Successors and Assigns............................................................ 95
10.8 Assignments, Participations, etc.................................................. 95
10.9 Confidentiality................................................................... 97
10.10 Set-off........................................................................... 98
10.11 Notification of Addresses, Lending Offices, etc................................... 98
10.12 Counterparts...................................................................... 98
10.13 Severability...................................................................... 98
10.14 No Third Parties Benefited........................................................ 98
10.15 Change in Accounting Principles................................................... 98
10.16 Governing Law and Jurisdiction.................................................... 99
10.17 Interpretation.................................................................... 99
10.18 Representation of Banks........................................................... 99
10.19 Waiver of Jury Trial..............................................................100
</TABLE>
ARTICLE XI
GENERAL RELEASE
iv
<PAGE>
EXHIBIT LIST
Exhibit I..........................................[FORM OF] NOTICE OF BORROWING
Exhibit II...........................[FORM OF] NOTICE OF CONVERSION/CONTINUATION
Exhibit III.......................................................[FORM OF] NOTE
Exhibit IV......................................[FORM OF] COMPLIANCE CERTIFICATE
Exhibit V .........................[FORM OF] CLOSING DATE CERTIFICATE OF COMPANY
Exhibit VI...............................[FORM OF] PLEDGE AND SECURITY AGREEMENT
Exhibit VII...................................................[FORM OF] GUARANTY
Exhibit VIII.................................[FORM OF] ASSIGNMENT AND ACCEPTANCE
Exhibit IX........................................................PRIVITY LETTER
i
<PAGE>
AMENDED AND RESTATED 1999 180 DAY CREDIT AGREEMENT
This AMENDED AND RESTATED 1999 180 DAY CREDIT AGREEMENT is entered into as
of January 31, 2000 among Levi Strauss & Co., a Delaware corporation
("Company"); the several financial institutions from time to time party to this
-------
Agreement (collectively "Banks" and individually a "Bank"); the several
----- ----
financial institutions party to this Agreement as Co-Documentation Agents; Bank
of America, N.A. as Administrative Agent for Banks; and Bank of America, N.A. as
Collateral Agent for Banks.
WHEREAS, Banks and Company are parties to the 1999 180 Day Credit Agreement
dated as of February 12, 1999, as amended by First Amendment to 1999 180 Day
Credit Agreement dated as of April 6, 1999, Second Amendment to 1999 180 Day
Credit Agreement dated as of August 4, 1998 and Third Amendment to 1999 180 Day
Credit Agreement dated as of August 31, 1999 (the "Existing Credit Agreement");
-------------------------
and
WHEREAS, pursuant to a Waiver dated as of November 12, 1999, Banks agreed
to waive certain provisions of the Existing Credit Agreement until February 3,
2000; and
WHEREAS, Company has agreed to secure its Obligations hereunder and under
the other Loan Documents by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of its personal property and certain of its real
property (other than Principal Property), including a pledge of 100% of the
Capital Stock of certain of its Domestic Subsidiaries and 65% of the Capital
Stock of certain of its Foreign Subsidiaries (other than Restricted
Subsidiaries); and
WHEREAS, certain of the Domestic Subsidiaries of Company have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of their respective personal property and certain of
their respective real property (other than Principal Property), including a
pledge of 100% of the Capital Stock of certain of their respective Domestic
Subsidiaries and 65% of the Capital Stock of certain of their respective Foreign
Subsidiaries (other than Restricted Subsidiaries);
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. In addition to the terms defined elsewhere in this
-------------
Agreement, the following terms have the following meanings:
"Administrative Agent" means Bank of America, in its capacity as agent
--------------------
for Banks hereunder, and any successor administrative agent pursuant to
Section 9.9.
"Administrative Agent-Related Persons" means Administrative Agent and
------------------------------------
any successor administrative agent arising under Section 9.9, together with
their respective
<PAGE>
Affiliates (including, in the case of Bank of America, the Arranger), and
the officers, directors, employees, agents, counsel, and attorneys-in-fact
of such Persons and Affiliates.
"Administrative Agent's Payment Office" means the address for payments
-------------------------------------
set forth on the signature page hereto in relation to Administrative Agent
or such other address as Administrative Agent may from time to time specify
in accordance with Section 10.2.
"Affected Bank" has the meaning specified in Section 3.8.
-------------
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, (a)
power to vote 10% or more of the Securities (on a fully diluted basis) of
the other Person having ordinary voting power for the election of directors
or managing general partners, or (b) to direct or cause the direction of
the management and policies of the other Person, whether through the
ownership of voting Securities, membership interests, by contract, or
otherwise.
"Affiliated Fund" means, with respect to any Bank, a fund that invests
---------------
in commercial loans and is managed by the same investment advisor as such
Bank, an Affiliate of such Bank or by an Affiliate of the same investment
advisor as such Bank.
"Aggregate Bridge Commitment" means the combined Commitments (as
---------------------------
defined therein) under the Bridge Credit Agreement.
"Aggregate 180 Day Commitment" means the combined Commitments of
-----------------------------
Banks. The initial Aggregate 180 Day Commitment is $300,000,000.
"Aggregate Term Commitments" means the sum of (a) the Aggregate
--------------------------
Commitment (as defined therein) under the Amended and Restated 1997 364 Day
Credit Agreement, and (b) the Aggregate Commitment (as defined therein)
under the 1997 Second Amended and Restated Credit Agreement.
"Aggregate Total Commitments" means the sum of (a) the Aggregate
---------------------------
Bridge Commitment and (b) the Aggregate 180 Day Commitment.
"Agreement" means this Amended and Restated 1999 180 Day Credit
---------
Agreement, as amended, supplemented, or modified from time to time.
"Amended and Restated 1997 364 Day Credit Agreement" means the Amended
--------------------------------------------------
and Restated 1997 364 Day Credit Agreement dated as of January 31, 2000,
between Company, Bank of America, as agent, Bank of America, as collateral
agent, and the other lenders parties thereto.
"Applicable Margin" has the meaning specified in Section 2.10.
-----------------
2
<PAGE>
"Arranger" means BancAmerica Securities, Inc., a Delaware corporation.
--------
"Asset Disposition" means the sale by Company or any of its
-----------------
Subsidiaries to any Person other than Company or any of its Subsidiaries of
(a) any of the stock of any of Company's Subsidiaries, (b) substantially
all of the assets of any division or line of business of Company or any of
its Subsidiaries, or (c) any other assets (whether tangible or intangible)
of Company or any of its Subsidiaries other than Dispositions permitted by
Sections 7.3(a), 7.3(c), 7.3(e), 7.3(f), 7.3(g), 7.3(h), and 7.3(m).
"Assignee" has the meaning specified in Section 10.8(a).
--------
"Assignment and Acceptance" means an Assignment and Acceptance
-------------------------
substantially in the form of Exhibit VIII.
------------
"Availability Period" means the period from the date of this Agreement
-------------------
to the close of business of Administrative Agent in San Francisco,
California on January 31, 2002.
"Bank" and "Banks" have the meanings specified in the introductory
---- -----
clause hereto; provided that for purposes of any determination made with
--------
respect to Citicorp U.S.A., Inc. under Section 3.2, 3.3, 3.4, 3.5 or 3.6,
"Bank" shall be deemed to include Citibank, N.A.
"Bank of America" means Bank of America, N.A.
---------------
"Bankruptcy Code" means Title 11 of the United States Code, entitled
---------------
"Bankruptcy" (11 U.S.C. (S)101, et seq.).
-------
"Base Rate" means, for any day, a fluctuating rate per annum equal to
---------
the higher of (a) the Federal Funds Rate plus 1/2 of 1%, and (b) the rate
----
of interest in effect for such day as publicly announced from time to time
by Bank of America as its "prime rate." Such rate is a rate set by Bank of
America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
--------------
Rate.
"Borrower Party" means Company and any of its Material Domestic
--------------
Subsidiaries from time to time party to a Loan Document, and "Borrower
--------
Parties" means all such Persons, collectively.
-------
"Borrowing" means a borrowing hereunder consisting of Loans made to
---------
Company on the same day and, other than in the case of Base Rate Loans,
having the same Interest Period.
3
<PAGE>
"Borrowing Date" means any date on which a Borrowing occurs under
--------------
Section 2.3.
"Bridge Credit Agreement" means the Bridge Credit Agreement dated as
-----------------------
of January 31, 2000, between Company, Bank of America, as administrative
agent, Bank of America, as collateral agent, and the other lenders parties
thereto.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York or San Francisco,
California are authorized or required by law to close and with respect to
calculations, disbursements, and payments relating to Offshore Rate Loans,
a day on which dealings are carried on in the offshore Dollar interbank
market in London.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Lease", as applied to any Person, means any lease of any
-------------
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Capital Markets Transaction" means (a) an issuance or sale of
---------------------------
Securities by Company, through a public offering or private placement, or
(b) a capital contribution to Company; provided, however, that in the case
-------- -------
of debt Securities, any such Securities (i) shall be unsecured, and (ii)
shall not have a stated maturity date or required principal payments
earlier than five years from the date of issuance thereof.
"Capital Stock" means (a) in the case of a corporation, corporate
-------------
stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of a
limited liability company, membership interests, and (e) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distribution of assets of, the issuing
Person.
"Cash Collateral Account" means a blocked deposit account at Bank of
-----------------------
America in which Company grants a security interest to Collateral Agent
pursuant to the Collateral Documents as security for Lender 180 Day Letter
of Credit Usage and with respect to which Company agrees to execute and
deliver from time to time such documentation as Administrative Agent or
Collateral Agent may reasonably request to further assure and confirm such
security interest.
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 4.1 are satisfied or waived by all Banks, or in the case
of Section 4.1(d), waived by the Person entitled to obtain such payment.
4
<PAGE>
"Co-Documentation Agent" means each of The Bank of Nova Scotia,
----------------------
Citicorp USA, Inc. and Morgan Guaranty Trust Company of New York.
"Code" means the Internal Revenue Code of 1986 as amended and any
----
regulations promulgated thereunder.
"Collateral" means, collectively, all of the Property (including
----------
Capital Stock) in which Liens are purported to be granted pursuant to the
Collateral Documents as security for the Obligations.
"Collateral Agent" means Bank of America, in its capacity as
----------------
collateral agent for Banks hereunder, and any successor collateral agent.
"Collateral Agent-Related Person" means Collateral Agent and any
-------------------------------
successor collateral agent arising under Section 9.10, together with their
respective Affiliates (including, in the case of Bank of America, the
Arranger), and the officers, directors, employees, agents, counsel, and
attorneys-in-fact of such Persons and Affiliates.
"Collateral Documents" means the Pledge and Security Agreement, the
--------------------
Foreign Pledge Agreements, the Mortgages, and all other instruments or
documents delivered by any Borrower Party pursuant to this Agreement or any
of the other Loan Documents in order to grant to Collateral Agent, on
behalf of Banks, a Lien on any Property of that Borrower Party as security
for the Obligations.
"Commitment" means, for each Bank, the amount set forth opposite such
----------
Bank's name on Schedule 2.1, as such amount may be reduced or adjusted from
------------
time to time in accordance with the terms of this Agreement.
"Commitment Percentage" means, as to any Bank, the percentage set
---------------------
forth opposite such Bank's name on Schedule 2.1, as adjusted as
------------
contemplated herein.
"Company" has the meaning specified in the introductory clause hereto.
-------
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit IV properly completed and signed by a Responsible Officer of
----------
Company.
"Consolidated Capital Expenditures" means, for any period, the sum of
---------------------------------
the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries during that
period that, in conformity with GAAP, are included in "additions to
property, plant or equipment" or comparable items reflected in the
consolidated statement of cash flows of Company and its Subsidiaries;
provided, however, that Consolidated Capital Expenditures shall not include
-------- -------
software costs.
"Consolidated EBITDA" means, for any period, for Company and its
-------------------
Subsidiaries on a consolidated basis, an amount equal to (a) the sum,
without duplication, of (i) Consolidated Net Income, (ii) Consolidated
Interest Charges, (iii) the amount of taxes,
5
<PAGE>
based on or measured by income, used or included in the determination of
such Consolidated Net Income, (iv) the amount of depreciation and
amortization expense deducted in determining such Consolidated Net Income,
and (v) accruals for Company's Global Success Sharing Plan, Long Term
Performance Plan, Leadership Shares and Long Term Incentive Payment Plan
minus (b) Company's cash payments for Company's Global Success Sharing
-----
Plan, Long Term Performance Plan, Leadership Shares and Long Term Incentive
Payment Plan.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
-----------------------------
positive) equal to (a) the sum, without duplication, of the amounts for
such period of (i) Consolidated EBITDA plus (or minus) (ii) loss (gain) on
---- -----
sales of assets plus (iii) to the extent not otherwise included, all
----
noncash expenses plus (iv) the first $50,000,000 of proceeds from the
----
Pending IceHouse Disposition plus (or minus) (v) the Consolidated Working
Capital Adjustment minus (b) the sum, without duplication, of the amounts
-----
for such period for (i) scheduled repayments of Consolidated Funded
Indebtedness (excluding repayments of revolving loans except to the extent
the corresponding commitments are permanently reduced in connection with
such repayments), (ii) Consolidated Capital Expenditures (net of any
proceeds of related financings with respect to such expenditures), (iii)
Consolidated Interest Charges paid in cash, (iv) taxes based on income of
Company and its Subsidiaries paid in cash, (v) the excess of bank fees paid
over bank fees amortized, and (vi) cash payments for long-term employee
benefits and other related liabilities (other than changes in accruals
under the Global Success Sharing Plan, Long Term Performance Plan,
Leadership Shares and Long Term Incentive Payment Plan).
"Consolidated Funded Indebtedness" means, as of any date of
--------------------------------
determination, for Company and its Subsidiaries on a consolidated basis,
the sum, without duplication, of (a) the outstanding principal amount of
all obligations and liabilities, whether current or long-term, for borrowed
money (including Obligations in respect of Loans hereunder), (b) that
portion of obligations with respect to Capital Leases that are capitalized
in the consolidated balance sheet of Company and its Subsidiaries, in each
case to the extent treated as debt in accordance with GAAP, and (c) the
outstanding amount of all obligations under any Receivables Purchase
Facility.
"Consolidated Interest Charges" means, for any period, for Company and
-----------------------------
its Subsidiaries on a consolidated basis, all interest (net of all interest
income), premium payments, fees, charges and related expenses payable by
Company and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with
GAAP.
"Consolidated Net Income" means, for any period, for Company and its
-----------------------
Subsidiaries on a consolidated basis, the net income (or loss) of Company
and its Subsidiaries determined in accordance with GAAP for that period.
"Consolidated Net Tangible Assets" means the aggregate amount of
--------------------------------
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all
6
<PAGE>
current liabilities (excluding any indebtedness for money borrowed having a
maturity of less than 12 months from the date of the most recent
consolidated balance sheet of Company but which by its terms is renewable
or extendable beyond 12 months from such date at the option of the
borrower), and (b) all goodwill, trade names, patents, unamortized debt
discount and expense and any other like intangibles, all as set forth on
the most recent consolidated balance sheet of Company and computed in
accordance with generally accepted accounting principles.
"Consolidated Working Capital Adjustment" means, for any period, for
---------------------------------------
Company and its Subsidiaries on a consolidated basis, an amount equal to
(a) the sum of the decrease (increase) during that period in current
assets, excluding changes in cash and cash equivalents, and changes in
current tax assets plus (b) the sum of the increase (decrease) during that
----
period in current liabilities, excluding changes in short-term Indebtedness
or current maturities of long-term Indebtedness, changes in short-term tax
liabilities and changes in short-term interest liabilities.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which Company (a)
----------------------------
converts Base Rate Loans to Offshore Rate Loans, or (b) converts Offshore
Rate Loans to Base Rate Loans, or (c) continues Offshore Rate Loans having
Interest Periods expiring on such date as Offshore Rate Loans but with a
new Interest Period.
"Debtor Relief Laws" means the Bankruptcy Code, and all other
------------------
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means an interest rate equal to the Base Rate plus the
------------ ----
Applicable Margin, if any, applicable to Base Rate Loans plus 2% per annum;
----
provided, however, that with respect to an Offshore Rate Loan, the Default
-------- -------
Rate shall be an interest rate equal to the interest rate (including any
Applicable Margin) otherwise applicable to such Loan plus 2% per annum, in
----
each case to the fullest extent permitted by applicable laws; provided
--------
further that with respect to an Offshore Rate Loan, upon the expiration of
-------
the Interest Period in effect at the time any such increase in interest
rate is effective, such Offshore Rate Loan shall thereupon become a Base
Rate Loan and shall thereafter bear interest at the Default Rate applicable
to Base Rate Loans.
7
<PAGE>
"Derivative/FX Contract" means (a) any and all interest rate swaps,
----------------------
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions,
cap transactions, floor transactions, collar transactions, currency swaps,
cross-currency rate swaps, currency options, spot contracts or any other
similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any such
transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., the International Foreign Exchange Master Agreement, or any other
master agreement, including any such obligations or liabilities under any
such agreement.
"Derivative/FX Lender" means a Bank party to the Bridge Credit
--------------------
Agreement or any of its Affiliates.
"Disposition" means the sale, transfer, license or other disposition
-----------
(including any sale and leaseback transaction) of any Property by any
Person, including any sale, assignment, transfer or other disposal with or
without recourse of any notes or accounts receivable or any rights and
claims associated therewith.
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
"Domestic Subsidiary" means any Subsidiary of Company that is
-------------------
incorporated or organized in the United States, any state thereof or in the
District of Columbia.
"Eligible Assignee" means (a) a financial institution organized under
-----------------
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of any such country, and having a combined capital and surplus
of at least $100,000,000, provided that such bank is acting through a
--------
branch or agency located in the United States; (c) a Person that is
primarily engaged in the business of commercial banking and that is (i) a
Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (iii) a Person of which a Bank is a Subsidiary; (d) another
Bank, any Affiliate of a Bank and any Affiliated Fund of any Bank; and (e)
any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933, as amended) which extends
credit or buys loans as one of its businesses, including but not limited
to, insurance companies, mutual funds and lease financing companies. No
Borrower Party or any Affiliate of a Borrower Party shall be an Eligible
Assignee.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
8
<PAGE>
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters, but excluding routine zoning ordinances.
"Equipment Financing Transaction" means any financing arrangement with
-------------------------------
any Person of equipment pursuant to a lease intended as security which will
be treated as indebtedness under GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) under common control with Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
-----------
Plan; (b) a withdrawal by Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization, in each case which would
reasonably be expected to result in a liability to Company or any of its
Subsidiaries of more than $10,000,000; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Company
or any ERISA Affiliate.
"Event of Default" means any of the events or circumstances specified
----------------
in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
------------
regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning specified in the recitals
-------------------------
hereto.
"Existing Receivables Purchase Agreement" means the Receivables
---------------------------------------
Purchase Agreement dated as of April 28, 1999 among LSFCC, Levi Strauss
Funding Corp., Ciesco L.P., Receivables Capital Corporation, the financial
institutions from time to time party thereto and Citicorp North America,
Inc., as agent.
9
<PAGE>
"Exposure Factor" means 125%.
---------------
"FDIC" means the Federal Deposit Insurance Corporation and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards to the nearest 1/100/th/ of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding
such day; provided that (a) if such day is not a Business Day, the Federal
--------
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged
to Bank of America on such day on such transactions as determined by
Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System and any Governmental Authority succeeding to any of its
principal functions.
"FinServ" means Levi Strauss & Co. Europe Financial Services, S.C.A.,
-------
a Belgian corporation.
"Flood Hazard Property" means real property located in an area
---------------------
designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.
"Foreign Credit Lines" means all unsecured committed or uncommitted
--------------------
lines of credit to which any Foreign Subsidiary is a party from time to
time. The Foreign Credit Lines as of November 28, 1999 are listed on
Schedule 1.1(a).
---------------
"Foreign Pledge Agreement" means each pledge agreement or similar
------------------------
instrument governed by the laws of a country other than the United States,
executed and delivered pursuant to Section 6.11 or from time to time
thereafter in accordance with Section 6.9 by Company or any Material
Domestic Subsidiary that owns Capital Stock of one or more Foreign
Subsidiaries organized in such country, in form and substance satisfactory
to Administrative Agent, as such Foreign Pledge Agreement may thereafter be
amended, supplemented, or modified from time to time.
"Foreign Subsidiary" means any Subsidiary of Company, other than a
------------------
Domestic Subsidiary.
"Four Facility Commitment Reduction Fraction" means, as of any date of
-------------------------------------------
determination, a fraction, the numerator of which is the Aggregate 180 Day
Commitment and the denominator of which is the sum of (a) the Aggregate 180
Day Commitment plus (b) the Aggregate Bridge Commitment plus (c) the
---- ----
Aggregate Commitment (as defined therein) under the Amended and Restated
1997 364 Day Credit Agreement plus (d) the Aggregate Commitment (as
----
defined therein) under the 1997 Second Amended and Restated Credit
Agreement.
10
<PAGE>
"Funded Current Liability Percentage" means "funded current liability
-----------------------------------
percentage" within the meaning of Section 412(1)(8)(B) of the Code.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section 3.1.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other statements by
such other entity as may be in general use by significant segments of the
U.S. accounting profession, which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantor" means any Material Domestic Subsidiary that executes and
---------
delivers a counterpart of the Guaranty on the Subsequent Closing Date or
from time to time thereafter pursuant to Section 6.9.
"Guaranty" means the Guaranty executed and delivered by existing
--------
Material Domestic Subsidiaries on the Subsequent Closing Date and to be
executed and delivered by additional Material Domestic Subsidiaries from
time to time thereafter in accordance with Section 6.9, substantially in
the form of Exhibit VII, as such Guaranty may thereafter be amended,
-----------
supplemented, or modified from time to time.
"Guaranty Obligation" means, as to any Person, any (a) guaranty by
-------------------
such Person of Indebtedness of, or other obligation payable or performable
by, any other Person, or (b) assurance, agreement, letter of
responsibility, letter of awareness, undertaking or arrangement given by
such Person to an obligee of any other Person with respect to the payment
or performance of an obligation by, or the financial condition of, such
other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any agreement to
support the solvency or level of any balance sheet item of such other
Person or any "keep-well" or other arrangement of whatever nature given for
the purpose of assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided, however, that the
-------- -------
term Guaranty Obligation
11
<PAGE>
shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Guaranty Obligation
shall be deemed to be an amount equal to the stated or determinable amount
of the related primary obligation, or portion thereof, covered by such
Guaranty Obligation or, if less, the amount to which such Guaranty
Obligation is specifically limited, or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined
by the person in good faith.
"Indebtedness" means, as to any Person at a particular time:
------------
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) any direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), banker's
acceptances, bank guaranties, surety bonds and similar instruments;
(c) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (other than obligations under a long term supply
contract), which purchase price is (i) due more than 90 days from the date
of incurrence of the obligation in respect thereof, or (ii) evidenced by a
note or similar written instrument, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse;
(d) without duplication, lease payment obligations under Capital
Leases or Synthetic Lease Obligations; and
(e) without duplication, all Guaranty Obligations of such Person
in respect of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless such Indebtedness
is expressly made non-recourse to such Person except for customary
exceptions acceptable to Majority Banks.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
-----------------------
"Indemnified Person" has the meaning specified in Section 10.5.
------------------
"Indentures" means that certain Indenture dated as of November 6, 1996
----------
between Company and Citibank, N.A., as trustee, and that certain Fiscal
Agency Agreement dated as of November 22, 1996 between Company and
Citibank, N.A., as fiscal agent.
12
<PAGE>
"Ineligible Securities" means securities which may not be underwritten
---------------------
or dealt in by member banks of the Federal Reserve System under Section 16
of the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case covered by subsections
(a) and (b) undertaken under U.S. Federal, State or foreign law, including
the Bankruptcy Code.
"Intellectual Property" means all patents, trademarks, tradenames,
---------------------
copyrights, technology, software, know-how and processes used in or
necessary for the conduct of the business of Company and its Subsidiaries
as currently conducted that are material to the condition (financial or
otherwise), business or operations of Company and its Subsidiaries, taken
as a whole.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
-----------------------
of January 31, 2000 between the respective lenders under this Agreement,
the Bridge Credit Agreement, the Amended and Restated 1997 364 Day Credit
Agreement and the 1997 Second Amended and Restated Credit Agreement.
"Interest Coverage Ratio" means, as of any date of determination, the
-----------------------
ratio of (a) Consolidated EBITDA for the period specified to (b)
Consolidated Interest Charges during such period.
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each fiscal quarter;
provided, however, that if any Interest Period for an Offshore Rate Loan
-------- -------
exceeds three months, interest shall also be paid on last day of each
successive three-month period (commencing with the beginning of such
Interest Period) and each such day will be an Interest Payment Date.
"Interest Period" means, with respect to any Offshore Rate Loan, the
---------------
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date of such Loan, as applicable, and ending on the
date one, two, three, or six months thereafter (and if consented to by
Majority Banks in the given instance, nine months), as selected by Company
in its Notice of Borrowing or Notice of Conversion/Continuation, as the
case may be;
provided that:
--------
(a) if any Interest Period pertaining to an Offshore Rate Loan would
otherwise end on a day which is not a Business Day, that Interest Period
shall be extended to the next succeeding Business Day unless the result of
such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Business Day;
13
<PAGE>
(b) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period;
(c) no Interest Period shall extend beyond the Maturity Date; and
(d) unless Administrative Agent otherwise consents, there may not be
more than 24 Interest Periods for Offshore Rate Loans in effect at any time
under this Agreement, the Bridge Agreement, the Amended and Restated 1997
364 Day Credit Agreement, and the 1997 Second Amended and Restated Credit
Agreement.
"Investment" means, as to any Person, any acquisition or any
----------
investment by such Person, whether by means of the purchase or other
acquisition of stock or other Securities of any other Person or by means of
a loan, creating a debt, capital contribution, guaranty or other debt or
equity participation or interest in any other Person, including any
partnership and joint venture interests in such other Person. For purposes
of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases
in the value of such Investment.
"IP Collateral" means, collectively, the Intellectual Property owned
-------------
by Company or any of its Material Domestic Subsidiaries that constitutes
Collateral under the Pledge and Security Agreement.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Issuing Bridge Lender" means, with respect to any Lender Bridge
---------------------
Letter of Credit, the issuing lender thereof pursuant to the Bridge Credit
Agreement.
"Issuing 180 Day Lender" means, with respect to any Lender 180 Day
----------------------
Letter of Credit, Bank of America, Citibank, N.A., Morgan Guaranty Trust
Company of New York or The Bank of Nova Scotia, as applicable, or any
successor Issuing 180 Day Lender hereunder.
"Lender Bridge Letter of Credit" means any letter of credit issued or
------------------------------
outstanding under the Bridge Credit Agreement.
"Lender Bridge Letter of Credit Usage" means, as of any date of
------------------------------------
determination, the aggregate undrawn face amount of outstanding Lender
Bridge Letters of Credit plus the aggregate amount of all drawings under
----
the Lender Bridge Letters of Credit not reimbursed by Company or converted
into Loans under (and as defined in) the Bridge Credit Agreement.
"Lender Derivative/FX Contract" means any Ordinary Course
-----------------------------
Derivative/FX Contract entered into by Company or FinServ and a
Derivative/FX Lender that is subject to a legally enforceable netting
agreement between Company or FinServ, as the case may be, and such
Derivative/FX Lender with respect to all Ordinary Course Derivative
14
<PAGE>
FX/Contracts between such parties. The Lender Derivative/FX Contracts as of
the dates indicated are listed on Schedule 1.1(a).
---------------
"Lender Derivative/FX Sublimit" means an amount equal to the lesser of
-----------------------------
the Aggregate Bridge Commitment and $75,000,000. The Lender Derivative/FX
Sublimit is part of, and not in addition to, the Aggregate Bridge
Commitment.
"Lender Derivative/FX Usage" means, as of any date of determination,
--------------------------
(a) the sum of the Termination Values for all outstanding Lender
Derivative/FX Contracts times (b) the Exposure Factor.
-----
"Lender Letter of Credit Sublimit" means an amount equal to the lesser
--------------------------------
of (a) the sum of the Aggregate 180 Day Commitment plus the Aggregate
----
Bridge Commitment and (b) $250,000,000. The Lender Letter of Credit
Sublimit is part of, and not in addition to, the Aggregate 180 Day
Commitment.
"Lender 180 Day Letter of Credit" means any letter of credit issued or
-------------------------------
outstanding hereunder. A Lender 180 Day Letter of Credit may be a
commercial letter of credit, a performance letter of credit or a financial
letter of credit.
"Lender 180 Day Letter of Credit Usage" means, as of any date of
-------------------------------------
determination, the aggregate undrawn face amount of outstanding Lender 180
Day Letters of Credit plus the aggregate amount of all drawings under the
----
Lender 180 Day Letters of Credit not reimbursed by Company or converted
into Loans.
"Lending Office" means, with respect to any Bank, the office or
--------------
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, below its name on
the signature pages hereto, or such other office or offices of such Bank as
it may from time to time specify to Company and Administrative Agent.
"Letter of Credit Action" means the issuance, supplement, amendment,
-----------------------
renewal, extension, modification or other action relating to a Lender 180
Day Letter of Credit hereunder.
"Letter of Credit Application" means an application for a Letter of
----------------------------
Credit Action from time to time in use by an Issuing 180 Day Lender.
"Letter of Credit Expiration Date" means the Maturity Date.
--------------------------------
"Leverage Ratio" means, as of any date of determination, for Company
--------------
and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) (i) as of the end of the first
fiscal quarter of fiscal year 2000, Consolidated EBITDA for such fiscal
quarter times 4; (ii) as of the end of the second fiscal quarter of fiscal
-----
year 2000, Consolidated EBITDA for the first two fiscal quarters of fiscal
year 2000 times 2; (iii) as of the end of the third fiscal quarter of
-----
fiscal year 2000, Consolidated EBITDA for the first three fiscal quarters
of fiscal year 2000 times
-----
15
<PAGE>
1.333; and (iv) as of the end of any fiscal quarter thereafter,
Consolidated EBITDA for the four fiscal quarter period then ended.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the
owner of the asset to which such lien relates as debtor, under the UCC of
any jurisdiction or any comparable law, or the interest of the Person other
than Company or any of its Subsidiaries in connection with any Equipment
Financing Transaction) and any contingent or other agreement to provide any
of the foregoing, but not including the interest of a lessor under an
operating lease or the interest of a purchaser of Permitted Foreign
Receivables under any Permitted Foreign Receivables Purchase Facility.
"Loan" means a loan by a Bank to Company under Section 2.1, and may be
----
an Offshore Rate Loan or a Base Rate Loan.
"Loan Documents" means this Agreement, any Notes, the Lender 180 Day
--------------
Letters of Credit, the Letter of Credit Applications, the fee letters
referred to in Section 2.11, the Guaranty, the Collateral Documents, and
all other instruments, documents and agreements delivered to Administrative
Agent or any Bank in connection herewith.
"LOS/DOS Business" means the ownership and operation by Company or a
----------------
Subsidiary of Company, whether directly or through joint ventures with
third parties in partnership, corporate or other form, of businesses
engaged solely in selling apparel and accessories and related products
including, without limitation, selling through retail stores, outlet
stores, telephone sales, catalog or other mail orders, and electronic
sales. LOS/DOS Business shall not include any business engaging in
manufacturing or in selling and in manufacturing.
"LSFCC" means Levi Strauss Financial Center Corporation, a California
-----
corporation, formerly Levi Strauss Credit Corp., a California corporation.
"LSFLLC" means Levi Strauss Funding, LLC, a Delaware limited liability
------
company.
"Majority Banks" means, at any time, (a) Banks holding more than 50%
--------------
of the Aggregate 180 Day Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 50% of the then aggregate unpaid
principal amount of the Loans.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U of the Federal Reserve Board.
16
<PAGE>
"Material Adverse Effect" means any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise), business, assets, operations or
prospects of Company and its Subsidiaries, taken as a whole, or (c)
materially impairs or could reasonably be expected to materially impair the
ability of any Borrower Party to perform the Obligations.
"Material Domestic Subsidiary" means any Domestic Subsidiary that is a
----------------------------
Material Subsidiary.
"Material Foreign Subsidiary" means any Foreign Subsidiary that is a
---------------------------
Material Subsidiary.
"Material Subsidiary" means (a) any Subsidiary of Company, (i) the net
-------------------
book value of which is $5,000,000 or more or (ii) the annual gross revenue
of which is $15,000,000 or more and (b) any other Subsidiary of Company
designated by Company to be a "Material Subsidiary" for purposes of this
Agreement.
"Maturity Date" means January 31, 2002.
-------------
"Mortgage" means a security instrument (whether designated as a deed
--------
of trust or a mortgage or by any similar title) containing standard and
customary terms and provisions executed and delivered by any Borrower
Party, in such form as may be approved by Majority Banks in their sole
discretion after consultation with Company, in each case with such changes
thereto as may be recommended by Administrative Agent's local counsel based
on local laws or customary local mortgage or deed of trust practices .
"Mortgages" means all such instruments, collectively.
---------
"Multiemployer Plan" means a "multiemployer plan", within the meaning
------------------
of Section 4001(a)(3) of ERISA, to which Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"Negative Pledge" means a Contractual Obligation that restricts Liens
---------------
on property.
"Net Asset Disposition Proceeds" means cash payments (including cash
------------------------------
received by way of deferred payment pursuant to, or by monetization of, a
note receivable or otherwise, but only as and when so received) received
for an Asset Disposition, net of any bona fide direct costs incurred in
connection with such Asset Disposition including (a) income taxes
reasonably estimated to be actually payable within one year of the date of
such Asset Disposition as a result of any gain recognized in connection
with such Asset Disposition, (b) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness
(other than the Loans and Indebtedness under the Bridge Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement) that is secured by a Lien on the
stock or assets in question that is required to be repaid under the
17
<PAGE>
terms thereof as a result of such Asset Disposition, and (c) brokers' fees
and legal fees incurred in connection with such Asset Disposition;
provided, however, that the first $50,000,000 of proceeds from the Pending
-------- -------
IceHouse Disposition shall not constitute Net Asset Disposition Proceeds.
"Net Equipment Financing Proceeds" means any cash proceeds received in
--------------------------------
connection with an Equipment Financing Transaction, net of (a) all
reasonable costs payable to Persons not Affiliates of Company in connection
with such Equipment Financing Transaction and (b) payment of the
outstanding principal amount of, premium or penalty, if any, and interest
on any Indebtedness (other than the Loans and Indebtedness under the Bridge
Credit Agreement, the Amended and Restated 1997 364 Day Credit Agreement,
and the 1997 Second Amended and Restated Credit Agreement) that is secured
by a Lien on the equipment in question that is required to be repaid under
the terms thereof as a result of such Equipment Financing Transaction.
"Net Insurance Proceeds" means any cash payments or proceeds received
----------------------
by Company or any of its Subsidiaries with respect to Collateral under (a)
any business interruption policy in respect of a covered loss thereunder,
or (b) under any property insurance policy in respect of a covered loss
thereunder, in each case, net of any actual and reasonable documented costs
incurred by Company or any of its Subsidiaries in connection with the
adjustment or settlement of any claims of Company or such Subsidiary in
respect thereof.
"Net Real Estate Financing Proceeds" means any cash proceeds received
----------------------------------
in connection with a Real Estate Financing Transaction, net of all
reasonable costs payable to Persons not Affiliates of Company in connection
with such Real Estate Financing Transaction.
"Net Securities Proceeds" means (a) the cash proceeds (net of
-----------------------
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and
expenses) from the issuance of Securities of Company or any of its
Subsidiaries, or (b) any cash capital contribution to Company.
"1997 Second Amended and Restated Credit Agreement" means the 1997
-------------------------------------------------
Second Amended and Restated Credit Agreement dated as of January 31, 2000,
between Company, Bank of America, as agent, Bank of America, as collateral
agent, and the other lenders parties thereto.
"Notes" has the meaning specified in Section 2.2.
-----
"Notice of Borrowing" means a notice, signed by Company, and given to
-------------------
Administrative Agent pursuant to Section 2.3, in substantially the form of
Exhibit I.
---------
"Notice of Conversion/Continuation" means a notice, signed by Company,
---------------------------------
and given to Administrative Agent pursuant to Section 2.4, in substantially
the form of Exhibit II.
----------
18
<PAGE>
"Obligations" means all advances to, and debts, liabilities,
-----------
obligations, covenants and duties of, any Borrower Party arising under any
Loan Document, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Laws by or against
any Borrower Party or any Subsidiary or Affiliate of any Borrower Party.
"Offshore Rate" means for any Interest Period with respect to any
-------------
Offshore Rate Loan, a rate per annum determined by Administrative Agent
pursuant to the following formula:
Offshore Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means, for such Interest Period:
------------------
(a) the rate per annum equal to the rate determined by
Administrative Agent to be the offered rate that appears on the page
of the Telerate Screen that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period, or
(b) in the event that the rate referenced in the preceding
subsection (a) does not appear on such page or service or such page or
service shall cease to be available, the rate per annum equal to the
rate determined by Administrative Agent to be the offered rate on such
other page or other service that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period, or
(c) in the event that the rates referenced in the preceding
subsections (a) and (b) are not available, the rate per annum
determined by Administrative Agent as the rate of interest at which
Dollar deposits (for delivery on the first day of such Interest
Period) in same day funds in the approximate amount of the applicable
Offshore Rate Loan and with a term equivalent to such Interest Period
would be offered by Bank of America's London Branch to major banks in
the offshore Dollar market at their request at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
-----------------------------
Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100/th/ of 1%) in effect on such day,
whether or not applicable to any Bank, under regulations issued from
time to time by the Board of Governors of the
19
<PAGE>
Federal Reserve System for determining the maximum reserve
requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities").
The Offshore Rate for each outstanding Offshore Rate Loan shall
be adjusted automatically as of the effective date of any change
in the Eurodollar Reserve Percentage.
The determination of the Eurodollar Reserve Percentage and the
Offshore Base Rate by Administrative Agent shall be conclusive in the
absence of manifest error.
"Offshore Rate Loan" means a Loan that bears interest based on
------------------
the Offshore Rate.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including leases that may be terminated by the lessee at any time) of
any Property that is not a Capital Lease, other than any such lease
under which that Person is the lessor.
"Ordinary Course Derivative/FX Contracts" means any and all
---------------------------------------
interest rate swaps, basis swaps, credit derivative transactions,
forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar
transactions, currency swaps, cross-currency rate swaps, currency
options, spot contracts or any other similar transactions or any
combination of any of the foregoing (including any options to enter
into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, in each case that are
(or were) entered into by any Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or
reasonably anticipated by such Person, or changes in the value of
securities issued by such Person and not for purposes of speculation
or taking a "market view" and that do not contain any provision
("walk-away" provision) exonerating the non-defaulting party from its
obligation to make payments on outstanding transactions to the
defaulting party.
"Organization Documents" means, (a) with respect to any
----------------------
corporation, the certificate or articles of incorporation and the
bylaws; (b) with respect to any limited liability company, the articles
of formation and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership or joint venture agreement and any agreement, instrument,
filing or notice with respect thereto filed in connection with its
formation with the secretary of state or other department in the state
of its formation, in each case as amended from time to time.
"Originator" has the meaning specified in Section 10.8(d).
----------
"Other Taxes" means any present or future stamp, court or
-----------
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
20
<PAGE>
"Outstanding Obligations" means, as of any date, and giving
-----------------------
effect to making any Loan or Lender 180 Day Letter of Credit requested
on such date and all payments, repayments and prepayments made on such
date, (a) when reference is made to all Banks, the sum of (i) the
aggregate outstanding principal amount of all Loans, and (ii) all
Lender 180 Day Letter of Credit Usage, and (b) when reference is made
to one Bank, the sum of (i) the aggregate outstanding principal amount
of all Loans made by such Bank, and (ii) such Bank's ratable risk
participation in all Lender 180 Day Letter of Credit Usage.
"Participant" has the meaning specified in Section 10.8(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation or any
----
entity succeeding to any or all of its functions under ERISA.
"Pending IceHouse Disposition" means the proposed sale of the
----------------------------
property located at 151 Union Street, San Francisco, California.
"Pension Plan" means a pension plan (as defined in Section 3(2)
------------
of ERISA) subject to Title IV of ERISA which Company or any ERISA
Affiliate sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a multiple employer
plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five plan years.
"Permitted Foreign Receivables" means all obligations of any
-----------------------------
obligor (whether now existing or hereafter arising) under a contract
for sale of goods or services by Foreign Subsidiaries, which includes
any obligation of such obligor (whether now existing or hereafter
arising) to pay interest, finance charges or amounts with respect
thereto, and, with respect to any of the foregoing receivables or
obligations, (a) all of the interest of Foreign Subsidiaries in the
goods (including returned goods) the sale of which gave rise to such
receivable or obligation after the passage of title thereto to any
obligor, (b) all other Liens and property subject thereto from time to
time purporting to secure payment of such receivables or obligations,
(c) all guaranties, insurance, letters of credit and other agreements
or arrangements of whatever character from time to time supporting or
securing payment of any such receivables or obligations, (d) all books
and records relating to the foregoing, lockbox accounts containing
primarily proceeds of the foregoing, and other similar related assets
customarily transferred (or in which security interests are
customarily granted) to purchasers in receivables purchase
transactions that are treated as sales under GAAP, (e) all rights of
Foreign Subsidiaries to refunds on account of value added tax in
respect of goods sold to an obligor, any receivable from whom is or
becomes a defaulted receivable, and (f) proceeds of or judgments
relating to any of the foregoing, any debts represented thereby and
all rights of action against any Person in connection therewith.
"Permitted Foreign Receivables Purchase Facility" means any
-----------------------------------------------
agreement of Foreign Subsidiaries providing for sales, transfers or
conveyances of, or granting of security interests in, Permitted
Foreign Receivables that do not provide, directly or indirectly, for
recourse against the seller of such Permitted Foreign Receivables (or
against any of such seller's Affiliates) by way of a guaranty or any
other support
21
<PAGE>
arrangement, with respect to the amount of such Permitted Foreign
Receivables (based on the financial condition or circumstances of the
obligor thereunder), other than such limited recourse as is reasonable
given market standards for receivables purchase transactions that are
treated as sales under GAAP, taking into account such factors as
historical bad debt loss experience and obligor concentration levels.
"Permitted Transferees" has the meaning specified in the
---------------------
Stockholders Agreement dated as of April 15, 1996 between Company and
the stockholders of Company party thereto as in effect as of the
Closing Date, except that transferees pursuant to Section 2.2(a)(A)
thereof shall not be deemed to be Permitted Transferees for purposes
of this Agreement.
"Person" means an individual, partnership, corporation, limited
------
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3)
----
of ERISA) which Company or any of its Subsidiaries sponsors or
maintains or to which Company or any of its Subsidiaries makes, is
making, or is obligated to make contributions and includes any Pension
Plan.
"Pledge and Security Agreement" means the Pledge and Security
-----------------------------
Agreement executed and delivered by Company on the Closing Date and
existing Material Domestic Subsidiaries on the Subsequent Closing Date
and to be executed and delivered by additional Material Domestic
Subsidiaries from time to time thereafter in accordance with Section
6.9, substantially in the form of Exhibit VI, as such Pledge and
----------
Security Agreement may thereafter be amended, supplemented, or
modified from time to time.
"Pledged Collateral" means the "Pledged Collateral" as defined in
------------------
the Pledge and Security Agreement.
"Pledged Foreign Subsidiary" means a Foreign Subsidiary no more
--------------------------
than 65% of the Capital Stock of which is pledged to Collateral Agent.
"Principal Property" means any contiguous or proximate parcel of
------------------
real property owned by, or leased to, Company or any of its Restricted
Subsidiaries, and any equipment located at or comprising a part of any
such property, having a gross book value (without deduction of any
depreciation reserves), as of the date of determination, in excess of
1% of Consolidated Net Tangible Assets; provided, however, that in the
-------- -------
event that the Indentures, or the limitations regarding Liens granted
by Company or Restricted Subsidiaries contained in the Indentures, are
no longer binding on Company, no Property shall be a Principal
Property.
"Professional Costs" means and includes all reasonable fees and
------------------
disbursements of any law firm or other external counsel, the allocated
cost of internal legal services and all disbursements of internal
counsel and the reasonable fees and costs of financial advisors,
accountants, appraisers, consultants, etc.
22
<PAGE>
"Property" means any estate or interest in any kind of property
--------
or asset, whether real, personal or mixed, and whether tangible or
intangible.
"Real Estate Financing Transaction" means any arrangement with
---------------------------------
any Person pursuant to which Company or any of its Subsidiaries incurs
Indebtedness secured by a Lien on real property of Company or any of
its Subsidiaries and related personal property.
"Receivables Purchase Facility" means any agreement providing for
-----------------------------
sales, transfers or conveyances of, or granting of security interests
in, accounts receivable that do not provide, directly or indirectly,
for recourse against the seller of such accounts receivable (or
against any of such seller's Affiliates) by way of a guaranty or any
other support arrangement, with respect to the amount of such accounts
receivable (based on the financial condition or circumstances of the
obligor thereunder), other than such limited recourse as is reasonable
given market standards for receivables purchase transactions that are
treated as sales under GAAP, taking into account such factors as
historical bad debt loss experience and obligor concentration levels.
"Receivables Transfer Agreements" means that certain Receivables
-------------------------------
Purchase and Sale Agreement dated as of January 28, 2000 among
Company, LSFCC, Levi Strauss Funding Corp. and LSFLLC and that certain
Third Amended and Fully Restated Receivables Purchase and Sale
Agreement between LSFCC and Company effective January 28, 2000.
"Released Matters" has the meaning specified in Section 11.1.
----------------
"Releasees" has the meaning specified in Section 11.1.
---------
"Releasors" has the meaning specified in Section 11.1.
---------
"Replacement Bank" means an Eligible Assignee satisfactory to
----------------
Company and Issuing 180 Day Lenders which acquires and assumes all or
a ratable part of all of a Bank's Loans and Commitment pursuant to
Section 3.8. Each designation of a Replacement Bank shall be subject
to the prior written consent of Administrative Agent (which consent
shall not be unreasonably withheld).
"Reportable Event" means, any of the events set forth in Section
----------------
4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
------------------
or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to
or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Requisite Banks" means, at any time, (a) Banks holding more than
---------------
90% of the Aggregate 180 Day Commitment, or (b) if the Commitments
have been terminated,
23
<PAGE>
Banks holding more than 90% of the then aggregate unpaid principal
amount of the Loans.
"Responsible Officer" of Company means the chief executive
-------------------
officer, the president, the chief financial officer, or the treasurer
of Company, or any other officer having substantially the same
authority and responsibility.
"Restricted Payment" means:
------------------
(a) the declaration or payment of any dividend or other
distribution by Company or any of its Subsidiaries, directly or
indirectly, either in cash or property, on any shares of the Capital
Stock of any class of Company or any of its Subsidiaries (except
dividends or other distributions payable solely in shares of Capital
Stock of Company or any of its Subsidiaries or payable by any
Subsidiary to Company or to a wholly-owned Subsidiary of Company);
(b) the purchase, redemption or retirement by Company or any of
its Subsidiaries of any shares of its Capital Stock of any class or
any warrants, rights or options to purchase or acquire any shares of
its Capital Stock, whether directly or indirectly (except the
purchase, redemption or retirement of Capital Stock (or any such
warrants, rights or options) held by Company or any wholly-owned
Subsidiary of Company); and
(c) the prepayment, repayment, redemption, defeasance or other
acquisition or retirement for value prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any
Indebtedness not otherwise permitted under any Loan Document to be so
paid.
"Restricted Subsidiary" means any Subsidiary of Company which
---------------------
owns or leases a Principal Property; provided, however, that in the
-------- -------
event that the Indentures, or the limitations regarding Liens granted
by or on the Capital Stock or Indebtedness of Restricted Subsidiaries
contained in the Indentures, are no longer binding on Company, no
Subsidiary of Company shall be a Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission, or any
---
successor thereto.
"Securities" means any stock, shares, partnership interests,
----------
voting trust certificates, certificates of interest or participation
in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"Solvent" means, with respect to any Person, that as of the date
-------
of determination both (a)(i) the then fair saleable value of the
property of such Person is (A) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (B)
not less than the amount that will be required to pay the probable
liabilities on such Person's
24
<PAGE>
then existing debts as they become absolute and matured considering
all financing alternatives and potential asset sales reasonably
available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any contemplated or
undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will
incur, debts beyond its ability to pay such debts as they become due;
and (b) such Person is "solvent" within the meaning given that term
and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subsequent Closing Date" means the date on which all conditions
-----------------------
precedent set forth in Section 4.3 are satisfied or waived by all
Banks.
"Subsidiary" of a Person means a corporation, partnership, joint
----------
venture, limited liability company or other business entity of which a
majority of the shares of Securities or other interests having
ordinary voting power for the election of directors or other governing
body (other than Securities or interests having such power only by
reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such
Person.
"Synthetic Lease Obligations" means all monetary obligations of a
---------------------------
Person under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession of
property creating obligations which do not appear on the balance sheet
of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the Indebtedness of such Person
(without regard to accounting treatment).
"Taxes" means any and all present or future taxes, levies,
-----
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto, excluding,
in the case of each Bank and Administrative Agent, respectively, taxes
imposed on or measured by its net income by the jurisdiction (or any
political subdivision thereof) under the laws of which such Bank or
Administrative Agent, as the case may be, is organized or maintains a
lending office.
"Termination Value" means, in respect of any Derivative/FX
-----------------
Contract, after taking into account the effect of any legally
enforceable netting agreement relating to such Derivative/FX Contract,
the termination value, expressed in Dollars, as determined by Company;
provided, however, that in the event that two Banks determine that the
-------- -------
mark-to-market value, expressed in Dollars, for any Derivative/FX
Contract, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such
Derivative/FX Contract, is greater than the termination value for such
Derivative/FX Contract determined by Company, the Termination Value of
such Derivative/FX Contract shall be the amount determined by
25
<PAGE>
such Banks; provided further that any such determination shall have no
-------- -------
evidentiary value for purposes of determining the amount owed to the
applicable Derivative/FX Lender.
"Three Facility Commitment Reduction Fraction" means, as of any
--------------------------------------------
date of determination, a fraction, the numerator of which is the
Aggregate 180 Day Commitment and the denominator of which is the sum
of (a) the Aggregate 180 Day Commitment plus (b) the Aggregate
----
Commitment (as defined therein) under the Amended and Restated 1997
364 Day Credit Agreement plus (c) the Aggregate Commitment (as defined
----
therein) under the 1997 Second Amended and Restated Credit Agreement.
"Total Amount of Unsecured Debt" means, as of any date of
------------------------------
determination, the sum, without duplication, of (a) the Unsecured
Derivative/FX Usage, (b) the Unsecured Letter of Credit Usage, and (c)
the aggregate amount of all unsecured Indebtedness of Company and its
Subsidiaries (other than Indebtedness permitted under Sections 7.1(a),
7.1(b), 7.1(c), 7.1(d), 7.1(e), 7.1(f), 7.1(g), 7.1(h), 7.1(i),
7.1(j), 7.1(k), 7.1(l), 7.1(m), 7.1(n), 7.1(o), 7.1(p), 7.1(q),
7.1(s), and 7.1(t)).
"Total Letter of Credit Usage" means, as of any date of
----------------------------
determination, the sum of (a) the Lender Bridge Letter of Credit Usage
plus (b) the Lender 180 Day Letter of Credit Usage.
"Total Utilization of Bridge Commitments" means, as of any date
---------------------------------------
of determination, the sum, without duplication, of (a) the aggregate
principal amount of all outstanding Loans (as defined in the Bridge
Credit Agreement), other than any such Loans made for the purpose of
reimbursing an Issuing Bridge Lender for any amount drawn under any
Lender Bridge Letter of Credit but not yet so applied, plus (b) the
----
Lender Bridge Letter of Credit Usage plus (c) the Lender Derivative/FX
----
Usage.
"Total Utilization of Commitments" means, as of any date of
--------------------------------
determination, the sum, without duplication, of (a) the Total
Utilization of Bridge Commitments plus (b) the Total Utilization of
----
180 Day Commitments.
"Total Utilization of 180 Day Commitments" means, as of any date
----------------------------------------
of determination, the sum, without duplication, of (a) the aggregate
principal amount of all outstanding Loans (other than any such Loans
made for the purpose of reimbursing an Issuing 180 Day Lender for any
amount drawn under any Lender 180 Day Letter of Credit but not yet so
applied) plus (b) the Lender 180 Day Letter of Credit Usage.
----
"Two Facility Commitment Reduction Fraction" means, as of any
------------------------------------------
date of determination, a fraction, the numerator of which is the
Aggregate 180 Day Commitment and the denominator of which is the sum
of (a) the Aggregate 180 Day Commitment plus (b) the Aggregate Bridge
----
Commitment.
"UCC" means the Uniform Commercial Code (or any similar or
---
equivalent legislation) as in effect in any applicable jurisdiction.
"United States" and "U.S." each means the United States of
------------- ----
America.
26
<PAGE>
"Unpledged Foreign Subsidiaries" means Foreign Subsidiaries none of
------------------------------
the Capital Stock of which is pledged to Collateral Agent.
"Unsecured Derivative/FX Usage" means, as of any date of
-----------------------------
determination, (a) the sum of the Termination Values for all outstanding
Derivative/FX Contracts to which Company and any of its Subsidiaries is a
party (other than Lender Derivative/FX Contracts and intercompany
Derivative/FX Contracts) minus (i) the Lender Bridge Letter of Credit Usage
-----
with respect to any Lender Bridge Letter of Credit issued to support any
such outstanding Derivative/FX Contract and (ii) the Lender 180 Day Letter
of Credit Usage with respect to any Lender 180 Day Letter of Credit issued
to support any such outstanding Derivative/FX Contract times (b) the
-----
Exposure Factor.
"Unsecured Letter of Credit Usage" means, as of any date of
--------------------------------
determination, the aggregate undrawn face amount of outstanding letters of
credit issued for the benefit of Company or any of its Subsidiaries (other
than Lender Bridge Letters of Credit and Lender 180 Day Letters of Credit).
"Voting Trust Agreement" means the Voting Trust Agreement entered into
----------------------
as of April 15, 1996 by and among Robert D. Haas; Peter E. Haas, Sr.; Peter
E. Haas, Jr.; and F. Warren Hellman as the Voting Trustees and the
stockholders of LSAI Holding Corp. who are parties thereto.
"Voting Trustees" means the persons entitled to act as voting trustees
---------------
under the Voting Trust Agreement.
1.2 Other Interpretive Provisions.
-----------------------------
(a) Defined Terms. Except as provided in Section 1.1, unless
-------------
otherwise specified herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. Terms
(including uncapitalized terms) not otherwise defined herein and that are
defined in the UCC of California shall have the meanings therein described.
(b) The Agreement. The words "hereof", "herein", "hereunder" and
-------------
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section and exhibit references are to this Agreement unless otherwise specified.
(c) Certain Common Terms.
--------------------
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
27
<PAGE>
(d) Performance; Time. Whenever any performance obligation hereunder
-----------------
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including". If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
(e) Contracts. Unless otherwise expressly provided herein, references
---------
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
(f) Laws. References to any statute or regulation are to be construed
----
as including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are for
--------
convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this
--------------------------
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
1.3 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed in accordance with GAAP,
consistently applied; except that, subject to Section 10.15, all financial
computations required under this Agreement shall be made in accordance with GAAP
as in effect on the Closing Date.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of Company. The fiscal quarters of Company end on the last
Sunday in February, May, August, and November of each year. Each fiscal year of
Company ends on the last Sunday in November of such year.
(c) References herein to "consolidated" and "consolidated basis" with
reference to Company are to Company and its Subsidiaries on a consolidated
basis.
28
<PAGE>
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments; the Credit.
--------------------------------------------
(a) Each Bank severally agrees, on the terms and conditions set forth
herein, to make Loans to Company from time to time on any Business Day during
the Availability Period, in an aggregate principal amount which does not exceed
at any time outstanding, for the relevant period, the amount equal to the
product of the then Aggregate Bridge Commitment times the percentage set forth
-----
opposite such Bank's name on Schedule 2.1 under the heading "Commitment
------------
Percentage" (such amount, as the same may be reduced pursuant to the terms of
this Agreement or as a result of one or more assignments under Section 10.8, the
Bank's "Commitment"); provided, however, that (i) the sum of (A) the Total
---------- -------- -------
Utilization of Commitments plus (B) the Total Amount of Unsecured Debt shall not
----
exceed the Aggregate Total Commitments at any time and (ii) the Total
Utilization of 180 Day Commitments shall not exceed the Aggregate 180 Day
Commitment at any time. All loans outstanding under the Existing Credit
Agreement shall be deemed to be Loans hereunder on the Closing Date.
(b) Within the limits of each Bank's Commitment and the Aggregate 180
Day Commitment, and subject to the other terms and conditions hereof, Company
may borrow under this subsection, prepay under Section 2.6 or 2.7, and reborrow
under this Section.
(c) Loans shall be denominated in Dollars.
2.2 Notes; Loan Accounts.
--------------------
(a) The Loans made by each Bank shall be evidenced by one or more loan
accounts or records maintained by such Bank in the ordinary course of business.
The loan accounts or records maintained by Administrative Agent and each Bank
shall be conclusive evidence, absent manifest error, of the amount of the Loans
made by Banks to Company and the interest and payments thereon. Any failure so
to record or any error in doing so shall not, however, limit or otherwise affect
the obligation of Company hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of any Bank made through Administrative Agent,
the Loans made by such Bank may be evidenced by one or more notes, as applicable
("Notes"), instead of or in addition to loan accounts. Each such Note shall be
-----
in the form of Exhibit III. Each such Bank shall endorse on the schedules
-----------
annexed to its Note the date, amount, and maturity of each Loan made by it and
the amount of each payment of principal made by Company with respect thereto.
Each such Bank is irrevocably authorized by Company to endorse its Note and each
Bank's record shall be conclusive absent manifest error; provided, however, that
-------- -------
the failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of
Company hereunder or under any such Note to such Bank.
29
<PAGE>
2.3 Procedure for Borrowing.
-----------------------
(a) Each Borrowing shall be made upon the irrevocable written notice
(including notice via facsimile transmission or telephone call confirmed
immediately by telephone call or facsimile transmission, respectively) of
Company in the form of a Notice of Borrowing, which notice must be received by
Administrative Agent not later than 9:00 a.m. San Francisco, California time:
(i) three Business Days prior to the requested Borrowing Date for
Offshore Rate Loans; and
(ii) on the requested Borrowing Date, in the case of Base Rate
Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of $10,000,000 or any integral
multiple of $5,000,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) whether the Borrowing is to be comprised of Offshore
Rate Loans or Base Rate Loans; and
(D) the duration of the Interest Period applicable to the
Loans included in such notice which are Offshore Rate Loans. If the
Notice of Borrowing shall fail to specify the duration of the Interest
Period for any Borrowing comprised of Offshore Rate Loans, such
Interest Period shall be one month.
(b) Upon receipt of the Notice of Borrowing (or notice by telephone or
facsimile transmission followed by prompt confirmation by facsimile transmission
or telephone, respectively) Administrative Agent will promptly notify each Bank
thereof and of the amount of such Bank's Commitment Percentage of the Borrowing.
(i) Each Bank will make the amount of its Commitment Percentage
of the Borrowing available to Administrative Agent, in immediately
available funds for the account of Company at Administrative Agent's
Payment Office by 10:00 a.m. San Francisco, California time on the
Borrowing Date requested by Company.
(ii) The proceeds of all such Loans will then be made available
to Company by Administrative Agent at Administrative Agent's Payment Office
by crediting Company's concentration account #12335-02255 on the books of
Bank of America (or such other account with Bank of America as Company may
hereafter designate in a written notice to Administrative Agent) with the
aggregate of the amounts made available to Administrative Agent by Banks
not later than 11:00 a.m. San Francisco, California time on such Borrowing
Date; or will then be remitted by Administrative Agent to such other
financial institution or institutions for the account or
30
<PAGE>
accounts of such designees as Company shall designate from time to time in
accordance with written instructions from Company delivered to
Administrative Agent. To the extent that Loans made by Banks mature on any
Borrowing Date, each Bank shall apply the proceeds of any Loans made on
such Borrowing Date, to the extent thereof, to the repayment of such
maturing Loans, such Loans and repayments intended to be a contemporaneous
exchange.
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) Company may upon irrevocable notice to Administrative Agent in
accordance with Section 2.4(b):
(i) elect to convert on any Business Day, any Base Rate Loans (or
any part thereof in an amount not less than $10,000,000 or that is in an
integral multiple of $1,000,000 in excess thereof) into Offshore Rate
Loans; or
(ii) elect to convert on any Interest Payment Date any Offshore
Rate Loans maturing on such Interest Payment Date (or any part thereof in
an amount not less than $10,000,000 or that is in an integral multiple of
$1,000,000 in excess thereof) into Base Rate Loans; or
(iii) elect to renew on any Interest Payment Date any Offshore
Rate Loans maturing on such Interest Payment Date (or any part thereof in
an amount not less than $10,000,000 or that is in an integral multiple of
$1,000,000 in excess thereof); provided that, if the Aggregate 180 Day
--------
Commitment shall have been reduced to less than $10,000,000, on and after
such reduction the right of Company to elect to continue such Loans as, and
convert such Loans into, Offshore Rate Loans shall terminate.
(b) Company shall deliver in writing (or by facsimile transmission
confirmed immediately by a telephone call or by a telephone call confirmed
immediately by a facsimile transmission), an irrevocable Notice of
Conversion/Continuation to be received by Administrative Agent not later than
9:00 a.m. San Francisco, California time, at least three Business Days in
advance of the Conversion/Continuation Date, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the nature of the proposed conversion or continuation; and
(iv) with respect to Offshore Rate Loans, the duration of the
requested Interest Period.
(c) (i) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, Company has failed to select a new Interest Period to
be applicable to such Offshore Rate Loans, and if no Event of Default shall
then exist, Company shall be
31
<PAGE>
deemed to have elected to continue such Offshore Rate Loans as Offshore
Rate Loans with an Interest Period of one month.
(ii) If an Event of Default exists at the time any Interest
Period applicable to Offshore Rate Loans expires, Company shall be deemed
to have elected to convert Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/ Continuation (or
telephonic notice in lieu thereof), Administrative Agent will promptly notify
each Bank thereof, or, if no timely notice is provided, Administrative Agent
will promptly notify each Bank of the details of any automatic conversion. All
conversions and continuations shall be made pro rata according to the respective
outstanding principal amounts of the Loans with respect to which the notice was
given or which are subject to automatic conversion held by each Bank.
2.5 Lender 180 Day Letters of Credit.
--------------------------------
(a) The Letter of Credit Commitment. Subject to the terms and
-------------------------------
conditions set forth in this Agreement, until the Maturity Date, each Issuing
180 Day Lender shall take such Letter of Credit Actions as Company may from time
to time request of such Issuing 180 Day Lender; provided, however, that (i) the
-------- -------
sum of (A) the Total Utilization of Commitments plus (B) the Total Amount of
----
Unsecured Debt shall not exceed the Aggregate Total Commitments at any time,
(ii) the Total Utilization of 180 Day Commitments shall not exceed the Aggregate
180 Day Commitment at any time, (iii) the sum of (A) the Total Letter of Credit
Usage plus (B) the Unsecured Letter of Credit Usage shall not exceed the Lender
----
Letter of Credit Sublimit at any time, and (iv) no Lender 180 Day Letter of
Credit shall be issued denominated in a currency other than Dollars. Subject to
subsection (f) below and unless consented to by the applicable Issuing 180 Day
Lender and Majority Banks, no Lender 180 Day Letter of Credit may expire more
than 12 months after the date of its issuance or last renewal; provided,
--------
however, that no Lender 180 Day Letter of Credit shall expire after the Maturity
- -------
Date. If any Lender 180 Day Letter of Credit Usage remains outstanding after
such date, Company shall, not later than such date, deposit cash in an amount
equal to such Lender 180 Day Letter of Credit Usage in a Cash Collateral
Account.
(b) Requesting Letter of Credit Actions. Company may irrevocably
-----------------------------------
request a Letter of Credit Action by delivering a Letter of Credit Application
therefor to the proposed Issuing 180 Day Lender, with a copy to Administrative
Agent (who shall notify Banks), not later than 1:00 p.m. San Francisco,
California time, two Business Days prior to such Letter of Credit Action. Upon
receipt by a proposed Issuing 180 Day Lender of a Letter of Credit Application
pursuant to Section 2.5(a) requesting such Issuing 180 Day Lender to take a
Letter of Credit Action, (i) in the event Administrative Agent is the proposed
Issuing 180 Day Lender, Administrative Agent shall be the Issuing 180 Day Lender
with respect to such Lender 180 Day Letter of Credit, notwithstanding the fact
that the Lender 180 Day Letter of Credit Usage with respect to such Lender 180
Day Letter of Credit and with respect to all other Lender 180 Day Letters of
Credit issued by Administrative Agent, when aggregated with Administrative
Agent's outstanding Loans, may exceed Administrative Agent's Commitment then in
effect and (ii) in the event any other Issuing 180 Day Lender is the proposed
Issuing 180 Day Lender, such Issuing
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<PAGE>
180 Day Lender shall promptly notify Company and Administrative Agent whether or
not, in its sole discretion, it has elected to issue such Lender 180 Day Letter
of Credit, and (A) if such Issuing 180 Day Lender so elects to issue such Lender
180 Day Letter of Credit it shall be the Issuing 180 Day Lender with respect
thereto and (B) if such Issuing 180 Day Lender fails to so promptly notify
Company and Administrative Agent or declines to issue such Lender 180 Day Letter
of Credit, Company may request Administrative Agent or another Issuing 180 Day
Lender to be the Issuing 180 Day Lender with respect to such Lender 180 Day
Letter of Credit in accordance with the provisions of this Section 2.5(b). Each
Letter of Credit Action shall be in a form acceptable to such Issuing 180 Day
Lender in its sole discretion. Unless Administrative Agent notifies such Issuing
180 Day Lender that such Letter of Credit Action is not permitted hereunder, or
such Issuing 180 Day Lender notifies Administrative Agent that it has determined
that such Letter of Credit Action is contrary to any laws or policies of such
Issuing 180 Day Lender, such Issuing 180 Day Lender shall, upon satisfaction of
the applicable conditions set forth in Section 4.2, effect such Letter of Credit
Action. This Agreement shall control in the event of any conflict with any
Letter of Credit Application. Upon the issuance of a Lender 180 Day Letter of
Credit, each Bank shall be deemed to have purchased from the applicable Issuing
180 Day Lender a risk participation therein in an amount equal to such Bank's
Commitment Percentage times the amount of such Lender 180 Day Letter of Credit.
-----
(c) Reimbursement of Payments Under Lender 180 Day Letters of Credit.
-----------------------------------------------------------------
Company shall reimburse the applicable Issuing 180 Day Lender through
Administrative Agent for any payment that such Issuing 180 Day Lender makes
under a Lender 180 Day Letter of Credit on or before the date of such payment;
provided, however, that if the conditions precedent set forth in Section 4.2 can
- -------- -------
be satisfied, Company may request a Borrowing of Loans to reimburse such Issuing
180 Day Lender for such payment pursuant to Section 2.3, or, failing to make
such request, Company shall be deemed to have requested a Borrowing of Base Rate
Loans on such payment date pursuant to subsection (e) below.
(d) Funding by Lenders When Issuing 180 Day Lender Not Reimbursed.
---------------------------------------------------------------
Upon any drawing under a Lender 180 Day Letter of Credit, the applicable Issuing
180 Day Lender shall notify Administrative Agent and Company. If Company fails
to timely make the payment required pursuant to subsection (c) above, such
Issuing 180 Day Lender shall notify Administrative Agent of such fact and the
amount of such unreimbursed payment. Administrative Agent shall promptly notify
each Bank of its Commitment Percentage of such amount. Each Bank shall make
funds in an amount equal to its Commitment Percentage of such amount available
to Administrative Agent at Administrative Agent's Payment Office not later than
1:00 p.m. San Francisco, California time, on the Business Day specified by
Administrative Agent. Administrative Agent shall remit the funds so received to
such Issuing 180 Day Lender. The obligation of each Bank to so reimburse such
Issuing 180 Day Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default or Event of Default or any other
occurrence or event (including the sum of (A) the Total Utilization of
Commitments plus (B) the Total Amount of Unsecured Debt exceeding the Aggregate
----
Total Commitments or the Total Utilization of 180 Day Commitments exceeding the
Aggregate 180 Day Commitment). Any such reimbursement shall not relieve or
otherwise impair the obligation of Company to reimburse such Issuing 180 Day
Lender for the amount of any payment made by such Issuing 180 Day Lender under
any Lender 180 Day Letter of Credit, together with interest as provided herein.
33
<PAGE>
(e) Nature of Banks' Funding. If the conditions precedent set forth
---------------------------
in Section 4.2 can be satisfied (except for the giving of a Notice of Borrowing)
on any date Company is obligated to, but fails to, reimburse any Issuing 180 Day
Lender for a drawing under a Lender 180 Day Letter of Credit, the funding by
Banks pursuant to the previous subsection shall be deemed to be a Borrowing of
Base Rate Loans deemed requested by Company. If the conditions precedent set
forth in Section 4.2 cannot be satisfied on the date Company is obligated to,
but fails to, reimburse any Issuing 180 Day Lender for a drawing under a Lender
180 Day Letter of Credit, the funding by Banks pursuant to the previous
subsection shall be deemed to be a funding by each Bank of its risk
participation in such Lender 180 Day Letter of Credit, and each Bank making such
funding shall thereupon acquire a pro rata participation, to the extent of its
reimbursement, in the claim of such Issuing 180 Day Lender against Company in
respect of such payment and shall share, in accordance with that pro rata
participation, in any payment made by Company with respect to such claim. Any
amounts made available by a Bank under its risk participation shall be payable
by Company upon demand of Administrative Agent, and shall bear interest at a
rate per annum equal to the Default Rate.
(f) Special Provisions Relating to Evergreen Lender 180 Day Letters of
------------------------------------------------------------------
Credit. Company may request Lender 180 Day Letters of Credit that have
- ------
automatic extension or renewal provisions ("evergreen" Lender 180 Day Letters of
Credit) so long as the applicable Issuing 180 Day Lender consents in its sole
and absolute discretion thereto and has the right to not permit any such
extension or renewal at least annually within a notice period to be agreed upon
at the time each such Lender 180 Day Letter of Credit is issued. Once an
evergreen Lender 180 Day Letter of Credit is issued, unless Administrative Agent
has notified the applicable Issuing 180 Day Lender that Majority Banks have
elected not to permit such extension or renewal, Borrower Parties,
Administrative Agent and Banks shall be deemed to have authorized (but may not
require) such Issuing 180 Day Lender to, in its sole and absolute discretion,
permit the renewal of such evergreen Lender 180 Day Letter of Credit at any time
to a date not later than the Letter of Credit Expiration Date, and, unless
directed by such Issuing 180 Day Lender, Company shall not be required to
request such extension or renewal. The applicable Issuing 180 Day Lender may,
in its sole and absolute discretion elect not to permit an evergreen Lender 180
Day Letter of Credit to be extended or renewed at any time.
(g) Obligations Absolute. The obligation of Company to pay to each
--------------------
Issuing 180 Day Lender the amount of any payment made by such Issuing 180 Day
Lender under any Lender 180 Day Letter of Credit shall be absolute,
unconditional, and irrevocable. Without limiting the foregoing, Company's
obligation shall not be affected by any of the following circumstances:
(i) any lack of validity or enforceability of such Lender 180 Day
Letter of Credit, this Agreement, or any other agreement or instrument
relating thereto;
(ii) any amendment or waiver of or any consent to departure from
such Lender 180 Day Letter of Credit, this Agreement, or any other
agreement or instrument relating hereto or thereto;
(iii) the existence of any claim, setoff, defense, or other
rights which Company may have at any time against such Issuing 180 Day
Lender, Administrative
34
<PAGE>
Agent, Collateral Agent or any Bank, any beneficiary of such Lender 180 Day
Letter of Credit (or any persons or entities for whom any such beneficiary
may be acting) or any other Person, whether in connection with such Lender
180 Day Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto, or any unrelated transactions ;
(iv) any demand, statement, or any other document presented under
such Lender 180 Day Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever so long as any such document
appeared to comply with the terms of the Lender 180 Day Letter of Credit;
(v) payment by such Issuing 180 Day Lender in good faith under
such Lender 180 Day Letter of Credit against presentation of a draft or any
accompanying document which does not strictly comply with the terms of such
Lender 180 Day Letter of Credit; or any payment made by such Issuing 180
Day Lender under such Lender 180 Day Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of such Lender 180 Day
Letter of Credit, including any arising in connection with any proceeding
under any Debtor Relief Laws;
(vi) the existence, character, quality, quantity, condition,
packing, value or delivery of any property purported to be represented by
documents presented in connection with such Lender 180 Day Letter of Credit
or for any difference between any such property and the character, quality,
quantity, condition, or value of such property as described in such
documents;
(vii) the time, place, manner, order or contents of shipments or
deliveries of property as described in documents presented in connection
with such Lender 180 Day Letter of Credit or the existence, nature and
extent of any insurance relative thereto;
(viii) the solvency or financial responsibility of any party
issuing any documents in connection with such Lender 180 Day Letter of
Credit;
(ix) any failure or delay in notice of shipments or arrival of
any property;
(x) any error in the transmission of any message relating to
such Lender 180 Day Letter of Credit not caused by such Issuing 180 Day
Lender, or any delay or interruption in any such message;
(xi) any error, neglect or default of any correspondent of such
Issuing 180 Day Lender in connection with such Lender 180 Day Letter of
Credit;
35
<PAGE>
(xii) any consequence arising from acts of God, wars,
insurrections, civil unrest, disturbances, labor disputes, emergency
conditions or other causes beyond the control of such Issuing 180 Day
Lender;
(xiii) so long as such Issuing 180 Day Lender in good faith
determines that the document appears to comply with the terms of the Lender
180 Day Letter of Credit, the form, accuracy, genuineness or legal effect
of any contract or document referred to in any document submitted to such
Issuing 180 Day Lender in connection with such Lender 180 Day Letter of
Credit;
(xiv) the sum of (A) the Total Utilization of Commitments plus
----
(B) the Total Amount of Unsecured Debt exceeding the Aggregate Total
Commitments or the Total Utilization of 180 Day Commitments exceeding the
Aggregate 180 Day Commitment; and
(xv) any other circumstances whatsoever where such Issuing 180
Day Lender has acted in good faith.
In addition, Company will promptly examine a copy of each Lender 180 Day
Letter of Credit and amendments thereto delivered to them and, in the event of
any claim of noncompliance with Company's instructions or other irregularity,
Company will immediately notify the applicable Issuing 180 Day Lender in
writing. Company shall be conclusively deemed to have waived any such claim
against such Issuing 180 Day Lender and its correspondents unless such notice is
given as aforesaid.
(h) Role of Issuing 180 Day Lender. Each Bank and Borrower Party
------------------------------
agree that, in paying any drawing under a Lender 180 Day Letter of Credit, the
applicable Issuing 180 Day Lender shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly
required by the Lender 180 Day Letter of Credit) or to ascertain or inquire as
to the validity or accuracy of any such document or the authority of the Person
executing or delivering any such document. No Administrative Agent-Related
Person nor any of the respective correspondents, participants or assignees of
the applicable Issuing 180 Day Lender shall be liable to any Bank for any action
taken or omitted in connection herewith at the request or with the approval of
Banks or Majority Banks, as applicable; any action taken or omitted in the
absence of gross negligence or willful misconduct; or the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Lender 180 Day Letter of Credit. Company hereby assumes all risks of the
acts or omissions of any beneficiary or transferee with respect to its use of
any Lender 180 Day Letter of Credit; provided, however, that this assumption is
-------- -------
not intended to, and shall not, preclude Company's pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. No Administrative Agent-Related Person, nor any of the
respective correspondents, participants or assignees of any Issuing 180 Day
Lender, shall be liable or responsible for any of the matters described in
subsection (g) above. In furtherance and not in limitation of the foregoing,
any Issuing 180 Day Lender may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and such Issuing 180 Day Lender shall not
be responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or
36
<PAGE>
assign a Lender 180 Day Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.
(i) Applicability of ISP98 and UCP. Unless otherwise expressly agreed
------------------------------
by any Issuing 180 Day Lender and Company when a Lender 180 Day Letter of Credit
is issued and subject to applicable laws, performance under Lender 180 Day
Letters of Credit by such Issuing Bridge Lender, its correspondents, and
beneficiaries will be governed by (i) with respect to standby Lender 180 Day
Letters of Credit, the rules of the "International Standby Practices 1998"
("ISP98") or such later revision as may be published by the Institute of
-----
International Banking Law & Practice, subject to applicable laws, and (ii) with
respect to commercial Lender 180 Day Letters of Credit, the rules of the Uniform
Customs and Practice for Documentary Credits, as published in its most recent
version by the International Chamber of Commerce (the "ICC") on the date any
---
commercial Lender 180 Day Letter of Credit is issued, and including the ICC
decision published by the Commission on Banking Technique and Practice on April
6, 1998 regarding the European single currency (euro).
(j) Letter of Credit Fee. Company shall pay to Administrative Agent
--------------------
in arrears, on the fifth Business Day after the last day of each fiscal quarter
for the account of each Bank in accordance with its Commitment Percentage, a
Letter of Credit fee equal to the Applicable Margin with respect to Offshore
Rate Loans times the actual daily maximum amount available to be drawn under
-----
each Lender 180 Day Letter of Credit since the later of the Closing Date and the
previous payment date.
(k) Fronting Fee and Documentary and Processing Charges Payable to
--------------------------------------------------------------
Issuing 180 Day Lender. On the date of issuance, Company shall pay directly to
- ----------------------
the applicable Issuing 180 Day Lender for its sole account a fronting fee with
respect to any financial or performance Lender 180 Day Letter of Credit in an
amount equal to 1/8 of 1%. On the date of issuance, Company shall pay directly
to the applicable Issuing 180 Day Lender for its sole account a fronting fee
with respect to any commercial Lender 180 Day Letter of Credit in an amount
equal to its customary issuance fee for commercial Lender 180 Day Letters of
Credit issued for the account of its most creditworthy customers. In addition,
Company shall pay directly to the applicable Issuing 180 Day Lender, upon
demand, for its sole account its customary documentary and processing charges in
accordance with its standard schedule, as from time to time in effect, for any
Lender 180 Day Letter of Credit Action or other occurrence relating to a Lender
180 Day Letter of Credit for which such charges are customarily made.
2.6 Voluntary Termination or Reduction of Aggregate 180 Day Commitment;
-------------------------------------------------------------------
Voluntary Prepayments.
- ---------------------
(a) Company may, upon not less than three Business Days' prior
irrevocable notice to Administrative Agent, terminate the Aggregate 180 Day
Commitment or permanently reduce the Aggregate 180 Day Commitment by $25,000,000
and, if in a greater amount, by any integral multiple of $5,000,000; provided
--------
that no such reduction or termination shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date thereof,
(i) the sum of (A) the Total Utilization of Commitments plus (B) the Total
----
Amount of Unsecured Debt would exceed the Aggregate Total Commitments then in
effect or (ii) the Total Utilization of 180 Day Commitments would exceed the
Aggregate 180 Day
37
<PAGE>
Commitment; provided further that once reduced in accordance with this Section,
-------- -------
the Aggregate 180 Day Commitment may not be increased. Any reduction of the
Aggregate 180 Day Commitment shall be applied to each Bank's Commitment in
accordance with such Bank's Commitment Percentage. If the Aggregate 180 Day
Commitment is terminated in its entirety, all accrued facility fees to, but not
including, the effective date of such termination shall be payable on the
effective date of such termination without any premium or penalty.
(b) Subject to Section 3.4, Company may (from time to time) ratably
prepay Loans in whole or in part in the minimum amount of $10,000,000 or any
integral multiple of $1,000,000 in excess thereof, upon notice to Administrative
Agent given not later than 9:00 a.m. San Francisco, California time:
(i) at least three Business Days' prior to the proposed date of
prepayment for Offshore Rate Loans; and
(ii) on the Business Day prior to the proposed date of prepayment
for Base Rate Loans.
Each such notice of prepayment shall specify the date and amount of
such prepayment and whether such prepayment is of Base Rate Loans or Offshore
Rate Loans, or any combination thereof. In the event that Company fails to so
specify, any voluntary prepayments of the Loans pursuant to this Section 2.6
shall be applied first to Base Rate Loans to the full amount thereof before
application to Offshore Rate Loans. Such notice shall not thereafter be
revocable by Company and Administrative Agent will promptly notify each Bank
thereof and the amount of such Bank's Commitment Percentage of such prepayment.
If such notice is given by Company, Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such date on the
amount prepaid and the amounts required pursuant to Section 3.4.
Notice to Administrative Agent under this Section shall be in writing,
signed by Company or may be by telephone notice promptly confirmed by notice
sent by facsimile transmission.
2.7 Mandatory Prepayments and Reductions of Aggregate 180 Day Commitment.
--------------------------------------------------------------------
The Loans shall be prepaid and the Aggregate 180 Day Commitment shall be
permanently reduced in the amounts and under the circumstances set forth below,
all such payments to be applied as set forth below or as more specifically
provided in Section 2.7(k). Each prepayment required under this Section shall be
subject to Section 3.4.
(a) Commitment Reductions. If for any reason the Total Utilization of
---------------------
180 Day Commitments exceeds the Aggregate 180 Day Commitment as in effect or as
reduced or because of any limitation set forth in this Agreement or otherwise,
Company shall immediately prepay Loans and/or deposit cash in a Cash Collateral
Account in an aggregate amount equal to such excess. If for any reason the sum
of (i) the Total Utilization of Commitments plus (ii) the Total Amount of
Unsecured Debt exceeds the Aggregate Total Commitments as in effect, Company
shall immediately prepay Loans and/or Loans under (and as defined in) the Bridge
38
<PAGE>
Credit Agreement and/or deposit cash in a Cash Collateral Account in an
aggregate amount equal to such excess.
(b) Permitted Foreign Receivables Purchase Facility. No later than
-----------------------------------------------
five Business Days following the receipt by Company or any of its Subsidiaries
of any proceeds in respect of a Permitted Foreign Receivables Purchase Facility,
Company shall prepay the Loans and the Aggregate 180 Day Commitment shall be
permanently reduced in an aggregate amount equal to the product of the net
proceeds received by Company or any of its Subsidiaries from such Permitted
Foreign Receivables Purchase Facility times (A) until the Aggregate Term
-----
Commitments have been terminated, zero (0)% and (B) thereafter, the Two Facility
Commitment Reduction Fraction.
(c) Equipment Financing Transactions. No later than (i) five Business
--------------------------------
Days following the receipt by Company or any of its Subsidiaries of any Net
Equipment Financing Proceeds in respect of any equipment not constituting
Collateral and (ii) the date of receipt by Company or any of its Subsidiaries of
any other Net Equipment Financing Proceeds, Company shall prepay the Loans and
the Aggregate 180 Day Commitment shall be permanently reduced in an aggregate
amount equal to the product of such Net Equipment Financing Proceeds times the
-----
Three Facility Commitment Reduction Fraction.
(d) Real Estate Financing Transactions. No later than (i) five
----------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
Net Real Estate Financing Proceeds in respect of any real property not
constituting Collateral and (ii) the date of receipt by Company or any of its
Subsidiaries of any other Net Real Estate Financing Proceeds, Company shall
prepay the Loans and the Aggregate 180 Day Commitment shall be permanently
reduced in an aggregate amount equal to the product of such Net Real Estate
Financing Proceeds times the Three Facility Commitment Reduction Fraction.
-----
(e) Asset Dispositions. No later than (i) five Business Days
------------------
following the receipt by Company or any of its Subsidiaries of any Net Asset
Disposition Proceeds in respect to Asset Dispositions not involving Collateral
and (ii) the date of receipt by Company or any of its Subsidiaries of any Net
Asset Disposition Proceeds from the Pending IceHouse Disposition in excess of
$50,000,000 or any other Net Asset Disposition Proceeds, Company shall prepay
the Loans and the Aggregate 180 Day Commitment shall be permanently reduced in
an aggregate amount equal to the product of such Net Asset Disposition Proceeds
times the Four Facility Commitment Reduction Fraction.
- -----
(f) Insurance. No later than two Business Days following the receipt
---------
by Company or any of its Subsidiaries of any Net Insurance Proceeds that are
required to be applied to prepay the Loans and reduce the Aggregate 180 Day
Commitment pursuant to Section 6.6, Company shall prepay the Loans and the
Aggregate 180 Day Commitment shall be permanently reduced in an aggregate amount
equal to the product of such Net Insurance Proceeds times the Four Facility
-----
Commitment Reduction Fraction.
(g) Excess Cash Flow. In the event that there shall be Consolidated
----------------
Excess Cash Flow for fiscal year 2000, Company shall, no later than 60 days
after the end of such fiscal year, prepay the Loans and the Aggregate 180 Day
Commitment shall be permanently reduced in
39
<PAGE>
an aggregate amount equal to (i) 60%of such Consolidated Excess Cash Flow minus
-----
voluntary commitment reduction under this Agreement, the Bridge Agreement, the
Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second Amended
and Restated Credit Agreement made during such fiscal year times (ii) the Four
-----
Facility Commitment Reduction Fraction.
(h) Tax Refunds. No later than five Business Days following the
-----------
receipt by Company or any of its Subsidiaries of any proceeds in respect of any
federal tax refunds in respect of the 1999 fiscal year in excess of $70,000,000
in the aggregate, Company shall prepay the Loans and the Aggregate 180 Day
Commitment shall be permanently reduced in an aggregate amount equal to the
product of the excess proceeds received times the Four Facility Commitment
-----
Reduction Fraction.
(i) Capital Markets Transactions. No later than two Business Days
----------------------------
following the receipt by Company or any of its Subsidiaries of any Net
Securities Proceeds, Company shall prepay the Loans and the Aggregate 180 Day
Commitment shall be permanently reduced in an aggregate amount equal to the
product of such Net Securities Proceeds times (i) until Net Securities Proceeds
-----
in an amount equal to $300,000,000 in the aggregate have been applied to reduce
the Aggregate Bridge Commitment, zero (0)% and (ii) thereafter, the Four
Facility Commitment Reduction Fraction.
(j) Calculations of Net Proceeds Amounts; Additional Prepayments and
----------------------------------------------------------------
Reductions Based on Subsequent Calculations. Concurrently with any prepayment
- -------------------------------------------
of the Loans pursuant to this Section 2.7, Company shall deliver to
Administrative Agent an officer's certificate demonstrating the calculation of
the amount of the applicable proceeds or Consolidated Excess Cash Flow, as the
case may be, that gave rise to such prepayment. In the event that Company shall
subsequently determine that the actual amount was greater than the amount set
forth in such officer's certificate, Company shall promptly make an additional
prepayment of the Loans (and the Aggregate 180 Day Commitment shall be
permanently reduced in accordance with the applicable subsection of this Section
2.7) in an amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an officer's certificate
demonstrating the derivation of the additional amount resulting in such excess.
(k) Application of Prepayments. Any mandatory prepayments of the
--------------------------
Loans pursuant to this Section 2.7 shall be applied first to Base Rate Loans to
the full extent thereof before application to Offshore Rate Loans and shall be
in addition to, and shall not be applied to reduce, the scheduled Commitment
reductions set forth in Section 2.8.
2.8 Repayment; Scheduled Reductions of Aggregate 180 Day Commitment.
------------------------------------------------------------------
(a) Company shall repay the principal amount of the outstanding Loans
on the last day of the Availability Period together with interest thereon.
(b) The Commitments shall be permanently reduced on the dates set
forth below in an amount equal to the product of the correlative amount
indicated times the Three Facility Commitment Reduction Fraction:
-----
40
<PAGE>
<TABLE>
<CAPTION>
Date Scheduled Reduction
---- -------------------
<S> <C>
May 25, 2000 $ 50,000,000
August 24, 2000 $ 50,000,000
November 22, 2000 $100,000,000
February 22, 2001 $ 50,000,000
May 24, 2001 $ 50,000,000
August 23, 2001 $100,000,000
</TABLE>
2.9 Interest.
--------
(a) Subject to Section 2.9(c), each Loan shall bear interest on the
outstanding principal amount thereof (before and after default, before and after
maturity, before and after judgment, and before and after the commencement of
any proceeding under any Debtor Relief Laws) from the Closing Date until it
becomes due at a rate per annum equal to the Offshore Rate or the Base Rate, as
the case may be, plus the Applicable Margin (the "Applicable Margin"). The
---- ---------- ------
initial Applicable Margin, subject to adjustment as provided below, shall be a
rate per annum equal to 3.25% for Offshore Rate Loans and 2.00% for Base Rate
Loans. If Company has not completed (after the date hereof) one or more Capital
Markets Transactions and applied at least $300,000,000 of Net Securities
Proceeds therefrom in the aggregate to reduce the Aggregate Bridge Commitment on
or prior to January 31, 2001, then effective February 1, 2001, the Applicable
Margin shall increase to 4.25% for Offshore Rate Loans and 3.00% for Base Rate
Loans. In addition, the Applicable Margin shall increase by an additional 0.25%
at the beginning of each subsequent three-month period, commencing May 1, 2001,
unless and until Company shall have completed (after the date hereof) one or
more Capital Markets Transactions and applied at least $300,000,000 of Net
Securities Proceeds therefrom in the aggregate to reduce the Aggregate Bridge
Commitment.
(b) Interest on each Loan shall be payable in arrears on each Interest
Payment Date. Interest shall also be payable on the date of any prepayment of
Loans pursuant to Section 2.6, 2.7 or 2.8 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during any
period when principal of the Loans is due and payable, interest shall be payable
on request for such payment by the holders of the Loans.
(c) While any Event of Default exists, Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law and including post-petition interest in any proceeding under any Debtor
Relief Law) on the principal amount of all Loans, at a rate per annum equal to
the Default Rate. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be payable upon demand.
(d) Anything herein to the contrary notwithstanding, the obligations
of Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest which may
41
<PAGE>
be lawfully contracted for, charged or received by such Bank, and in such event
Company shall pay such Bank interest at the lower of (i) the highest rate
permitted by applicable law and (ii) the rates required by this Agreement.
2.10 Fees. In addition to fees due under other provisions of this
----
Agreement:
(a) Facility Fee. Company shall pay to Administrative Agent for the
------------
account of each Bank pro rata according to its Commitment Percentage, a facility
fee equal to 0.25% times the actual daily amount of its Commitment regardless of
-----
usage. The facility fee shall accrue at all times from the Closing Date until
the Maturity Date, shall be computed on a daily basis, and shall be payable in
arrears (i) on the fifth Business Day after the last day of each fiscal quarter,
commencing on the first such day after the Closing Date and (ii) on the Maturity
Date.
(b) Unused Commitment Fee. Company shall pay to Administrative Agent
---------------------
for the account of each Bank pro rata according to its Commitment Percentage, an
unused commitment fee equal to 0.50% times the actual daily amount by which the
-----
Aggregate 180 Day Commitment exceeds the Outstanding Obligations of all Banks.
The commitment fee shall accrue at all times from the Closing Date until the
Maturity Date, shall be computed on a daily basis, and shall be payable in
arrears (i) on the fifth Business Day after the last day of each fiscal quarter,
commencing on the first such day after the Closing Date and (ii) on the Maturity
Date. The commitment fee shall accrue at all times, including at any time
during which one or more conditions in Article IV are not met.
(c) Utilization Fee. Company shall pay to Administrative Agent for
---------------
the account of each Bank pro rata according to its Commitment Percentage, a
utilization fee equal to 0.25% times the actual daily aggregate principal amount
-----
of such Bank's Outstanding Obligations. The utilization fee shall accrue at all
times from the Closing Date until the Maturity Date, shall be computed on a
daily basis, and shall be payable in arrears (i) on the fifth Business Day of
the last day of each fiscal quarter, commencing on the first such day after the
Closing Date, and (ii) on the Maturity Date.
(d) Amendment Fee. On the Closing Date, Company shall pay to
-------------
Administrative Agent for the account of each Bank that approves the execution of
this Agreement pro rata according to its Commitment Percentage, an amendment fee
in an amount equal to 0.50% times the Aggregate 180 Day Commitment. If Company
-----
has not completed (after the date hereof) one or more Capital Markets
Transactions and applied at least $300,000,000 of Net Securities Proceeds
therefrom in the aggregate to reduce the Aggregate Bridge Commitment on or prior
to January 31, 2001, on February 1, 2001, Company shall pay to Administrative
Agent for the account of each Bank pro rata according to its Commitment
Percentage, an additional amendment fee in an amount equal to 2.00% times the
-----
Aggregate 180 Day Commitment.
(e) Agency Fee. Company shall pay to Administrative Agent an agency
----------
fee in such amounts and at such times as set forth in a separate fee letter
agreement between Company and Administrative Agent. The agency fee is for
services to be performed by Administrative Agent acting as Administrative Agent
and is fully earned on the date paid. The agency fee paid to Administrative
Agent is solely for its account and is nonrefundable.
42
<PAGE>
(f) Collateral Agency Fee. Company shall pay to Collateral Agent a
---------------------
collateral agency fee in such amounts and at such times as set forth in a
separate fee letter agreement between Company and Collateral Agent. The
collateral agency fee is for services to be performed by Collateral Agent acting
as Collateral Agent and is fully earned on the date paid. The collateral agency
fee paid to Collateral Agent is solely for its accounts and is nonrefundable.
(g) Other Fees. Company shall pay Administrative Agent for its own
----------
account and/or the account of each Co-Agent such fees in such amounts and at
such times as set forth in separate fee letter agreements between Company and
Administrative Agent.
2.11 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by Bank of America's "prime rate" shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue during
each period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Administrative Agent will notify Company and Banks of each
determination of an Offshore Rate. Any failure by Administrative Agent to give
such notice and any failure by Company and any Bank to receive such notice shall
not relieve Company of any obligation to pay interest or provide the basis for
any claim against Administrative Agent. Administrative Agent shall, upon
request made by Company or any Bank from time to time, advise such Person(s) of
the relevant applicable Offshore Rate(s).
(c) Each determination of an interest rate by Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
Company and Banks in the absence of manifest error.
2.12 Payments by Company.
-------------------
(a) All payments (including prepayments) to be made by Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall be made in Dollars to
Administrative Agent for the ratable account of Banks at Administrative Agent's
Payment Office. Such payments shall be made in immediately available funds and
no later than 11:00 a.m. San Francisco, California time, on the date specified
herein. Administrative Agent will promptly distribute to each Bank the amount
of its Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts, in like funds as
received. Any payment which is received by Administrative Agent later than
11:00 a.m. San Francisco, California time, shall be deemed to have been received
on the immediately succeeding Business Day and any applicable interest or fee
shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and
43
<PAGE>
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be, subject to the provisions set forth in the
definition of "Interest Period" herein.
(c) Unless Administrative Agent shall have received notice from
Company prior to the date on which any payment is due to Banks hereunder from
Company that Company will not make such payment in full, Administrative Agent
may assume that Company has made such payment in full to Administrative Agent on
such date and Administrative Agent may (but shall not be so required), in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent
Company shall not have made such payment in full to Administrative Agent, each
Bank shall repay to Administrative Agent, on request made by Administrative
Agent, such amount distributed to such Bank, together with interest thereon for
each day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to Administrative Agent, at the Federal Funds Rate
as in effect for each such day.
2.13 Payments by the Banks to Administrative Agent.
---------------------------------------------
(a) Unless Administrative Agent shall have received notice from a Bank
at least one Business Day prior to the date of any proposed Borrowing (but prior
to 10:00 a.m. San Francisco, California time, on the same day with respect to a
Borrowing consisting of Base Rate Loans) that such Bank will not make available
to Administrative Agent for the account of Company the amount of that Bank's
Commitment Percentage of the Borrowing, Administrative Agent may assume that
each Bank has made such amount available to Administrative Agent on the
Borrowing Date and Administrative Agent may (but shall not be so required), in
reliance upon such assumption, make available to Company on such date a
corresponding amount. If and to the extent any Bank shall not have made its
full amount available to Administrative Agent and Administrative Agent in such
circumstances has made available to Company such amount, that Bank shall on the
next Business Day following such Borrowing Date make such amount available to
Administrative Agent, together with interest at the Federal Funds Rate for and
determined as of each day during such period.
(b) A certificate of Administrative Agent submitted to any Bank with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to
Administrative Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to
Administrative Agent on the next Business Day following such Borrowing Date,
Administrative Agent shall notify Company of such failure to fund and, upon
request for payment made by Administrative Agent, Company shall pay such amount
to Administrative Agent for Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(c) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
44
<PAGE>
2.14 Sharing of Payments, etc. If, other than as expressly contemplated
-------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it or
amounts payable in respect of Lender 180 Day Letters of Credit, any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) in an amount in excess of its Commitment Percentage of payments on
account of the Loans or amounts payable in respect of Lender 180 Day Letters of
Credit obtained by all the Banks, such Bank shall forthwith (a) notify
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them or amounts payable in respect of Lender
180 Day Letters of Credit as shall be necessary to cause such purchasing Bank to
share the excess payment ratably with each of them; provided, however, that if
-------- -------
all or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's Commitment Percentage
(according to the proportion of (i) the amount of such paying Bank's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. Company agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including the right
of set-off but subject to Section 10.10) with respect to such participation as
fully as if such Bank were the direct creditor of Company in the amount of such
participation. Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error), of participations
purchased pursuant to this Section and will in each case notify Banks following
any such purchases and repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
3.1 Taxes.
-----
(a) Any and all payments by Company to each Bank or Administrative
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition,
Company shall pay all Other Taxes.
(b) If Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank, or Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Bank or Administrative Agent, as the case may be, receives and retains
an amount equal to the sum it would have received and retained had no such
deductions or withholdings been made;
(ii) Company shall make such deductions and withholdings;
(iii) Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
45
<PAGE>
(iv) Company shall also pay to each Bank or Administrative Agent
for the account of such Bank, at the time interest is paid, Further Taxes
in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes
or Further Taxes had not been imposed.
(c) Company agrees to indemnify and hold harmless each Bank and
Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Bank or Administrative Agent makes
written demand therefor.
(d) Within 30 days after the date of any payment by Company of Taxes,
Other Taxes or Further Taxes, Company shall furnish to each Bank or
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or
Administrative Agent.
(e) Company will not be required to pay any additional amounts in
respect of Section 3.1(b) to any Bank or Administrative Agent:
(i) if such Bank shall have delivered to Company a Form 1001 (or
any successor form) pursuant to Section 9.11(a)(i), and such Bank shall not
at any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by Company
hereunder for any reason other than a change in United States law or
regulations or any applicable tax treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any Governmental
Authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such
Form 1001 (or any successor form); or
(ii) if such Bank shall have delivered to Company a Form 4224 (or
any successor form) pursuant to Section 9.11(a)(ii), and such Bank shall
not at any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by Company
hereunder for any reason other than a change in United States law or
regulations or in the official interpretation of such law or regulations by
any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the
date of delivery of such Form 4224 (or any successor form).
(f) If, at any time, Company requests any Bank to deliver any forms
or other documentation pursuant to Section 9.11(a)(iii), then Company shall, on
demand of such Bank through Administrative Agent, reimburse such Bank for any
costs and expenses (including Professional Costs) reasonably incurred by such
Bank in the preparation or delivery of such forms or other documentation.
46
<PAGE>
(g) If Company is required to pay additional amounts to any Bank or
Administrative Agent pursuant to this Section 3.1, then such Bank or
Administrative Agent, as the case may be, shall use its reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its Lending Office or take any other reasonable action so as to eliminate any
such additional payment by Company which may thereafter accrue if such change,
in the reasonable judgment of such Bank, is not otherwise materially
disadvantageous to such Bank or Administrative Agent.
3.2 Illegality.
----------
(a) If any Bank determines that the introduction of any Requirement of
Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make Offshore Rate Loans, then,
on notice thereof by the Bank to Company through Administrative Agent, any
obligation of that Bank to make Offshore Rate Loans shall be suspended until the
Bank notifies Administrative Agent and Company that the circumstances giving
rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful for such Bank to maintain
any Offshore Rate Loan, Company shall, upon receipt of notice of such fact and
demand from such Bank (with a copy to Administrative Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 3.4, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loans. If Company is required
to so prepay any Offshore Rate Loan, then concurrently with such prepayment,
Company shall borrow from the affected Bank, in the amount of such repayment, a
Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, Company may elect, by giving notice
to the Bank through Administrative Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Bank determines that, due to either (i) the introduction of
or any change in or in the interpretation of any law or regulation, or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans in an amount deemed material by
such Bank, then Company shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to Administrative Agent), pay to
Administrative Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
47
<PAGE>
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation; affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased in an amount deemed
material by such Bank as a consequence of its loans, credits or obligations
under this Agreement, then, upon request of such Bank (with a copy to
Administrative Agent), Company shall immediately pay to the Bank, from time to
time as specified by the Bank, additional amounts sufficient to compensate the
Bank for such increase.
3.4 Funding Losses. Company agrees to reimburse each Bank and to hold
--------------
each Bank harmless from any loss, cost or expense which the Bank may sustain or
incur as a consequence of:
(a) any failure of Company to make, on a timely basis, any payment or
prepayment of principal of any Offshore Rate Loan (including payments made after
any acceleration thereof);
(b) any failure of Company to borrow, continue or convert a Loan after
Company has given (or are deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation;
(c) any failure of Company to make any prepayment after Company has
given a notice in accordance with Section 2.6;
(d) any prepayment of an Offshore Rate Loan on a day which is not the
last day of the Interest Period with respect thereto; or
(e) any conversion pursuant to Section 2.4 of any Offshore Rate Loan
to a Base Rate Loan on a day that is not the last day of the relevant Interest
Period; or including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained.
3.5 Inability to Determine Rates. If Administrative Agent or Majority
----------------------------
Banks shall have determined that for any reason adequate and reasonable means do
not exist for ascertaining the Offshore Base Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan or that the Offshore Base
Rate or the Offshore Rate applicable pursuant to Section 2.9 for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to Banks of funding such Loan,
Administrative Agent will forthwith give notice of such determination to Company
and each Bank. Thereafter, the obligation of Banks to make or maintain Offshore
Rate Loans hereunder shall be suspended until Administrative Agent upon the
instruction of Majority Banks revokes such notice in writing.
48
<PAGE>
Upon receipt of such notice, Company may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by Company. If Company does not
revoke such notice, Banks shall make, convert or continue the Loans, as proposed
by Company, in the amount specified in the applicable notice submitted by
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.
3.6 Reserves on Offshore Rate Loans. Company shall pay to each Bank, as
-------------------------------
long as such Bank shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to actual costs of such reserves allocated to such Loan by the
Bank (as determined by the Bank in good faith, which determination shall be
conclusive) (without duplication for such costs included in the computation of
the Offshore Rate), payable on each date on which interest is payable on such
Loan provided Company shall have received at least 15 days' prior written notice
(with a copy to Administrative Agent) of such additional sums from the Bank.
Each such notice from a Bank shall set forth in reasonable detail (as determined
by the Bank) the basis for such additional sums. If a Bank fails to give notice
15 days prior to the relevant Interest Payment Date, such additional sums shall
be payable 15 days from receipt of such notice.
3.7 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation pursuant to this Article shall deliver to Company (with a copy to
Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and such certificate shall be conclusive
and binding on Company in the absence of manifest error. Each certificate
submitted under this Section may not claim reimbursement or compensation for a
period earlier than 30 days prior to the date of such certificate unless
interpretation of the law or regulation or the guideline or request in question
is retroactive in effect in which case the certificate can cover such
retroactive period.
3.8 Substitution of Banks. Upon receipt by Company from any Bank of a
---------------------
claim for compensation under Section 3.1, 3.2, 3.3 or 3.6 (each such Bank an
"Affected Bank"), Company may: (a) request the Affected Bank to use its
- --------------
reasonable efforts without incurring any material expense to obtain a
Replacement Bank; (b) request one or more of the other Banks to acquire and
assume all or part of such Affected Bank's Loans and Commitment; or (c)
designate a Replacement Bank. Any assignment to a Replacement Bank pursuant to
this Section shall be pursuant to an Assignment and Acceptance in compliance
with Section 10.8 including payment of the processing fee to Administrative
Agent (except to the extent that there is any conflict between the provisions of
this Section and Section 10.8, in which case the provisions of this Section
shall control). If Bank of America is the Affected Bank, it may, at its sole
option, resign as Administrative Agent or Collateral Agent. Notwithstanding the
provisions of Section 9.9 or 9.10, any resignation as Administrative Agent or
Collateral Agent by Bank of America under this Section shall take effect upon
delivery of Bank of America's written resignation to Company and Banks without
necessity of further action or lapse of time.
3.9 Survival. The agreements and obligations of Company in this Article
--------
shall survive the payment of all other Obligations.
49
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1 Condition to Closing . The effectiveness of this Agreement is subject
---------------------
to the following conditions:
(a) Administrative Agent shall have received, on or before the
Closing Date, all of the following documents, in form and substance reasonably
satisfactory to Administrative Agent and Majority Banks:
(i) Loan Documents. Originals of the Loan Documents to which
--------------
Company is a party executed by Company.
(ii) Organization Documents. Copies of the Organization
----------------------
Documents of each Borrower Party, certified by the Secretary of State of
its jurisdiction of organization or, if such document is of a type that may
not be so certified, certified by the secretary or similar officer of the
applicable Borrower Party, together with a good standing certificate from
the Secretary of State of its jurisdiction of organization and each other
state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each dated a recent date
prior to the Closing Date.
(iii) Resolutions; Incumbency.
-----------------------
(A) Copies of the resolutions of the board of directors of
each Borrower Party (or an authorized committee thereof) approving and
authorizing the execution, delivery, and performance by such Borrower
Party of the Loan Documents to which such Borrower Party is a party,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of such Borrower Party.
(B) A certificate of the Secretary or an Assistant
Secretary of each Borrower Party certifying, as of the Closing Date,
the names and true signatures of the officers of such Borrower Party
authorized to execute and deliver, as applicable, this Agreement, and
all other Loan Documents to be delivered hereunder.
(iv) Opinions. Opinions of Wachtell, Lipton, Rosen, & Katz,
--------
special counsel to Company, Albert F. Moreno Esq., Senior Vice President
and General Counsel of Company, and Legal Strategies Group, dated the
Closing Date, and addressed to Administrative Agent and Banks, in form and
substance reasonably satisfactory to Banks.
(v) Closing Certificates from Company. A certificate from the
---------------------------------
president, the chief financial officer, or the treasurer of Company, dated
as of the Closing Date, substantially in the form of Exhibit V.
---------
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(vi) No Material Adverse Effect. There has occurred since
--------------------------
November 28, 1999, as reflected in the draft consolidated financial
statements delivered on January 24, 2000 and the accompanying draft notes,
no event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(vii) Security Interests in Collateral. Evidence satisfactory
--------------------------------
to Administrative Agent that Borrower Parties shall have taken or caused to
be taken all such actions, executed and delivered or caused to be executed
and delivered all such agreements, documents and instruments, and made or
caused to be made all such filings and recordings (other than the filing or
recording of items described in subsections (B), (C) and (D) below) that
may be necessary or, in the opinion of Administrative Agent, desirable in
order to create in favor of Administrative Agent, for the benefit of Banks,
a valid and (upon such filing and recording) perfected Lien on the
Collateral. Such actions shall include the following:
(A) Stock Certificates and Instruments. Delivery to
----------------------------------
Administrative Agent of (1) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in
blank and otherwise satisfactory in form and substance to
Administrative Agent) representing all Capital Stock pledged pursuant
to the Pledge and Security Agreement and (2) all promissory notes or
other instruments (duly endorsed, where appropriate, in a manner
satisfactory to Administrative Agent) evidencing any Collateral;
(B) Lien Searches and UCC Termination Statements. Delivery
--------------------------------------------
to Administrative Agent of (1) the results of a recent search, by a
Person satisfactory to Administrative Agent, of all effective UCC
financing statements and fixture filings and all judgment and tax lien
filings which may have been made with respect to any personal or mixed
property of any Borrower Party, together with copies of all such
filings disclosed by such search, and (2) UCC termination statements
duly executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC
financing statements or fixture filings disclosed in such search
(other than any such financing statements or fixture filings in
respect of Liens permitted to remain outstanding pursuant to the terms
of this Agreement);
(C) UCC Financing Statements and Fixture Filings. Delivery
--------------------------------------------
to Administrative Agent of UCC financing statements and, where
appropriate, fixture filings, duly executed by each applicable
Borrower Party with respect to all personal and mixed property
Collateral of such Borrower Party, for filing in all jurisdictions as
may be necessary or, in the opinion of Administrative Agent, desirable
to perfect the security interests created in such Collateral pursuant
to the Collateral Documents; and
(D Intellectual Property Filings. Delivery to
-----------------------------
Administrative Agent of all cover sheets or other documents or
instruments required to be filed with the United States Patent and
Trademark Office in order to create or perfect Liens in respect of any
IP Collateral.
51
<PAGE>
(viii) Foreign Subsidiaries. Copies of the Organization
--------------------
Documents of each Pledged Foreign Subsidiary.
(ix) Financial Statements. A copy of a draft of the unaudited
--------------------
(A) consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of the fiscal year ended November 28, 1999,
(B) related consolidated and consolidating statements of income of
Company and its Subsidiaries for such fiscal year and (C) related
consolidated statement of cash flows of Company and its Subsidiaries for
such fiscal year.
(x) Evidence of Insurance. A certificate from Company's
---------------------
insurance broker or other evidence satisfactory to Administrative Agent
that all insurance required to be maintained pursuant to Sections 5.16
and 6.6 is in full force and effect.
(xi) Financial Plan. A consolidated plan and financial forecast
--------------
for fiscal years 2000 and 2001 including (A) forecasted consolidated
balance sheets and forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for each such fiscal year and for
each month of fiscal year 2000 and each quarter of fiscal year 2001,
together with a pro forma calculation of compliance with Sections 7.6,
7.7 and 7.8 for each quarter of each such fiscal year, and (B) such other
information as Administrative Agent may reasonably request.
(xii) Intercreditor Agreement. Executed copies of the
-----------------------
Intercreditor Agreement.
(xiii) Other Credit Facilities. Executed copies of the Bridge
-----------------------
Credit Agreement, the Amended and Restated 1997 364 Day Credit Agreement,
and the 1997 Second Amended and Restated Credit Agreement, together with
evidence satisfactory to Administrative Agent that all conditions
precedent to the effectiveness of such agreements have been satisfied.
(xiv) Other Documents. Such other approvals, opinions,
---------------
documents or materials as Administrative Agent or any Bank may reasonably
request.
(b) Representations and Warranties. The representations and
------------------------------
warranties made by Company herein, or which are contained in any certificate,
document or financial or other statement furnished at any time under or in
connection herewith or therewith, shall be correct on and as of the Closing
Date.
(c) Existing Receivables Facility. On the Closing Date, LSFLLC shall
-----------------------------
have (i) repurchased all accounts receivable sold under the Existing Receivables
Purchase Agreement, (ii) terminated any commitments to purchase any accounts
receivable or make other extensions of credit thereunder, and (iii) delivered to
Administrative Agent all documents or instruments necessary to assign to LSFLLC
all financing statements filed in respect of transactions under the Existing
Receivables Purchase Agreement. In addition, the Levi Strauss Receivables
Transfer Agreement dated as of April 28, 1999 among Company, Levi Strauss
Financial Center Corporation and Levi Strauss Funding Corp. shall have been
terminated.
52
<PAGE>
(d) Payment of Fees. On the Closing Date, Administrative Agent shall
---------------
have received evidence of payment by Company of all accrued and unpaid fees,
costs and expenses to the extent then due and payable on the Closing Date
pursuant to the terms of this Agreement, together with Professional Costs of
Bank of America, to the extent invoiced prior to or on the Closing Date;
including any such costs, fees and expenses arising under or referenced in
Sections 2.10 and 10.4.
(e) LSFLLC. LSFLLC shall have entered into a Receivables Transfer
------
Agreement with Levi Strauss Financial Center Corporation similar to the
Receivables Transfer Agreement between Levi Strauss Financial Center Corporation
and Levi Strauss Funding Corp. and Administrative Agent shall have received duly
executed UCC financing statements for filing in all appropriate jurisdictions.
4.2 Conditions to Each Borrowing, Issuance of Lender 180 Day Letter of
------------------------------------------------------------------
Credit. The obligation of each Bank to make any Loan to be made by it
- ------
(including its initial Loan), and of each Issuing 180 Day Lender to issue any
Lender 180 Day Letter of Credit, is subject to the satisfaction of the following
conditions precedent on the relevant disbursement date:
(a) Notice. As to any Loan, Administrative Agent shall have received
------
a Notice of Borrowing and as to any Lender 180 Day Letter of Credit,
Administrative Agent shall have received a Letter of Credit Application;
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties made by Company and contained in Article V shall
be true and correct in all material respects on and as of each disbursement date
with the same effect as if made on and as of such disbursement date (except to
the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct in all material respects as
of such earlier date);
(c) No Existing Default. No Default or Event of Default shall exist
-------------------
or shall result from such Borrowing, the issuance of such Lender 180 Day Letter
of Credit; and
(d) Total Utilization of Commitments. After giving effect to the
---------------------------------
proposed Borrowing or the issuance of the proposed Lender 180 Day Letter of
Credit, as the case may be, (i) the sum of (A) the Total Utilization of
Commitments and (B) the Total Amount of Unsecured Debt shall not exceed the
Aggregate Total Commitments and (ii) the Total Utilization of 180 Day
Commitments shall not exceed the Aggregate 180 Day Commitment.
Each Notice of Borrowing and each Letter of Credit Application submitted by
Company hereunder shall constitute a representation and warranty by Company
hereunder, as of the date of each such application, request, notice, and
disbursement date that the conditions in Section 4.2 are satisfied.
4.3 Conditions Subsequent. No later than the day following the Closing
---------------------
Date, Administrative Agent shall have received all of the following documents,
in form and substance satisfactory to Administrative Agent and Majority Banks:
53
<PAGE>
(a) Loan Documents. Originals of the Guaranty and the Pledge and
--------------
Security Agreement executed by all Material Domestic Subsidiaries; and
(b) Opinions. An opinion of Wachtell, Lipton, Rosen & Katz, special
--------
counsel to Company, and Albert F. Moreno, Esq., Senior Vice President and
General Counsel of Company, dated the Subsequent Closing Date, addressed to
Administrative Agent and Banks, in form and substance reasonably satisfactory to
Banks.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Company represents and warrants to Administrative Agent and each Bank that:
5.1 Organization, Powers, Good Standing, Business, Ownership of
-----------------------------------------------------------
Subsidiaries and Capitalization.
- -------------------------------
(a) Organization and Powers. Each Borrower Party is a corporation
-----------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1(a) and has all
---------------
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to enter
into each Loan Document, to issue the Notes (in the case of Company) and to
carry out the transactions contemplated hereby and thereby.
(b) Good Standing. Each Borrower Party is duly qualified to do
-------------
business and is in good standing wherever necessary to carry on its respective
present business and operations, except in jurisdictions in which the failure to
be so qualified or to be in good standing has not had and will not have a
Material Adverse Effect.
(c) Conduct of Business. Company and its Subsidiaries, considered
-------------------
together, are engaged only in businesses related or incidental to the
manufacture and sale of clothing and accessories and the LOS/DOS Business.
(d) Common Stock of Company All of the issued and outstanding shares
-----------------------
of Capital Stock of Company and each of its Subsidiaries have been duly and
validly issued and are fully paid and non-assessable.
(e) Restricted Subsidiaries. As of the Closing Date, the only
-----------------------
Restricted Subsidiaries are those listed on Schedule 5.1(e).
---------------
(f) Organizational Structure. As of the Closing Date, the
------------------------
organizational structure of Company and its Subsidiaries is set forth on
Schedule 5.1(f).
- ---------------
(g) Material Subsidiaries. As of the Closing Date, all Material
---------------------
Subsidiaries are listed on Schedule 5.1(g). As of the end of each fiscal
---------------
quarter, the aggregate gross revenues of the Subsidiaries of Company not
constituting Material Subsidiaries for the preceding four fiscal quarter period
shall not be more than 1% of the aggregate gross revenues of Company and its
Subsidiaries on a consolidated basis for such period.
54
<PAGE>
5.2 Authorization of Borrowing, etc.
--------------------------------
(a) Authorization of Borrowing. The execution, delivery and
--------------------------
performance by each Borrower Party of each Loan Document to which it is a party
and the issuance, delivery and payment of the Notes by Company as contemplated
herein have been duly authorized by all necessary corporate action by such
Borrower Party. Each of the Loan Documents (other than the Notes) to which any
Borrower Party is a party has been duly executed and delivered by such Borrower
Party, and the Notes, when executed and delivered, will be duly executed and
delivered by Company.
(b) No Conflict. The execution, delivery and performance by each
-----------
Borrower Party of each Loan Document to which it is a party and the issuance,
delivery and performance of the Notes by Company do not and will not (i) violate
any Borrower Party's Organization Documents or any order, judgment or decree of
any court or other Governmental Authority binding on any Borrower Party, (ii)
conflict with, result in a breach of, constitute a default under, or require the
termination of, any Contractual Obligation of any Borrower Party, except where
such conflicts, breaches, defaults and terminations, in the aggregate, would not
have a Material Adverse Effect, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any of the properties or
assets of any Borrower Party (other than pursuant to the Collateral Documents),
or (iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of any Borrower Party except for such
approvals or consents which will be obtained on or before the Closing Date or
where the failure to obtain such approvals and consents would not, in the
aggregate, have a Material Adverse Effect.
(c) Governmental Consents. The execution, delivery and performance by
---------------------
Borrower Parties of the Loan Documents, the application of the proceeds of the
Loans and the issuance, delivery and performance of the Notes by Company do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any Governmental Authority except actions
which are required due to a change in applicable law after the date hereof and
which have been or will be duly taken within the time period prescribed by any
such law.
(d) Binding Obligation. Each of the Loan Documents (other than the
------------------
Notes) to which any Borrower Party is a party is, and the Notes, when executed
and delivered, will be, the legally valid and binding obligations of such
Borrower Party, enforceable against such Borrower Party in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability, whether
enforcement is sought in a proceeding at law or in equity.
5.3 Financial Condition. On January 24, 2000, Company delivered to
-------------------
Administrative Agent a draft of its unaudited financial statements for its
fiscal year ending November 28, 1999 and the accompanying draft notes. The
foregoing financial statements were prepared in conformity with GAAP, and fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as of the date thereof and the consolidated results
of operations and cash flows of Company and its Subsidiaries for the period
covered thereby, subject, to changes resulting from audit and normal year-end
adjustments. As of the date of this
55
<PAGE>
Agreement, Company and its Subsidiaries, taken as a whole, have no material
contingent obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment, which is not reflected in the
unaudited financial statements for its fiscal year ending November 28, 1999, the
notes thereto, or the most recent financial statements delivered pursuant to
Section 6.1 (if any), and which is required by GAAP to be reflected therein.
Since November 28, 1999, there has been no event or circumstance which has a
Material Adverse Effect.
5.4 Title to Properties; Liens. Each of Company and its Subsidiaries has
--------------------------
good, sufficient and legal title to all of its respective properties and assets
reflected in the balance sheets referred to in Section 5.3 or in the most recent
financial statements delivered pursuant to Section 6.1 (if any), except for
assets acquired or disposed of in the ordinary course of business since the date
of such balance sheet and assets disposed of where such disposition would not be
prohibited by Sections 7.3 and 7.4 and except for those imperfections of title
which would not in the aggregate have a Material Adverse Effect. Except as
permitted under Section 7.2, all such properties and assets are free and clear
of Liens. As of the Closing Date, the only Principal Properties are those
listed on Schedule 5.4. As of the Closing Date, all domestic real property that
-------------
is owned or leased by Company and its Subsidiaries is listed on Schedule 5.4.
------------
5.5 Litigation; Adverse Facts. Except as to any confidential governmental
-------------------------
proceeding of which Borrower Parties are unaware, there is no action, suit,
proceeding, claim or dispute (whether or not purportedly on behalf of Company or
any of its Subsidiaries) at law or in equity or before or by any Governmental
Authority, pending or, to the knowledge of any Borrower Party, threatened in
writing against or affecting Company or any of its Subsidiaries or any property
of Company or any of its Subsidiaries, which any Borrower Party reasonably
expects to (a) result in any Material Adverse Effect, or (b) materially and
adversely affect the ability of any Borrower Party to perform the Obligations or
the ability of Banks to enforce the Obligations. Neither Company nor any of its
Subsidiaries is (i) in violation of any applicable Requirement of Law which (as
to all such violations in the aggregate) would have a Material Adverse Effect,
or (ii) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule, or regulation of any Governmental Authority, domestic
or foreign, which (as to all such matters in the aggregate) would have a
Material Adverse Effect. There is no action, suit or proceeding pending or, to
the knowledge of any Borrower Party, threatened in writing against or affecting
Company or any of its Subsidiaries which challenges the validity or the
enforceability of this Agreement, the Notes or the other Loan Documents.
5.6 Payment of Taxes. All federal and state tax returns and reports of
----------------
Company and each of its Subsidiaries required to be filed by such Person, where
the failure to file such returns or reports would have a Material Adverse
Effect, have been timely filed, and all taxes, assessments, fees and other
governmental charges upon such Persons and upon their respective properties,
assets, income and franchises which are due and payable, where the failure to
pay such amounts when due and payable would in the aggregate have a Material
Adverse Effect, have been paid when due and payable. No Borrower Party knows of
any proposed tax assessment against Company or any of its Subsidiaries that
would have a Material Adverse Effect which is not being actively contested in
good faith by the applicable corporation to the extent affected thereby (and as
to which any provision therefor required pursuant to Section 6.5 has been made).
56
<PAGE>
5.7 Materially Adverse Agreements; Performance.
------------------------------------------
(a) Agreements. Neither Company nor any of its Subsidiaries is a
----------
party to or subject to any material agreement or instrument or charter or other
internal restriction which (in the aggregate as to all such matters) would have
a Material Adverse Effect.
(b) Performance. Neither Company nor any of its Subsidiaries is in
-----------
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation of Company or
any of its Subsidiaries, nor will any default result from the consummation of
this Agreement or any of the other Loan Documents, and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or indirect, of such
default or defaults, if any, would not have a Material Adverse Effect.
5.8 Governmental Regulation. Neither Company nor any of its Material
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, any state public utilities code or to any federal or state
statute or regulation limiting its ability to incur Indebtedness for money
borrowed.
5.9 ERISA Compliance. Except as specifically disclosed in Schedule 5.9:
---------------- ------------
(a) And except as would not have a Material Adverse Effect, each Plan
is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of any Borrower Party, nothing has
occurred which would cause the loss of such qualification. Company and each
ERISA Affiliate have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the best knowledge of any Borrower
Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event that requires notice to be given to the PBGC
has occurred or is reasonably expected to occur; (ii) no Pension Plan has a
Funded Current Liability Percentage of less than 90%; (iii) neither Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); and (iv) neither Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan.
57
<PAGE>
5.10 Environmental Matters. Company and each of its Subsidiaries conducts
---------------------
in the ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business, operations
and properties, and as a result thereof each Borrower Party has reasonably
concluded that, except as specifically disclosed in Schedule 5.10, such
-------------
Environmental Laws and Environmental Claims are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect.
5.11 Compliance With Laws. Each of Company and its Subsidiaries is in
--------------------
compliance with all Requirements of Law applicable to their properties, assets
and business where the failure to so comply would (as to all such failures to
comply in the aggregate) have a Material Adverse Effect. There are no
proceedings pending or, to the knowledge of any Borrower Party, threatened in
writing, to terminate or modify any license, permit or other approval issued by
a Governmental Authority, the termination or modification of which (in the
aggregate as to all such matters) would have a Material Adverse Effect.
5.12 Regulation U. None of Company nor any of its Subsidiaries is engaged
------------
principally, nor as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. No
part of the proceeds of the Loans will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. No part of the proceeds of the Loans will be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X of the Federal Reserve Board.
5.13 Disclosure. No representation or warranty of any Borrower Party
----------
contained in this Agreement or any other document, certificate or written
statement furnished to Administrative Agent or any Bank by any Borrower Party
for use in connection with any transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or omits to
state or will omit to state a material fact known to such Borrower Party
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
5.14 Matters Relating to Collateral.
------------------------------
(a) The execution and delivery of the Collateral Documents by
Borrower Parties, together with (i) the actions taken on or prior to the date
hereof pursuant to Sections 4.1(a)(vii) and 4.1(a)(viii), (ii) the actions taken
pursuant to Sections 6.9 and 6.11, and (iii) the delivery to Administrative
Agent of any Pledged Collateral not delivered to Administrative Agent at the
time of execution and delivery of the applicable Collateral Document (all of
which Pledged Collateral has been so delivered) are effective to create in favor
of Administrative Agent for the benefit of Banks, as security for the respective
Secured Obligations (as defined in the applicable Collateral Document in respect
of any Collateral), a valid and perfected Lien on all of the Collateral, a
security interest in which may be perfected by filing in the United States or
possession, and all filings and other actions necessary or desirable to perfect
and maintain the perfection of such Liens have been duly made or taken and
remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
58
<PAGE>
(b) No authorization, approval or other action by, and no notice to or
filing with, any Government Authority in the United States is required for
either (i) the pledge or grant by any Borrower Party of the Liens purported to
be created in favor of Administrative Agent pursuant to any of the Collateral
Documents, or (ii) the exercise by Administrative Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created
pursuant to any of the Collateral Documents or created or provided for by
applicable law), except for filings or recordings contemplated by Section
5.14(a) and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities .
(c) The pledge of the Pledged Collateral pursuant to the Collateral
Documents does not violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
(d) All information supplied to Administrative Agent by or on behalf
of any Borrower Party with respect to any of the Collateral (in each case taken
as a whole with respect to any particular Collateral) is accurate and complete
in all material respects.
5.15 Intangible Assets. Company and its Subsidiaries own, or possess the
-----------------
right to use, all trademarks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intangible assets that are used in the conduct of
their respective businesses as now operated, and none of such items, to the best
knowledge of any Borrower Party, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person, to the
extent that such failure to own or possess or such conflict has a Material
Adverse Effect.
5.16 Insurance. The properties of Company and its Subsidiaries are insured
---------
with financially sound and reputable insurance companies not Affiliates of
Company or with Majestic Insurance International Ltd., a wholly-owned Subsidiary
of Company, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Company and its Subsidiaries operate.
From and after the date that is 30 days following the Closing Date, property,
general liability, business interruption and automobile insurance policies shall
name Collateral Agent for the benefit of Banks as an additional insured
thereunder as its interests may appear and, in the case of property insurance,
contain a loss payable subsection or endorsement, satisfactory in form and
substance to Administrative Agent, that names Collateral Agent for the benefit
of Banks as the loss payee thereunder for any covered loss with respect to the
Collateral, as appropriate. Insurance policies shall provide for at least 30
days prior written notice to Administrative Agent of any material modification
or cancellation of such policy.
5.17 Year 2000. Company has (a) initiated a review and assessment of all
---------
areas within its and each of its Subsidiaries' business and operations
(including those affected by customers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by Company or
any of its Subsidiaries (or their respective customers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (b) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(c) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, Company believes that all computer applications and devices
containing
59
<PAGE>
imbedded computer chips (including those of its and its Subsidiaries' customers
and vendors) that are material to its or any of its Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
so does not have a Material Adverse Effect.
5.18 Solvency. Each Borrower Party is and, upon the incurrence of any
--------
Obligations by such Borrower Party on any date on which this representation is
made, will be, Solvent.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall (except in the case of Company's reporting covenants)
cause each of its Subsidiaries to, perform and comply with all covenants in this
Article.
6.1 Financial Statements and Other Reports.
--------------------------------------
(a) Company shall maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP and in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Company or any of its subsidiaries. Company shall deliver to
Administrative Agent for distribution to Banks:
(i) as soon as practicable and in any event within 30 days after
the end of each fiscal month, a copy of the consolidated and consolidating
balance sheets of Company and its Subsidiaries, as at the end of such period,
the related consolidated and consolidating statement of income of Company and
its Subsidiaries for such fiscal month and for the fiscal year to date, and the
related consolidated statement of cash flows of Company and its Subsidiaries for
such fiscal month and for the fiscal year to date, certified by the chief
financial officer, treasurer or controller of Company as fairly presenting the
financial condition of Company and its Subsidiaries in all material respects as
at the dates indicated and the results of their operations and changes in cash
flows for the periods indicated in accordance with GAAP, except for the absence
of footnotes and subject to changes resulting from audit and normal year-end
adjustment;
(ii) as soon as practicable and in any event within 45 days after
the end of each of the first three fiscal quarters of the fiscal year, a copy of
the consolidated and consolidating balance sheets of Company and its
Subsidiaries, as at the end of such period, the related consolidated and
consolidating statement of income of Company and its Subsidiaries for such
fiscal quarter and for the fiscal year to date, and the related consolidated
statement of cash flows of Company and its Subsidiaries for such fiscal quarter
and for the fiscal year to date, certified by the chief financial officer,
treasurer or controller of Company as fairly presenting the financial condition
of Company and its Subsidiaries in all material respects as at the dates
indicated and the result results of their
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operations and changes in cash flows for the periods indicated in accordance
with GAAP, except for the absence of footnotes and subject to changes resulting
from audit and normal year-end adjustment;
(iii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a copy of the consolidated and consolidating
balance sheets of Company and its Subsidiaries, as at the end of such year, the
related consolidated and consolidating statements of income of Company and its
Subsidiaries for such fiscal year and the related consolidated statements of
stockholders' equity and cash flows of Company and its Subsidiaries for such
fiscal year, accompanied by a report thereon of and a letter from Arthur
Andersen LLP or other independent public accountants of recognized national
standing selected by Company and satisfactory to Majority Banks substantially in
the form of Exhibit IX, which report shall be unqualified as to going concern
----------
and scope of audit and shall state that such consolidated financial statements
present fairly in all material respects the financial position of Company and
its Subsidiaries as at the dates indicated and the results of operations and
cash flows for the periods indicated in conformity with GAAP (except as
otherwise stated therein) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) together with each delivery of any financial statements
pursuant to Section 6.1(a)(ii) or 6.1(a)(iii) a Compliance Certificate from
Company executed by a Responsible Officer, stating that the signer does not have
knowledge of the existence as at the date of such certificate, of any condition
or event which constitutes a Default or Event of Default, or, if any such
condition or event existed at such date or exists, specifying the nature and
period of existence thereof and what action Company has taken, is taking and
proposes to take with respect thereto, and demonstrating in reasonable detail
compliance during or at the end of such accounting periods, as applicable, with
Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.11 and 7.16; and, should there be any
material change in GAAP as in effect as of the Closing Date, such Compliance
Certificate shall include computations setting forth reconciliation of the items
used in computing compliance with the covenants under this Agreement by reason
of the differences between GAAP used in the preparation of such financial
statements and GAAP as in effect as of the Closing Date;
(v) concurrently with the delivery of the financial statements
referred to in Section 6.1(a)(iii), a certificate of Company's independent
certified public accountants certifying such financial statement and stating
that in making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default hereunder or, if any such Default or Event of
Default shall exist, stating the nature and status of such event;
(vi) as soon as practicable and in any event no later than 10
Business Days after the end of each fiscal month, a cash flow forecast for
Company and its Subsidiaries for the then following 13 weeks and a report
setting forth the cash flows of Company and its Subsidiaries for the prior 13
weeks, together with an explanation of any
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material variance between those results and the results previously projected for
those 13 weeks;
(vii) (A) as soon as practicable and in any event no later than
10 Business Days after the end of each fiscal month, (1) a report setting forth
the details of (y) any Lender Derivative/FX Contract to which Company or FinServ
is a party, including the Termination Value of any such Lender Derivative/FX
Contract, and (z) all other outstanding unsecured Indebtedness of Company or any
of its Subsidiaries (including any letters of credit (other than Lender Bridge
Letters of Credit and Lender 180 Day Letters of Credit) issued for the benefit
of Company and its Subsidiaries) incurred in accordance with Section 7.1(r), and
(2) information with respect to all other Derivative/FX Contracts to which
Company or any of its Subsidiaries is a party, and (B) promptly upon request,
any other information concerning such Derivative/FX Contracts reasonably
requested by Administrative Agent;
(viii) as soon as practicable and in any event no later than 30
days after the end of fiscal year 2000, a consolidated plan and financial
forecast for fiscal year 2001 including (A) forecasted consolidated balance
sheets and forecasted consolidated statements of income and cash flows of
Company and its Subsidiaries for such fiscal year and for each month of such
fiscal year, together with a pro forma calculation of compliance with
---------
Sections 7.6, 7.7 and 7.8 for each quarter of such fiscal year and an
explanation of the major assumptions on which such forecasts are based, and (B)
such other information as Administrative Agent may reasonably request;
(ix) promptly after the same are available, copies of each
annual report or proxy statement sent to the stockholders of Company, and copies
of all annual, regular, periodic and special reports and registration statements
which Company may file or, if Company were subject to the Exchange Act, would be
required to file with the Securities and Exchange Commission under Sections 13
or 15(d) of the Exchange Act, and not otherwise required to be delivered to
Administrative Agent pursuant hereto;
(x) promptly upon any Responsible Officer of Company obtaining
knowledge of any condition or event which constitutes a Default or Event of
Default, or becoming aware that any Bank has given any written notice of a
claimed Default or Event of Default, a certificate from Company, executed by a
Responsible Officer of Company, specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action taken, and
the nature of such claimed Default or Event of Default, event or condition, and
what action Company has taken, is taking, and proposes to take with respect
thereto;
(xi) promptly upon any Responsible Officer of Company obtaining
knowledge of (A) the institution of, or non-frivolous threat of, any material
action, suit, proceeding or arbitration against or affecting Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries not
previously disclosed in writing by Company to Administrative Agent, or (B) any
material development in any action, suit, proceeding or arbitration already
disclosed, and in each case Company reasonably expects such institution, threat,
or material development to result in any Material Adverse
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Effect or materially and adversely to affect the ability of Company and its
Subsidiaries, taken as a whole, to perform the Obligations or the ability
of Banks to enforce the Obligations, Company shall promptly give notice
thereof to Administrative Agent and provide such other information
(excluding communications covered by the attorney-client privilege) as may
be reasonably requested by Administrative Agent or a Bank to enable their
counsel to evaluate such matters;
(xii) promptly upon any Responsible Officer of Company becoming
aware of its occurrence, notice of any of the following events affecting
Company or any ERISA Affiliate (but in no event more than 10 days after
such event), and such Responsible Officer shall also deliver to
Administrative Agent and each Bank a copy of any notice with respect to
such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to Company or any ERISA Affiliate
with respect to such event:
(A) an ERISA Event;
(B) a decrease in the Funded Current Liability Percentage
for any Pension Plan at the end of any fiscal quarter to less than
90%; or
(C) any significant change in the status of any item
disclosed on Schedule 5.9;
------------
(xiii) promptly upon receipt thereof, copies of any detailed audit
reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of Company by
independent accountants in connection with the accounts or books of Company
or any of its Subsidiaries, or any audit of any of them;
(xiv) promptly upon any discovery or determination that any
computer application (including those of its suppliers and vendors) that is
material to the business and operations of Company or any of its
Subsidiaries will not be Year 2000 Compliant on a timely basis, except to
the extent that such failure does not have a Material Adverse Effect, a
notice thereof; and
(xv) promptly upon any Responsible Officer of Company becoming
aware of its occurrence, a notice of any material change in accounting
policies or financial reporting practices by Company or any of its
Subsidiaries.
(b) Company will deliver to Administrative Agent for distribution to
each Bank together with the Compliance Certificate required under subsection
(iv) of subsection (a) of this Section, a copy of all press releases and other
statements made available generally by Company to the public during the period
covered by the Compliance Certificate. The press releases and such other
statements covered by this subsection are those which concern material
developments in the business of Company and its Subsidiaries taken as a whole.
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(c) Company will deliver to Administrative Agent for distribution to
each Bank copies of material financial and other information as Administrative
Agent or Majority Banks may reasonably request from time to time.
6.2 Corporate Existence, etc. Except as permitted by Section 7.4, Company
-------------------------
shall, and shall cause each of its Subsidiaries to, at all times preserve and
keep in full force and effect its corporate existence and rights and franchises
material to its business and its goodwill except where the failure to do so
would not in the aggregate have a Material Adverse Effect.
6.3 Compliance With Laws, etc. Company shall, and shall cause each of its
--------------------------
Subsidiaries, to comply with the requirements of each applicable Requirement of
Law, including all laws relating to environmental, health, safety and land use
matters applicable to any property, except where the failure to do so would not
in the aggregate have a Material Adverse Effect.
6.4 Compliance with Agreements. Company shall, and shall cause each of
--------------------------
its Subsidiaries to, promptly and fully comply with all Contractual Obligations
to which any one or more of them is a party, except for any such Contractual
------
Obligations (a) the performance of which would cause a Default or Event of
Default, (b) then being contested by any of them in good faith by appropriate
proceedings, or (c) if the failure to comply therewith does not have a Material
Adverse Effect.
6.5 Payment of Taxes and Claims. Company shall, and shall cause each of
---------------------------
its Subsidiaries to pay, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges not exceeding
$5,000,000 in the aggregate) imposed upon any of them or any of their properties
or assets or in respect of any of their franchises, business, income or property
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
(other than claims not exceeding $5,000,000 in the aggregate) which have become
due and payable and which by law have or may become a Lien upon any of their
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such governmental charge or
--------
claim need be paid if it is being contested in good faith by appropriate
proceedings and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
6.6 Maintenance of Properties; Insurance.
------------------------------------
(a) Company shall, and shall cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
all properties used or useful in the business of Company and its Subsidiaries
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof, if the failure to perform such actions would
in the aggregate have a Material Adverse Effect. Company shall, and shall cause
each of its Subsidiaries to, maintain or cause to be maintained, through self-
insurance or with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations, if the failure
to do so would (as to all
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<PAGE>
such failures in the aggregate) have a Material Adverse Effect. From and after
the date that is 30 days following the Closing Date, property, general
liability, business interruption and automobile insurance policies shall (i)
name Collateral Agent for the benefit of Banks as an additional insured
thereunder with respect to all Collateral as its interests may appear and, in
the case of property insurance, (ii) contain a loss payable subsection or
endorsement, satisfactory in form and substance to Administrative Agent, that
names Collateral Agent for the benefit of Banks as the loss payee thereunder for
any covered loss with respect to all Collateral, as appropriate. Insurance
policies shall provide for at least 30 days prior written notice to
Administrative Agent of any material modification or cancellation of such
policy.
(b) Upon receipt by Company or any of its Subsidiaries of any
insurance proceeds constituting Net Insurance Proceeds, (i) so long as no Event
of Default shall have occurred and be continuing, Company or such Subsidiary may
retain and apply such Net Insurance Proceeds for working capital purposes, in
the case of business interruption insurance proceeds, or to pay or reimburse the
costs of repairing, restoring or replacing the assets (or substantially similar
assets) in respect of which such Net Insurance Proceeds were received or, to the
extent not so applied, as provided in Section 2.7, and (ii) if an Event of
Default shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance Proceeds as provided in Section 2.7.
6.7 Inspection.
----------
(a) Company shall, and shall cause each of its Subsidiaries to, (i)
permit any authorized representatives designated by a Bank, at the expense of
that Bank, to visit and inspect any of the properties of Company or any of its
Subsidiaries, including their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss their affairs, finances and
accounts with their officers and independent public accountants, all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested, and (ii) following the occurrence and
during the continuation of an Event of Default, permit any authorized
representatives designated by a Bank, at the expense of Company, to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
their financial and accounting records, and to make copies and take extracts
therefrom, and to discuss their affairs, finances and accounts with their
officers and independent public accountants, immediately upon request by
Administrative Agent.
(b) Company shall, and shall cause each of its Subsidiaries to, permit
E & Y Restructuring LLC and its affiliates, at the expense of Company, to have
access to and review their financial and accounting records in connection with
the services to be performed by E & Y Restructuring LLC for Banks and to discuss
their affairs, finances and accounts. The scope of such services shall be
determined by Banks from time to time and shall include a monthly review during
the first six months following the Closing Date (including a review of all
Derivative/FX Contracts) and a quarterly review thereafter. Banks agree that
provided no Event of Default has occurred and is continuing, the Professional
- --------
Costs for the services of E & Y Restructuring LLC for which Company shall be
liable shall not exceed $600,000 in the aggregate plus all related expenses.
----
Information acquired by a Bank pursuant to this Section shall be subject to the
confidentiality provisions of Section 10.9.
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6.8 Use of Proceeds. Company shall use the proceeds of the Loans solely
---------------
for repayment of all obligations under the Existing Receivables Purchase
Agreement and for working capital and other general corporate purposes and not
in contravention of any applicable Requirement of Law.
6.9 Execution of Guaranty and Collateral Documents by Additional
------------------------------------------------------------
Subsidiaries.
- ------------
(a) In the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will notify Administrative Agent of
that fact and cause such Material Domestic Subsidiary to execute and deliver to
Administrative Agent a counterpart of the Guaranty and the Pledge and Security
Agreement, and to take all such further actions and execute such further
documents and instruments as may be necessary or, in the opinion of
Administrative Agent, desirable to create in favor of Collateral Agent, for the
benefit of Banks, a valid and perfected Lien on the assets of such Material
Domestic Subsidiary described in the applicable Collateral Documents within 30
days of such Person becoming a Material Domestic Subsidiary; provided, however,
-------- -------
that neither Company nor any of its Subsidiaries shall be required to grant
Liens on any Principal Property, the Capital Stock of a Restricted Subsidiary or
any Indebtedness of or issued by a Restricted Subsidiary.
(b) Company shall deliver to Administrative Agent, together with such
Loan Documents, (i) certified copies of such Subsidiary's Organization
Documents, together with a good standing certificate from the Secretary of State
of the jurisdiction of its organization and each other state in which such
Person is qualified to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a certificate executed by the secretary or similar
officer of such Subsidiary as to (A) the fact that the attached resolutions of
the board of directors of such Subsidiary approving and authorizing the
execution, delivery and performance of such Loan Documents are in full force and
effect and have not been modified or amended and (B) the incumbency and
signatures of the officers of such Subsidiary executing such Loan Documents, and
(iii) a favorable opinion of counsel to such Subsidiary, in form and substance
satisfactory to Administrative Agent and its counsel, as to (A) the due
organization and good standing of such Subsidiary, (B) the due authorization,
execution and delivery by such Subsidiary of such Loan Documents, (C) the
enforceability of such Loan Documents against such Subsidiary, and (D) such
other matters (including matters relating to the creation and perfection of
Liens in any Collateral pursuant to such Loan Documents) as Administrative Agent
may reasonably request, all of the foregoing to be satisfactory in form and
substance to Administrative Agent and its counsel.
(c) In the event that (i) Company or any Material Domestic Subsidiary
acquires any fee interest or leasehold interest in real property after the date
hereof or (ii) at the time any Person becomes a Material Domestic Subsidiary,
such Person owns or holds any fee interest or leasehold interest in real
property, Company or such Material Domestic Subsidiary will notify
Administrative Agent of that fact and deliver, or cause such Material Domestic
Subsidiary to, execute and deliver to Administrative Agent, within 30 days of
such Person acquiring such Property or becoming a Material Domestic Subsidiary,
as the case may be, a fully executed and notarized Mortgage, in proper form for
recording in all appropriate places in all
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applicable jurisdictions, encumbering the interest of such Borrower Party in
such Property, and the opinions, appraisals, documents, title insurance,
environmental reports described in Section 6.11(a) or that may be reasonably
required by Administrative Agent; provided, however, that neither Company nor
-------- -------
any of its Subsidiaries shall be required to grant Liens on any Principal
Property.
6.10 Compliance with ERISA. Company shall and shall cause each of its
---------------------
Subsidiaries and their respective ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code.
6.11 Post Closing Actions.
--------------------
(a) Real Estate.
-----------
(i) On or prior to the date that is 60 days after the Closing
Date, Company shall have delivered to Administrative Agent:
(A) Fully executed and notarized Mortgages in proper form
for recording in all appropriate places in all applicable
jurisdictions, encumbering the Property listed on Schedule 6.11(a)(i);
-------------------
(B) An opinion of counsel (which counsel shall be reasonably
satisfactory to Administrative Agent) in each state in which any such
Property is located with respect to the enforceability of the form(s)
of Mortgages to be recorded in such state and such other matters as
Administrative Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Administrative Agent;
(C) (1) ALTA mortgagee title insurance policies or
unconditional commitments therefor issued by a title company
satisfactory to Administrative Agent with respect to the Property
listed on Schedule 6.11(a)(i), in amounts not less than the respective
-------------------
amounts designated therein with respect to any particular Property,
insuring fee simple title to each such Property vested in Company and
assuring Administrative Agent that the applicable Mortgage creates
valid and enforceable mortgage Liens on the respective Property
encumbered thereby subject only to a standard survey exception, which
policies (y) shall include an endorsement for mechanics' liens, for
future advances under this Agreement and for any other matters
reasonably requested by Administrative Agent and (z) shall provide for
affirmative insurance and such reinsurance as Administrative Agent may
reasonably request, all of the foregoing in form and substance
reasonably satisfactory to Administrative Agent; and (2) evidence
satisfactory to Administrative Agent that Company has delivered to the
title company all certificates and affidavits required by the title
company in connection with the issuance of the policies and paid to
the title company or to the
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appropriate governmental authorities all expenses and premiums of the
title company in connection with the issuance of the policies and all
recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Mortgages in the
appropriate real estate records;
(D) With respect to each Property listed on Schedule
--------
6.11(a)(i), a title report issued by the title company with respect
----------
thereto, dated not more than 30 days prior to the Closing Date and
satisfactory in form and substance to Administrative Agent;
(E) Copies of all recorded documents listed as exceptions
to title or otherwise referred to in the policies or in the title
reports delivered pursuant to subsection (D); and
(F) (1) Evidence, which may be in the form of a letter
from an insurance broker or a municipal engineer, as to whether any
Property is a Flood Hazard Property and the community in which any
such Flood Hazard Property is located is participating in the National
Flood Insurance Program; (2) if there are any such Flood Hazard
Properties, Company's written acknowledgement of receipt of written
notification from Administrative Agent (y) as to the existence of each
such Flood Hazard Property and (z) as to whether the community in
which each such Flood Hazard Property is located is participating in
the National Flood Insurance Program; and (3) in the event that any
such Flood Hazard Property is located in a community that participates
in the National Flood Insurance Program, evidence that Company has
obtained flood insurance in respect of such Flood Hazard Property to
the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System.
(ii) In the event that the pending sale of any of the Properties
listed on Schedule 6.11(a)(ii) is not consummated on or prior to the date
--------------------
that is 90 days after the Closing Date, Company will notify Administrative
Agent of that fact and promptly execute and deliver to Administrative Agent
a fully executed and notarized Mortgage, in proper form for recording in
all appropriate places in all applicable jurisdictions encumbering the
interest of Company in such Property and the opinions, appraisals,
documents, title insurance and environmental reports described in Section
6.11(a)(i) or that may be reasonably required by Administrative Agent.
(iii) In the event that a contract of sale is not entered into
by Company within 120 days after the Closing Date with respect to any of
the Properties listed on Schedule 6.11(a)(iii), Company will notify
---------------------
Administrative Agent of that fact and promptly execute and deliver to
Administrative Agent a fully executed and notarized Mortgage, in proper
form for recording in all appropriate places in all applicable
jurisdictions encumbering the interest of Company in such Property and the
opinions, appraisals, documents, title insurance and environmental reports
described in Section 6.11(a)(i) or that may be reasonably required by
Administrative Agent; provided, however, that in the event a contract of
-------- -------
sale is entered into with respect to any such Property during such period
and a sale is not consummated on or prior to the date that is
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<PAGE>
60 days after the execution of any such contract, Company will notify
Administrative Agent of that fact and promptly take the actions described
above with respect to such Property.
Notwithstanding the foregoing, in the event that any Property listed on
Schedule 6.11(a)(ii) or Schedule 6.11(a)(iii) becomes a Principal Property prior
- -------------------- ---------------------
to the date on which a Mortgage with respect to such Property is required to be
delivered, Company shall have no obligation to make the deliveries or take the
actions set forth above with respect to such Property.
(b) Insurance. On or prior to the date that is 30 days after the
---------
Closing Date, Company shall have delivered to Collateral Agent a certificate
from Company's insurance broker or other evidence satisfactory to Collateral
Agent that Collateral Agent on behalf of Banks has been named as additional
insured and/or loss payee under all insurance policies to the extent required
under Sections 5.16 and 6.6.
(c) Derivative/FX Contracts. On or prior to the date that is 60 days
-----------------------
after the Closing Date, Company shall have delivered to Administrative Agent
executed copies of amendments to the existing master agreements pursuant to
which Lender Derivative/FX Contracts are issued providing that the obligations
of Company and FinServ under such agreements will be secured by the Collateral
Documents (as defined in the Bridge Credit Agreement).
(d) Foreign Collateral. Company shall use its best efforts to take or
------------------
cause to be taken all such actions, execute and deliver or cause to be executed
and delivered all such agreements, documents and instruments and make or cause
to be made all such filings and recordings that may be necessary or, in the
opinion of Administrative Agent, desirable in order to create in favor of
Collateral Agent, for the benefit of Banks, a valid and perfected security
interest in all foreign registrations of IP Collateral and 65% of the Capital
Stock owned by Company or any Domestic Subsidiary of all Material Foreign
Subsidiaries (other than the Capital Stock of Restricted Subsidiaries).
(e) Intercompany Transactions. On or prior to the date that is 10
-------------------------
Business Days after the Closing Date, Company shall deliver a certificate
setting forth (i) all Indebtedness of Company to any of its Subsidiaries and of
any of its Subsidiaries to Company or any of its other Subsidiaries, and (ii)
all Investments by Company in any of its Subsidiaries and Investments of any of
its Subsidiaries in Company or any of its other Subsidiaries. On or prior to
the date that is 30 days after the Closing Date, Company shall deliver a fully
executed copy of an intercompany note evidencing all Indebtedness of Foreign
Subsidiaries to Domestic Subsidiaries that are Guarantors.
6.12 Transfer of Receivables. LSFCC shall sell to LSFLLC all accounts
-----------------------
receivable purchased by it from Company immediately upon consummation of such
purchase.
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ARTICLE VII
NEGATIVE COVENANTS
------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall cause each of its Subsidiaries to, perform and comply
with all covenants in this Article.
7.1 Indebtedness; Derivative/FX Contracts. Company shall not, and shall
-------------------------------------
not suffer or permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Indebtedness or Derivative/FX Contracts,
except
(a) Indebtedness of Company outstanding on the Closing Date and listed
on Schedule 7.1 and any refinancing of the industrial revenue bond obligations
------------
listed on Schedule 7.1 provided there is no increase in the aggregate principal
------------ --------
amount of such obligations;
(b) Indebtedness under the Loan Documents;
(c) Indebtedness arising from the honoring of a check, draft or
similar instrument against insufficient funds;
(d) Guaranty Obligations of Company guaranteeing the Indebtedness of
Material Foreign Subsidiaries permitted under Section 7.1(r);
(e) Indebtedness of Company and the other Borrower Parties under the
Bridge Credit Agreement, the Amended and Restated 1997 364 Day Credit Agreement,
and the 1997 Second Amended and Restated Credit Agreement and the related loan
documents;
(f) Indebtedness of Company in respect of Capital Leases not exceeding
$5,000,000 in the aggregate at any time;
(g) Indebtedness of Company to any wholly-owned Subsidiary that is a
Guarantor and Indebtedness of any wholly-owned Domestic Subsidiary that is a
Guarantor to Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor; provided that (i) all such intercompany Indebtedness shall be
--------
evidenced by promissory notes pledged to Administrative Agent on behalf of
Banks, (ii) all such intercompany Indebtedness owed by Company to any of its
Subsidiaries shall be subordinated in right of payment to the payment in full of
the Obligations in any Insolvency Proceeding pursuant to the terms of the
applicable promissory notes or an intercompany subordination agreement, (iii)
any payment by any Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or any of its Subsidiaries for
whose benefit such payment is made;
(h) Indebtedness of Pledged Foreign Subsidiaries to other Pledged
Foreign Subsidiaries;
(i) Indebtedness of Unpledged Foreign Subsidiaries to Pledged Foreign
Subsidiaries or other Unpledged Foreign Subsidiaries;
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(j) Indebtedness of Company and its Subsidiaries (other than LSFCC or
LSFLLC) to FinServ and Indebtedness of FinServ to Company and its other
Subsidiaries (other than LSFCC or LSFLLC) in the ordinary course of business;
(k) other Indebtedness of Company to any of its Subsidiaries and other
Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries incurred after the date hereof; provided, however, that the sum of
-------- -------
(i) the aggregate principal amount of all such Indebtedness incurred after the
date hereof plus (ii) the aggregate Investments permitted by Section 7.11(j),
----
plus (iii) the aggregate Dispositions permitted by Section 7.3(j) shall not
- ----
exceed $50,000,000 in the aggregate during fiscal year 2000 or $100,000,000 in
the aggregate during fiscal year 2001;
(l) Derivative/FX Contracts between Company or FinServ and FinServ and
the other Subsidiaries of Company (other than LSFCC or LSFLLC) in the ordinary
course of business;
(m) Indebtedness of Company in the form of Securities issued in a
Capital Markets Transaction; provided (i) Company makes the prepayments required
--------
pursuant to Section 2.8, (ii) the stated maturity date of such Indebtedness is
not earlier than five years from the issuance thereof, and (iii) such
Indebtedness is unsecured;
(n) Indebtedness of Company and its Material Subsidiaries (other than
LSFCC or LSFLLC) secured by Liens permitted under Section 7.2(h) not exceeding
$25,000,000 in the aggregate at any time;
(o) Indebtedness of Foreign Subsidiaries in the form of Permitted
Foreign Receivables Purchase Facilities, provided Company and its Subsidiaries
--------
make the prepayment required pursuant to Section 2.7;
(p) Indebtedness of Company and its Subsidiaries in the form of Real
Estate Financing Transactions not exceeding the limitations in Section 7.2(m) at
any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.7;
(q) Indebtedness of Company and its Subsidiaries in the form of
Equipment Financing Transactions not exceeding the limitations in Section 7.2(m)
at any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.7;
(r) unsecured Indebtedness (including Foreign Credit Lines), unsecured
reimbursement obligations under letters of credit (other than Lender Bridge
Letters of Credit and Lender 180 Day Letters of Credit) and secured or unsecured
Ordinary Course Derivative/FX Contracts (other than Lender Derivative/FX
Contracts and intercompany Ordinary Course Derivative/FX Contracts) of Company
and its Subsidiaries (other than LSFCC and LSFLLC); provided, however, that (i)
-------- -------
the sum of (A) the Total Utilization of Commitments plus (B) the Total Amount of
----
Unsecured Debt shall not exceed the Aggregate Total Commitments at any time,
(ii) the sum of (A) the Unsecured Letter of Credit Usage plus (B) the Total
----
Letter of Credit Usage shall not exceed the Lender Letter of Credit Sublimit at
any time and (iii) the sum of (A) the Unsecured Derivative/FX Usage plus (B)the
----
Derivative/FX Usage shall not exceed the Lender Derivative/FX Sublimit at any
time;
71
<PAGE>
(s) Indebtedness of Company to any of its Subsidiaries and other
Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries outstanding on the Closing Date and set forth on the certificate
delivered pursuant to Section 6.11(e); and
(t) other Indebtedness of Company and its Subsidiaries not exceeding
$5,000,000 in the aggregate at any time.
7.2 Limitation on Liens and Negative Pledges. Company shall not, and
----------------------------------------
shall not suffer or permit any of its Subsidiaries to, directly or indirectly,
incur, assume or suffer to exist any Lien or Negative Pledge upon any of their
Property, whether now owned or hereafter acquired, except:
(a) any Lien or Negative Pledge existing on the property of Company or
its Subsidiaries on the Closing Date and listed on Schedule 7.2;
------------
(b) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.5;
(c) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the Property subject thereto
or if such reserve or other appropriate provision, if any, required by GAAP
shall have been made therefor;
(d) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens securing (i) the performance of tenders, bids, trade
contracts (other than for borrowed money), government contracts, leases,
statutory obligations, and performance and return-of-money bonds, (ii)
contingent obligations on surety and appeal bonds, and (iii) other obligations
of a like nature; in each case, incurred in the ordinary course of business;
(f) Liens consisting of judgment or judicial attachment liens,
provided that the judgment secured by any such Lien shall, within 45 days after
- --------
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall have been discharged within 45 days after the expiration of any
such stay and such Liens do not constitute an Event of Default;
(g) easements, rights-of-way, restrictions and other similar
encumbrances that do not interfere with the ordinary conduct of the businesses
of Company and its Subsidiaries;
(h) purchase money mortgages (including chattel mortgages) or other
purchase money liens or conditional sale or other title retention or security
agreements incurred by Company or any of its Material Subsidiaries (other than
LSFCC or LSFLLC) in connection with the acquisition or construction of any real
or personal property, or mortgages or liens or conditional sale or other title
retention agreements or security agreements existing on any such
72
<PAGE>
property at the time of acquisition or construction or placed thereon within one
year of the acquisition or completion of construction thereof and any extension,
renewal or replacement of any such purchase money mortgage or lien in respect of
all or part of the same property; provided that the aggregate outstanding amount
--------
of Indebtedness secured by such Liens does not exceed $25,000,000 in the
aggregate at any time; provided further that every such mortgage, lien or
-------- -------
agreement shall apply only to the property originally subject thereto and fixed
improvements, if any, then existing or thereafter erected thereon;
(i) any interest or title of a lessor under any Capital or Operating
Lease permitted hereunder (other than any Equipment Financing Transaction);
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
--------
dedicated cash collateral account and is not subject to restrictions against
access by Company or any of its Subsidiaries owning the affected deposit account
or other funds maintained with a creditor depository institution in excess of
those set forth by regulations promulgated by the Federal Reserve Board, and
(ii) such deposit account is not intended by Company or any of its Subsidiaries
to provide collateral to the depository institution;
(k) leases or subleases granted to others in the ordinary course of
business not interfering with the ordinary conduct of the business of the
grantor thereof;
(l) Liens attaching to ownership interests in joint ventures (whether
in partnership, corporate or other form) engaged in the LOS/DOS Business or
attaching to intellectual property rights relating to the LOS/DOS Business;
(m) Liens created in connection with (i) Equipment Financing
Transactions and (ii) Real Estate Financing Transactions so long as (A) the
aggregate amount of all such transactions permitted by this Section 7.2(m) at
any time outstanding (as measured by the sum of all Indebtedness secured by such
Liens then outstanding or to be so created or assumed) shall not exceed
$175,000,000 and (B) Company shall cause, in connection therewith, the
prepayments of Loans required by Section 2.7;
(n) Liens created pursuant to applications or reimbursement agreements
pertaining to documentary letters of credit which encumber documents and other
property relating to such documentary letters of credit and the products and
proceeds thereof;
(o) Liens granted pursuant to the Collateral Documents;
(p) Liens securing Indebtedness under the Bridge Credit Agreement, the
Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second Amended
and Restated Credit Agreement;
(q) Liens securing Ordinary Course Derivative/FX Contracts permitted
by Section 7.1(r);
73
<PAGE>
(r) other Liens so long as the aggregate outstanding amount of
Indebtedness secured by such Liens does not exceed $2,000,000 at any time;
(s) Negative Pledges on accounts receivables of Foreign Subsidiaries
and the associated assets of Foreign Subsidiaries in connection with Permitted
Foreign Receivable Purchase Facilities;
(t) Negative Pledges on Intellectual Property licensed from third
parties; and
(u) Negative Pledges with respect to specific property encumbered to
secure payment of particular Indebtedness permitted hereunder.
7.3 Dispositions. Company shall not, and shall not suffer or permit any
------------
of its Subsidiaries to, directly or indirectly, make any Dispositions, except:
(a) Dispositions of obsolete or worn out property, whether now owned
or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory by Company or any of Subsidiaries to
Company or any of its Subsidiaries in ordinary course of business arm's length
transactions;
(c) Dispositions of inventory in the ordinary course of business;
(d) Dispositions of accounts receivable from Company to LSFCC and from
LSFCC to LSFLLC;
(e) Dispositions of Permitted Foreign Receivables pursuant to
Permitted Foreign Receivables Purchase Facilities, provided Company and its
--------
Subsidiaries make the prepayments required pursuant to Section 2.7;
(f) Dispositions of equipment pursuant to Equipment Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.7;
(g) Dispositions of real property pursuant to Real Estate Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.7;
(h) licenses of Intellectual Property in the ordinary course of
business;
(i) the Pending IceHouse Disposition;
(j) other Dispositions by Company to any of its Subsidiaries of
Property other than accounts receivable and other Dispositions by any of its
Subsidiaries to Company or any of its other Subsidiaries of Property other than
accounts receivable; provided, however, that the sum of (i) the fair market
-------- -------
value of the assets sold, transferred, licensed or otherwise disposed of plus
----
(ii) the aggregate principal amount of Indebtedness permitted by Section 7.1(k)
plus (iii) the
- ----
74
<PAGE>
aggregate Investments permitted by Section 7.11(j) shall not exceed $50,000,000
in the aggregate during fiscal year 2000 or $100,000,000 in the aggregate during
fiscal year 2001;
(k) Asset Dispositions by Company and its Subsidiaries of Property
other than accounts receivable; provided that (i) at the time of any
--------
Disposition, no Event of Default shall exist or shall result from such
Disposition; (ii) the consideration received for such Disposition shall be in an
amount at least equal to the fair market value of the assets sold, transferred,
licensed or otherwise disposed of; (iii) the sole consideration received shall
be cash; (iv) the aggregate fair market value of all assets so sold,
transferred, licensed or otherwise disposed of by Company and its Subsidiaries
shall not exceed $50,000,000 in any fiscal year; and (v) Company and its
Subsidiaries make the prepayments required pursuant to Section 2.7;
(l) Dispositions of the Capital Stock of Domestic Subsidiaries that
are Guarantors to Company and wholly owned Domestic Subsidiaries that are
Guarantors; Dispositions of the Capital Stock of Pledged Foreign Subsidiaries to
Company, Domestic Subsidiaries that are Guarantors and other Pledged Foreign
Subsidiaries; and Dispositions of the Capital Stock of Unpledged Foreign
Subsidiaries to Company or any of its other Subsidiaries; and
(m) Dispositions of accounts receivable to collection agencies the
aggregate face amount of which does not exceed $2,000,000.
7.4 Fundamental Changes. Company shall not and shall not suffer or permit
-------------------
its Subsidiaries to, merge or consolidate with or into any Person or liquidate,
wind-up or dissolve themselves, or permit or suffer any liquidation or
dissolution or sell all or substantially all of their respective assets, except
that so long as no Default or Event of Default exists or would result therefrom
(a) any Domestic Subsidiary may merge with or into Company or any other Domestic
Subsidiary that is a Guarantor, or be liquidated, wound-up or dissolved or all
or any part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of to Company or any other Domestic Subsidiary
that is a Guarantor, provided that, in the case of a merger, Company or such
--------
Guarantor, as the case may be, shall be the continuing or surviving corporation;
(b) any Pledged Foreign Subsidiary may merge with or into any other Pledged
Foreign Subsidiary or be liquidated, wound-up or dissolved or all or any part of
its business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of to Company or any other Pledged Foreign Subsidiary; (c)
any Unpledged Foreign Subsidiary may merge with or into any other Unpledged
Foreign Subsidiary or any Pledged Foreign Subsidiary, or be liquidated, wound-up
or dissolved or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of to any other
Unpledged Foreign Subsidiary or a Pledged Foreign Subsidiary, provided that, in
--------
the case of a merger, such Pledged Foreign Subsidiary shall be the continuing or
surviving corporation; and (d) Company and its Subsidiaries may make Asset
Dispositions permitted by Section 7.3(k).
7.5 Use of Proceeds.
---------------
(a) Company shall not use any portion of the Loan proceeds directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance Indebtedness of Company or others incurred to purchase or carry Margin
Stock, (iii) to extend
75
<PAGE>
credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to
acquire any security in any transaction that is subject to Sections 13 or 14 of
the Exchange Act.
(b) Company shall not, directly or indirectly, use any portion of the
proceeds of the Loans (i) knowingly to purchase Ineligible Securities from the
Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of Company or any Affiliate of Company. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities.
7.6 Leverage Ratio. Company shall not permit the Leverage Ratio on the
--------------
last day of any period set forth below to be more than the correlative amount
indicated:
<TABLE>
<CAPTION>
Period Leverage Ratio
------ --------------
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 6.00 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
Fiscal Year 2000 5.75 to 1.00
Four Fiscal Quarter Period ending on the last day of the First Fiscal 5.25 to 1.00
Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second 5.00 to 1.00
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third Fiscal 4.50 to 1.00
Quarter of Fiscal Year 2001
Fiscal Year 2001 4.25 to 1.00
</TABLE>
7.7 Interest Coverage Ratio. Company shall not permit the Interest
-----------------------
Coverage Ratio for any period set forth below to be less than the correlative
amount indicated:
76
<PAGE>
<TABLE>
<CAPTION>
Interest
Period Coverage Ratio
------ --------------
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 1.6 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 1.6 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 1.7 to 1.00
Fiscal Year 2000 1.8 to 1.00
Four Fiscal Quarter Period ending on the last day of the First 1.9 to 1.00
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Second 2.0 to 1.00
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third 2.1 to 1.00
Fiscal Quarter of Fiscal Year 2001
Fiscal Year 2001 2.2 to 1.00
</TABLE>
7.8 Minimum Consolidated EBITDA. Company shall not permit
---------------------------
Consolidated EBITDA for any period set forth below to be less than the
correlative amount indicated:
<TABLE>
<CAPTION>
Minimum
Period Consolidated EBITDA
------ -------------------
($ in millions)
<S> <C>
First Fiscal Quarter of Fiscal Year 2000 $102
First Two Fiscal Quarter Period of Fiscal Year 2000 $205
First Three Fiscal Quarter Period of Fiscal Year 2000 $320
Fiscal Year 2000 $440
Four Fiscal Quarter Period ending on the last day of the First $465
Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the $490
Second Fiscal Quarter of Fiscal Year 2001
Four Fiscal Quarter Period ending on the last day of the Third $510
Fiscal Quarter of Fiscal Year 2001
Fiscal Year 2001 $540
</TABLE>
7.9 Change in Business. Company shall not, and shall not suffer or permit
------------------
any of its Subsidiaries to, engage in any business not related or incidental to
the manufacture and sale of clothing and accessories. The LOS/DOS Business is a
business that is related or incidental to the manufacture and sale of clothing
within the meaning of the preceding sentence. Company shall not suffer or permit
LSFLLC to engage in any business other than the purchase and holding of accounts
receivable and shall not suffer or permit LSFCC to engage in any business other
than the purchase and servicing of accounts receivable generated by Company, the
processing of
77
<PAGE>
accounts payable of Company and its Subsidiaries, and other accounting and
general customer relationship functions.
7.10 ERISA. Company shall not, and shall not permit or suffer any of its
-----
Subsidiaries or ERISA Affiliates to:
(a) engage in any transaction in connection with which Company or any
of its Subsidiaries or any of their respective ERISA Affiliates would be subject
to either a civil penalty assessed pursuant to Section 502(i) or 502(l) of ERISA
or a tax imposed by Section 4975 of the Code, in either case in an amount in
excess of $5,000,000;
(b) fail to make full payment within five Business Days after the date
when due of all amounts exceeding $5,000,000 which, under the provisions of any
Pension Plan, Company or any of its Subsidiaries or any of their respective
ERISA Affiliates is required to pay as contributions thereto, or (as to any
Subsidiary organized under the laws of any of the United States) permit to exist
any accumulated funding deficiency, whether or not waived, with respect to any
Pension Plan in an aggregate amount greater than $5,000,000;
(c) permit the Funded Current Liability Percentage for any Pension
Plan to be less than 90%; or
(d) fail to make any payments in an aggregate amount greater than
$5,000,000 to any Multiemployer Plan that Company or any of its Subsidiaries, or
any of their respective ERISA Affiliates may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto.
As used in this Section, the term "accumulated funding deficiency" has
the meaning specified in Section 3(23) of ERISA and Section 412 of the Code and
the term "accrued benefit" has the meaning specified in Article 3 of ERISA.
7.11 Investments. Company shall not, and shall not suffer or permit any of
-----------
its Subsidiaries to, directly or indirectly, make any Investments, or acquire,
by purchase or otherwise, all or substantially all the business, property or
fixed assets of, or stock or other ownership interest of any Person, or any
division or line of business of, any Person except:
------
(a) Investments existing on the Closing Date and listed on Schedule
--------
7.11;
- ----
(b) cash and cash equivalents;
(c) advances to officers, directors and employees of Company or any of
their respective Subsidiaries for travel, entertainment, relocation and
analogous ordinary business purposes;
(d) extensions of credit to customers or suppliers of Company or any
of its Subsidiaries in the ordinary course of business and any Investments
received in satisfaction or partial satisfaction thereof;
(e) Investments permitted by Section 7.4;
78
<PAGE>
(f) intercompany loans permitted by Sections 7.1(g), 7.1(h), 7.1(i),
and 7.1(j);
(g) Investments by Company in any wholly-owned Subsidiary that is a
Guarantor and Investments of any wholly-owned Domestic Subsidiary that is a
Guarantor in Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor;
(h) Investments by Pledged Foreign Subsidiaries in other Pledged
Foreign Subsidiaries;
(i) Investments by Unpledged Foreign Subsidiaries in other Unpledged
Foreign Subsidiaries;
(j) other Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries made after the date hereof; provided, however, that (i) such
-------- -------
Investments plus (ii) the aggregate principal amount of Indebtedness permitted
----
by Section 7.1(k) plus (iii) the aggregate Dispositions permitted by Section
----
7.3(j) shall not exceed $50,000,000 in the aggregate during fiscal year 2000 or
$100,000,000 in the aggregate during fiscal year 2001; provided further that
-------- -------
Investments in Subsidiaries of Company that are not Solvent immediately prior to
the making of any such Investment shall not exceed $10,000,000 in the aggregate
in any fiscal year;
(k) Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries on the Closing Date and set forth on the certificate delivered
pursuant to Section 6.11(e); and
(l) other Investments not exceeding $25,000,000 at any time.
7.12 Restricted Payments. Company shall not, and shall not permit or
-------------------
suffer any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment other than (a) payments of
Indebtedness in connection with Asset Dispositions as contemplated by the
definition of Net Asset Disposition Proceeds or Equipment Financing Transactions
as contemplated by the definition of Net Equipment Financing Proceeds and (b)
repayments and prepayments of Indebtedness under the Bridge Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement.
7.13 Operating Lease Obligations. Company shall not, and shall not suffer
---------------------------
or permit any of its Subsidiaries to, directly or indirectly, create or suffer
to exist any obligations for the payment of rent for any property under
Operating Leases, except:
------
(a) Operating Leases in existence on the Closing Date; and
(b) Operating Leases entered into or assumed by Company or any
Subsidiary after the date hereof in the ordinary course of business.
7.14 Transactions with Affiliates. Company shall not, and shall not suffer
----------------------------
or permit any of its Subsidiaries to directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service)
79
<PAGE>
with any Affiliate of Company other than arm's-length transactions with
Affiliates that are otherwise not prohibited hereunder.
7.15 Amendments of Documents Relating to Indebtedness and Receivables.
----------------------------------------------------------------
(a) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of any Indebtedness (other
than Indebtedness under the Bridge Credit Agreement, the Amended and Restated
1997 364 Day Credit Agreement or the 1997 Second Amended and Restated Credit
Agreement), or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate or make less onerous any such event or default or increase any grace
period related thereto), change the redemption, prepayment or defeasance
provisions thereof, or change any collateral therefor (other than to release
such collateral), or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder or to confer any additional rights on the holders of
such Indebtedness (or a trustee or other representative on their behalf) which
would be materially adverse to Company or to Banks. Company shall not amend or
otherwise change the terms of the Bridge Credit Agreement, the Amended and
Restated 1997 364 Day Credit Agreement or the 1997 Second Amended and Restated
Credit Agreement without the written consent of Majority Banks if the effect of
such amendment is to extend the stated maturity date thereof or increase the
aggregate commitments thereunder. Company shall not amend or otherwise change
the terms of the Bridge Credit Agreement, the Amended and Restated 1997 364 Day
Credit Agreement or the 1997 Second Amended and Restated Credit Agreement to
provide for an earlier stated maturity date unless this Agreement is amended to
provide for the same maturity date.
(b) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of the Receivables Transfer
Agreements other than amendments to extend the term thereof or to preserve the
arm's length nature of the purchase and sale effected thereby.
7.16 Consolidated Capital Expenditures. Company shall not, and shall not
---------------------------------
suffer or permit any of its Subsidiaries to make or incur Consolidated Capital
Expenditures, in any fiscal year indicated below, in an aggregate amount in
excess of the corresponding amount set forth below opposite such fiscal year:
<TABLE>
<CAPTION>
Maximum Capital
Fiscal Year Expenditures
----------- ------------
<S> <C>
2000 $60,000,000
2001 $60,000,000
</TABLE>
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<PAGE>
7.17 Materially Adverse Agreements. Company shall not, and shall not
suffer or permit any of its Subsidiaries to, become a party to or become subject
to any material agreement or instrument or charter or other internal restriction
which (in the aggregate as to all such matters) would have a Material Adverse
Effect.
7.18 Limitations on Upstreaming. Company shall not, and shall not suffer
or permit any of its Subsidiaries to, agree to any restriction or limitation on
the making of Restricted Payments or transferring of assets from any Subsidiary
to its parent except pursuant to this Agreement, the Bridge Credit Agreement,
the Amended and Restated 1997 364 Day Credit Agreement, and the 1997 Second
Amended and Restated Credit Agreement.
7.19 Change in Auditors. Company shall not terminate the certified public
accountants auditing the books of Company or any of its Subsidiaries unless
Company shall have informed Administrative Agent of the reason for the
termination and selected new certified public accountants of recognized national
standing and reasonably satisfactory to Administrative Agent.
7.20 Restricted Subsidiaries. Company shall not permit any of its
Subsidiaries existing as of the Closing Date to become a Restricted Subsidiary
other than as a result of a change in Consolidated Net Tangible Assets.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.1 Event of Default. Any of the following shall constitute an "Event of
---------------- --------
Default":
- -------
(a) Non-Payment. Company fails to pay, (i) when and as required to
-----------
be paid herein, any amount of principal of any Loan or (ii) within three
Business Days after the same becomes due, any other interest, fee or any other
amount payable hereunder or under any other Loan Document; or
(b) Cross Default. Failure of Company or any of its Subsidiaries to
-------------
pay, or any default in the payment of, any principal, interest or any other
amount on any Indebtedness or Derivative/FX Contract beyond any period of grace
provided; or breach or default with respect to any other material term of any
evidence of any Indebtedness or Derivative/FX Contract, or of any loan
agreement, mortgage, indenture or other agreement relating thereto, if such
breach or default continues beyond any applicable period of grace provided, if
and for so long as the effect of such failure, default or breach is to cause or
permit the holder or holders of that Indebtedness or Derivative/FX Contract (or
a trustee on behalf of such holder or holders) to cause, with or without the
giving of notice, that Indebtedness or Derivative/FX Contract to become or be
declared due prior to its stated maturity; provided, however, that this
-------- -------
subsection shall not apply with respect to Indebtedness and Derivative/FX
Contracts, the aggregate principal amount of which or the Termination Value of
which, as the case may be, does not exceed $25,000,000 in the aggregate; or
(c) Representation or Warranty. Any representation or warranty made
--------------------------
by any Borrower Party herein or in any other Loan Document or any representation
or warranty in any statement or certificate at any time given by any Borrower
Party in writing pursuant to any of the
81
<PAGE>
Loan Documents or in connection herewith shall be false in any material respect
on the date as of which made; or
(d) Specific Defaults. Failure to perform or observe any term,
-----------------
covenant or agreement contained in Section 6.8 or Article VII; or
(e) Other Defaults. Failure to perform or observe any term, covenant
--------------
or agreement contained in this Agreement or any other Loan Document and such
default shall not have been remedied or waived within 30 days after receipt of
notice from Administrative Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction shall enter a decree or order
for relief in respect of Company or any of its Material Subsidiaries in an
involuntary case under any applicable Debtor Relief Laws, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable Debtor Relief Laws; or
(ii) A decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Material
Subsidiaries or over all or a substantial part of their property, shall
have been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Material Subsidiaries
for all or a substantial part of their property; or the issuance of a
warrant of attachment, execution or similar process against any substantial
part of the property of Company or any of its Material Subsidiaries, and
the continuance of any such events described in this subsection (f)(ii) for
60 days unless stayed, dismissed, bonded or discharged; or
(iii) an involuntary case under any applicable Debtor Relief Laws
shall have been commenced against Company or any of its Material
Subsidiaries and shall not have been dismissed within 60 days after the
commencement of such case; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Company or
---------------------------------------------------
any of its Material Subsidiaries shall commence a voluntary case under any
applicable Debtor Relief Laws, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such Debtor Relief Laws, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of their property; the making by Company or any of
its Material Subsidiaries of any assignment for the benefit of creditors; or the
inability or failure of Company or any of its Material Subsidiaries or the
admission by Company or any of its Material Subsidiaries in writing of their
inability to pay their debts as such debts become due; or the Board of Directors
of Company or any of its Material Subsidiaries (or any committee thereof) adopts
any resolution or otherwise authorizes action to approve any of the foregoing;
or
(h) Judgments and Attachments. Any money judgment, writ or warrant of
-------------------------
attachment, or similar process involving in any case an amount in excess of
$10,000,000 in excess of available insurance coverage as to which the insurer
has not denied coverage shall be
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entered or filed against Company or any of its Material Subsidiaries or any of
their respective assets and shall remain undischarged, unvacated, unbonded and
unstayed for a period of 45 days or in any event later than five days prior to
the date of any proposed sale thereunder; or
(i) Unfunded ERISA Liabilities. Any Pension Plan maintained by
--------------------------
Company or any of its ERISA Affiliates shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan, or the PBGC (or any
successor thereto) shall institute proceedings to terminate any Pension Plan or
to appoint a trustee to administer any Pension Plan, and, in each case,
Company's or any such ERISA Affiliate's liability (after giving effect to the
tax consequences thereof) as of the date thereof to the PBGC (or any successor
thereto) for unfunded guaranteed vested benefits under such Pension Plan or
Company's obligations to contribute to any Pension Plan in order to voluntarily
terminate such Pension Plan exceed $20,000,000 (or in the case of a termination
involving Company or any of its ERISA Affiliates as a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA) the withdrawing employer's proportionate
share of such liability shall exceed such amount); or
(j) Withdrawal Liability Under Multiemployer Plan. Company or any of
---------------------------------------------
its ERISA Affiliates as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an amount exceeding
$20,000,000; or
(k) Change of Control. (i) Any person or two or more persons (other
-----------------
than Permitted Transferees) acting in concert shall acquire beneficial
ownership, directly or indirectly, of Securities of Company or Voting Trust
Certificates issued under the Voting Trust Agreement (or other securities
convertible into such securities) representing 30% or more of the combined
voting power of all Securities of Company entitled to vote (or would be entitled
to vote in the absence of the Voting Trust Agreement) in the election of
directors (except that the provisions of this subsection (i) shall not apply to
Voting Trustees serving in their capacities as such under the Voting Trust
Agreement); or (ii) during any period of up to 12 consecutive months, commencing
after the Closing Date, individuals who at the beginning of such 12 month period
were directors of Company shall cease for any reason to constitute a majority of
the Board of Directors of Company unless the persons replacing such individuals
were nominated by the Board of Directors of Company, by Permitted Transferees or
by any of the Voting Trustees; or
(l) Failure to Deliver Certain Loan Documents; Invalidity of
--------------------------------------------------------
Guaranties; Failure of Security; Repudiation of Obligations. The Guaranty or
- -----------------------------------------------------------
the Pledge and Security Agreement shall not be executed and delivered by the
Material Domestic Subsidiaries on or prior to the day following the Closing
Date. At any time after the execution and delivery thereof, (i) any Guaranty
for any reason, other than the satisfaction in full of all Obligations, shall
cease to be in full force and effect (other than in accordance with its terms)
or shall be declared to be null and void, (ii) any Collateral Document shall
cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void by a court of competent jurisdiction, or Collateral Agent
shall not have or shall cease to have a valid and
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perfected Lien in any Collateral (other than Inventory in the possession or
control of Company's agents or processors) purported to be covered thereby
having a fair market value, individually or in the aggregate, exceeding
$5,000,000, in each case for any reason other than the failure of Administrative
Agent or any Bank to take any action within its control, or (iii) any Borrower
Party shall contest the validity or enforceability of any Loan Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by Banks, under any Loan Document to which it is a
party.
8.2 Remedies. If any Event of Default occurs, Administrative Agent shall,
--------
at the request of, or may, with the consent of, Majority Banks,
(a) declare the Commitment of each Bank to be terminated, whereupon
such Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable;
without presentment, demand, request, protest or other notice of any kind, all
of which are hereby expressly waived by Company;
(c) demand immediate payment by Company of an amount equal to the
aggregate amount of all outstanding Lender 180 Day Letter of Credit Usage to be
held in the Cash Collateral Account; and
(d) exercise on behalf of itself and Banks all rights and remedies
available to it and Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in Section
- -------- -------
8.1(f) or (g) above (after the expiration of any grace or cure period provided
therein), (i) the obligation of each Bank to make Loans shall automatically
terminate; (ii) the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of Administrative Agent or any Bank; and (iii) an
amount equal to the aggregate amount of all outstanding Lender 180 Day Letter of
Credit Usage shall be immediately due and payable to the applicable Issuing 180
Day Lender without notice to or demand upon Company, which are expressly waived
by Company, to be held in the Cash Collateral Account.
8.3 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
No Bank may exercise any rights or remedies with respect to the Obligations
without the consent of Majority Banks in their sole and absolute discretion.
The order and manner in which Administrative Agent's and Banks' rights and
remedies are to be exercised shall be determined by Majority Banks in their sole
and absolute discretion. Regardless of how a Bank may treat payments for the
purpose of its own accounting, for the purpose of computing the Obligations
hereunder, payments shall be applied first, to costs and expenses (including
Professional Costs) incurred by Administrative Agent and each Bank,
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second, to the payment of accrued and unpaid interest on the Loans to and
including the date of such application, third, to the payment of the unpaid
principal of the Loans, and fourth, to the payment of all other amounts
(including fees) then owing to Administrative Agent and Banks under the Loan
Documents, in each case paid pro rata to each Bank in the same proportions that
the aggregate Obligations owed to each Bank under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all Banks, without
priority or preference among Banks. No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Administrative Agent and Banks hereunder or
thereunder or at law in equity.
ARTICLE IX
ADMINISTRATIVE AGENT; COLLATERAL AGENT
--------------------------------------
9.1 Appointment and Authorization. Each Bank hereby irrevocably (subject
-----------------------------
to Section 9.9) appoints, designates and authorizes Administrative Agent and
Collateral Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, neither Administrative Agent nor
Collateral Agent shall have any duties or responsibilities, except those
expressly set forth herein, nor shall Administrative Agent or Collateral Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Administrative Agent or Collateral Agent. Without
limiting the generality of the foregoing sentence, the use of the term "agent"
in this Agreement with reference to Administrative Agent or Collateral Agent is
not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.
9.2 Delegation of Duties. Administrative Agent and Collateral Agent may
--------------------
execute any of their respective duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Neither Administrative Agent nor Collateral Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.
9.3 Liability of Administrative Agent or Collateral Agent. No
-----------------------------------------------------
Administrative Agent-Related Person or Collateral Agent-Related Person shall (a)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be responsible
in any manner to any of Banks for any recital, statement, representation or
warranty made by any Borrower Party or any Subsidiary or Affiliate of any
Borrower Party, or any officer thereof,
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contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Administrative Agent or Collateral Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower Party or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Administrative Agent-Related Person or Collateral Agent-Related Person shall be
under any obligation to any Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Properties, books or
records of any Borrower Party, or any of Company's Subsidiaries or Affiliates.
9.4 Reliance by Administrative Agent and Collateral Agent.
-----------------------------------------------------
(a) Administrative Agent and Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Company), independent
accountants and other experts selected by Administrative Agent or Collateral
Agent. Administrative Agent and Collateral Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless
Administrative Agent or Collateral Agent, as the case may be, shall first
receive such advice or concurrence of Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of Majority Banks (or all of Banks if required hereunder) and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all of Banks. Where this agreement expressly permits or prohibits an
action unless Majority Banks otherwise determine, and in all other instances,
Administrative Agent or Collateral Agent, as the case may be, may, but shall not
be required to, initiate any solicitation for the consent or a vote of Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
either sent by Administrative Agent or Collateral Agent to such Bank for
consent, approval, acceptance, or satisfaction, required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. Neither Administrative Agent nor Collateral Agent
-----------------
shall be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except that Administrative Agent shall be deemed to have
knowledge with respect to defaults in the payment of principal, interest and
fees required to be paid to Administrative Agent for the account of Banks,
unless Administrative Agent shall have received written notice from a Bank or
Company referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". Administrative Agent
will notify Banks of its receipt of any such notice. Administrative Agent shall
take such action with respect to such Default or
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Event of Default as may be directed by Majority Banks in accordance with Article
VIII; provided, however, that unless and until Administrative Agent has received
-------- -------
any such direction, Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of Banks.
9.6 Credit Decision; Disclosure of Information by Administrative Agent and
----------------------------------------------------------------------
Collateral Agent. Each Bank acknowledges that no Administrative Agent-Related
- ----------------
Person or Collateral Agent-Related Person has made any representation or
warranty to it, and that no act by Administrative Agent or Collateral Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of Company or any of its Subsidiaries or Affiliates, shall
be deemed to constitute any representation or warranty by any Administrative
Agent-Related Person or Collateral Agent-Related Person to any Bank as to any
matter, including whether Administrative Agent-Related Persons or Collateral
Agent-Related Persons have disclosed material information in their possession.
Each Bank, including any Bank by assignment, represents to Administrative Agent
that it has, independently and without reliance upon any Administrative Agent-
Related Person or Collateral Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Company and its Subsidiaries and
Affiliates, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Administrative Agent-Related Person
or Collateral Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decision in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business prospects, operations,
property, financial and other condition and creditworthiness of Company and its
Subsidiaries and Affiliates. Except for notices, reports and other documents
expressly required to be furnished to Banks by Administrative Agent or
Collateral Agent herein, neither Administrative Agent or Collateral Agent shall
have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Company or any of its Subsidiaries or
Affiliates which may come into the possession of any Administrative Agent
Related Person or any Collateral Agent-Related Person.
9.7 Indemnification of Administrative Agent and Collateral Agent. Whether
------------------------------------------------------------
or not the transactions contemplated hereby are consummated, Banks shall
indemnify upon demand each Administrative Agent-Related Person and each
Collateral Agent-Related Person (to the extent not reimbursed by or on behalf of
any Borrower Party and without limiting the obligation of any Borrower Party to
do so), pro rata, and hold harmless each Administrative Agent Related Person and
each Collateral Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Bank shall be liable for
-------- -------
the payment to any Administrative Agent-Related Person or any Collateral Agent-
Related Person of any portion of such Indemnified Liabilities resulting from
such Person's gross negligence or willful misconduct; provided, however, that no
-------- -------
action taken in accordance with the directions of Majority Banks shall be deemed
to constitute gross negligence or willful misconduct for
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purposes of this Section. Without limitation of the foregoing, each Bank shall
reimburse Administrative Agent and Collateral Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Professional Costs)
incurred by Administrative Agent and Collateral Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or financial or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Administrative Agent or Collateral Agent
is not reimbursed for such expenses by or on behalf of Company. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Administrative Agent or Collateral Agent.
9.8 Administrative Agent in Individual Capacity. Bank of America and its
-------------------------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Company
and its Subsidiaries and Affiliates as though Bank of America were not
Administrative Agent, an Issuing 180 Day Lender or Collateral Agent hereunder
and without notice to or consent of Banks. In addition, Banks acknowledge that
Bank of America has been appointed administrative agent and collateral agent
under the Bridge Credit Agreement, the Amended and Restated 1997 364 Day Credit
Agreement, and the 1997 Second Amended and Restated Credit Agreement and that
the lenders party to those agreements have been granted a Lien on the Collateral
that is subordinated to the Lien granted to Banks pursuant to the Intercreditor
Agreement. Bank of America or its Affiliates may receive information regarding
Company and its Subsidiaries and Affiliates (including information that may be
subject to confidentiality obligations in favor of Company, such Subsidiary or
such Affiliate) or information relating to the Bridge Credit Agreement, the
Amended and Restated 1997 364 Day Credit Agreement or the 1997 Second Amended
and Restated Credit Agreement) as a result of the activities described above and
Banks acknowledge that Administrative Agent or Collateral Agent shall be under
no obligation to provide such information to them. With respect to its Loans,
Bank of America shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not Administrative
Agent, an Issuing 180 Day Lender or Collateral Agent, and the terms "Bank" and
"Banks" shall include Bank of America in its individual capacity.
9.9 Successor Administrative Agent. Administrative Agent may, and at the
------------------------------
request of Majority Banks shall, resign as Administrative Agent upon 30 days'
notice to Company and Banks. If Administrative Agent resigns under this
Agreement, Majority Banks shall appoint from among Banks a successor
administrative agent for Banks which successor administrative agent shall be
consented to by Company at all times other than during the existence of an Event
of Default (which approval of Company shall not be unreasonably withheld or
delayed). If no successor administrative agent is appointed prior to the
effective date of the resignation of Administrative Agent, Administrative Agent
may appoint, after consulting with Banks and Company, a successor administrative
agent from among Banks. Upon the acceptance of its appointment as successor
administrative agent hereunder, such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be
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terminated. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article IX and Sections 10.4 and
10.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and Banks shall perform all of the duties of
Administrative Agent hereunder until such time, if any, as Majority Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
Bank of America may not be removed as Administrative Agent at the request of
Majority Banks unless Bank of America shall also simultaneously be replaced as
"Collateral Agent" and an "Issuing 180 Day Lender" hereunder pursuant to
documentation in form and substance reasonably satisfactory to Bank of America.
9.10 Successor Collateral Agent. Collateral Agent may, and at the request
--------------------------
of Majority Banks shall, resign as Collateral Agent upon 30 days' notice to
Company and Banks. If Collateral Agent resigns under this Agreement, Majority
Banks shall appoint from among Banks a successor collateral agent for Banks
which successor collateral agent shall be consented to by Company at all times
other than during the existence of an Event of Default (which approval of
Company shall not be unreasonably withheld or delayed). If no successor
collateral agent is appointed prior to the effective date of the resignation of
Collateral Agent, Collateral Agent may appoint, after consulting with Banks and
Company, a successor collateral agent from among Banks. Upon the acceptance of
its appointment as successor collateral agent hereunder, such successor
collateral agent shall succeed to all the rights, powers and duties of the
retiring Collateral Agent and the term "Collateral Agent" shall mean such
successor collateral agent and the retiring Collateral Agent's appointment,
powers and duties as Collateral Agent shall be terminated. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions of
this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement. If no successor collateral agent has accepted appointment as
Collateral Agent by the date which is 30 days following a retiring Collateral
Agent's notice of resignation, the retiring Collateral Agent's resignation shall
nevertheless thereupon become effective and Banks shall perform all of the
duties of Collateral Agent hereunder until such time, if any, as Majority Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
Bank of America may not be removed as Collateral Agent at the request of
Majority Banks unless Bank of America shall also simultaneously be replaced as
"Administrative Agent" and an "Issuing 180 Day Lender" hereunder pursuant to
documentation in form and substance reasonably satisfactory to Bank of America.
9.11 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of Administrative Agent, to deliver to
Administrative Agent and Company:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed
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copies of IRS Form 1001 (or any successor form) before the payment of any
interest in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 (or any successor form)
before the payment of any interest is due in the first taxable year of such
Bank and in each succeeding taxable year of such Bank during which interest
may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 (or any
successor form) and such Bank sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Company to such Bank, such
Bank agrees to notify Administrative Agent of the percentage amount in which it
is no longer the beneficial owner of Obligations of Company to such Bank. To
the extent of such percentage amount, Administrative Agent will treat such
Bank's IRS Form 1001 (or any successor form) as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 (or any successor form) with Administrative Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Company to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, Administrative Agent may withhold from any interest payment to
such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to Administrative
Agent, then Administrative Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify
Administrative Agent fully for all amounts paid, directly or indirectly, by
Administrative Agent as tax or otherwise, including
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penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Administrative Agent under this Section, together with
all costs and expenses (including Professional Costs). The obligation of Banks
under this subsection shall survive the payment of all Obligations and the
resignation or replacement of Administrative Agent.
9.12 Co-Documentation Agents. None of the Banks identified on the facing
-----------------------
page or signature pages of this Agreement as a "Co-Documentation Agent" shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Banks as such. Without limiting
the foregoing, none of Banks so identified as a "Co-Documentation Agent" shall
have or be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
9.13 Collateral Documents, Guaranties and Intercreditor Agreement. Each
------------------------------------------------------------
Bank hereby further authorizes Collateral Agent, on behalf of and for the
benefit of Banks, to enter into each Collateral Document as secured party and
hereby authorizes Administrative Agent, on behalf of and for the benefit of
Banks, to enter into each Guaranty and the Intercreditor Agreement, and each
Bank agrees to be bound by the terms of each Collateral Document, each Guaranty
and the Intercreditor Agreement; provided that neither Administrative Agent nor
--------
Collateral Agent shall (a) enter into or consent to any material amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or Guaranty or (b) release any Collateral without the prior consent of
Majority Banks, Requisite Banks or all Banks, as provided in Section 10.1;
provided, however, that, without further written consent or authorization from
- -------- -------
Banks, Administrative Agent or Collateral Agent, as the case may be, may execute
any documents or instruments necessary to (i) release any Lien encumbering any
item of Collateral that is the subject of a Capital Lease, Equipment Financing
Transaction, Real Estate Financing Transaction, Permitted Foreign Receivables
Purchase Facility or sale or other disposition of assets permitted by Section
7.3, (ii) release any Guarantor from a Guaranty if all of the Capital Stock of
such Guarantor is sold to any Person (other than an Affiliate of Company)
pursuant to a sale or other disposition permitted by Section 7.3, or (iii)
subordinate the Liens of Collateral Agent, on behalf of Banks, to any Lien
permitted hereunder. Anything contained in any of the Loan Documents to the
contrary notwithstanding, Company, Administrative Agent, Collateral Agent and
each Bank hereby agree that (A) no Bank shall have any right individually to
realize upon any of the Collateral under any Collateral Document or to enforce
any Guaranty, it being understood and agreed that all powers, rights and
remedies under the Collateral Documents and the Guaranties may be exercised
solely by Administrative Agent or Collateral Agent for the benefit of Banks in
accordance with the terms thereof, and (B) in the event of a foreclosure by
Collateral Agent on any of the Collateral pursuant to a public or private sale,
Administrative Agent, Collateral Agent or any Bank may be the purchaser of any
or all of such Collateral at any such sale and Administrative Agent, as agent
for and representative of Banks (but not any Bank or Banks in its or their
respective individual capacities unless Majority Banks 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 Obligations as a credit on
account of the purchase price for any collateral payable by Administrative Agent
at such sale.
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ARTICLE X
MISCELLANEOUS
-------------
10.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by Majority Banks and Company and acknowledged by Administrative Agent,
and then such waiver, amendment or consent shall be effective only in the
specific instance and for the specific purpose for which given, except that
written agreement from all of Banks is required for any waiver, amendment, or
consent which does any of the following:
(a) subject to subsection (b), written agreement from Requisite Banks
is required for any waiver, amendment, or consent which releases any (i)
Collateral other than the release of any Lien encumbering any item of Collateral
that is the subject of a Capital Lease, Equipment Financing Transaction, Real
Estate Financing Transaction, Permitted Foreign Receivables Purchase Facility or
sale or other disposition of assets permitted by Section 7.3 or (ii) Guarantor
from a Guaranty other than in connection with the sale of all of the Capital
Stock of such Guarantor to any Person (other than an Affiliate of Company)
pursuant to a sale or other disposition permitted by Section 7.3; and
(b) written agreement from all Banks is required for any waiver,
amendment, or consent which does any of the following:
(i) postpones, extends or delays any date fixed for any payment
of principal, interest, fees or other amounts due to Banks (or any of them)
hereunder or under any Loan Document;
(ii) reduces the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or
under any Loan Document or any mandatory reduction of the Aggregate 180 Day
Commitment or any mandatory prepayment pursuant to Section 2.7;
(iii) changes the Commitment Percentage or the aggregate unpaid
principal amount of the Loans which shall be required for Banks or any of
them to take any action hereunder;
(iv) changes the definition of Majority Banks, Requisite Banks
or the number of Banks required to take any action under this Agreement;
(v) releases any Lien granted in favor of Collateral Agent with
respect to all or substantially all of the Collateral; or
(vi) amends this Section 10.1 or Section 2.12 or 2.13 or 2.14;
provided that no amendment, waiver or consent shall, unless in writing and
--------
signed by Administrative Agent in addition to Majority Banks or all Banks,
as the case may be, affect the rights or duties of Administrative Agent
under this Agreement or any other
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Loan Document; provided further that no amendment shall, unless in writing
-------- -------
and signed by Collateral Agent in addition to Majority Banks or all Banks,
as the case may be, affect the rights or duties of Collateral Agent under
this Agreement or any other Loan Document; provided still further that no
-------- ----- -------
amendment shall, unless in writing and signed by Issuing 180 Day Lenders,
in addition to Majority Banks or all Banks, as the case may be, affect the
rights or duties of Issuing 180 Day Lender under this Agreement or any
other Loan Document; provided still further that this Section 10.1 shall
-------- ----- -------
not apply in connection with an Insolvency Proceeding.
10.2 Notices.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission shall be followed promptly by a
hard copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to Company or Administrative Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as to each other party, at such other address as shall
be designated by such party in a written notice to Company and Administrative
Agent.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery, except that notices
pursuant to Articles II or IX shall not be effective until actually received by
Administrative Agent.
(c) Company acknowledges and agrees that any agreement of
Administrative Agent and Banks in Article II to receive certain notices by
telephone and facsimile is solely for the convenience and at the request of
Company. Administrative Agent and Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by Company to give
such notice and Administrative Agent and Banks shall not have any liability to
Company or other Person on account of any action taken or not taken by
Administrative Agent and Banks in reliance upon such telephonic or facsimile
notice. The obligation of Company to repay the Loans shall not be affected in
any way or to any extent by any failure by Administrative Agent and Banks to
receive written confirmation of any telephonic or facsimile notice or the
receipt by Administrative Agent and Banks of a confirmation which is at variance
with the terms understood by Administrative Agent and Banks to be contained in
the telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of Administrative Agent or any Bank, 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.
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10.4 Costs and Expenses. Company agrees to:
------------------
(a) Whether or not the transactions contemplated hereby are
consummated, pay or reimburse Bank of America (including in its capacity as
Administrative Agent) promptly after demand, for all reasonable costs and
expenses incurred by Bank of America (including in its capacity as
Administrative Agent) in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement, any
Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable Professional Costs and other professional fees
incurred by Bank of America (including in its capacity as Administrative Agent)
with respect thereto;
(b) Subject to the limitations set forth therein, pay or reimburse
Administrative Agent promptly after demand, for all reasonable costs and
expenses incurred by Administrative Agent (including the fees, expenses and
disbursements of any auditors, accountants, advisors and agents employed or
retained by Administrative Agent or its counsel) in connection with obtaining
and reviewing the information provided under Section 6.1 or 6.7;
(c) Pay or reimburse Administrative Agent, Collateral Agent, the
Arranger and each Bank within five Business Days after demand, for all costs and
expenses (including Professional Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding);
(d) Pay or reimburse Administrative Agent and Collateral Agent
promptly after demand, for all the actual costs and reasonable expenses of
creating and perfecting Liens in favor of Collateral Agent on behalf of Banks
pursuant to any Collateral Document, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to
Administrative Agent and Collateral Agent and of counsel providing any opinions
that Administrative Agent, Collateral Agent or Majority Banks may request in
respect of the Collateral Documents or the Liens created pursuant thereto; and
(e) Pay or reimburse Collateral Agent promptly after demand, for all
reasonable costs and expenses incurred by Collateral Agent in connection with
the custody and preservation of the Collateral.
10.5 Company's Indemnification. Whether or not the transactions
-------------------------
contemplated hereby are consummated, Company shall indemnify, defend and hold
Administrative Agent-Related Persons, Collateral Agent-Related Persons and each
Bank and each of its respective officers, directors, employees, counsel, agents,
attorneys-in-fact and Affiliates (each, an "Indemnified Person") harmless from
------------------
and against any and all claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Professional Costs) of any kind or nature whatsoever which may at any
time
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(including at any time following repayment of the Loans and the termination,
resignation or replacement of Administrative Agent or Collateral Agent or
replacement of any Bank) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement, or any document
contemplated by or referred to herein, or the transactions contemplated hereby
or thereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
-----------------------
provided that Company shall have no obligation hereunder to any Indemnified
- --------
Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that Company makes a payment to
------------------
Administrative Agent or Banks, or Administrative Agent or Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Administrative Agent or such Bank in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any Insolvency Proceeding or
otherwise, then (a) to the extent of such recovery the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Bank severally agrees to pay to Administrative Agent
upon demand its pro rata share of any amount so recovered from or repaid by
Administrative Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
permitted (and those arising by operation of law) successors and assigns, except
that Company may not assign or transfer any rights or obligations under this
Agreement without the prior written consent of Administrative Agent and each
Bank and no Bank may assign or transfer any of its rights or obligations under
this Agreement except in accordance with Section 10.8 and by operation of law.
10.8 Assignments, Participations, etc.
---------------------------------
(a) Any Bank may, with the written consent of Administrative Agent and
Issuing 180 Day Lenders (which consent shall not be unreasonably withheld), at
any time, assign and delegate to one or more Eligible Assignees (provided that
--------
no written consent of Administrative Agent or Issuing 180 Day Lenders shall be
required in connection with (i) any assignment and delegation by a Bank to an
Affiliate of such Bank or (ii) to another Bank) (each an "Assignee") all, or any
--------
ratable part of all, of the Loans, and the other rights and obligations of such
Bank hereunder, in a minimum amount of $5,000,000; provided, however, that:
-------- -------
(A) a Bank may enter into an assignment and delegation of
less than $5,000,000 if such assignment and delegation consists of
such Bank's entire interest;
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(B) the assignment shall provide that any claims made by any
Assignee under Sections 3.1, 3.2, 3.3, and 3.6 shall not exceed the
claims the assigning Bank could have made on the interests assigned if
the assigning Bank had retained such interests; provided, however,
-------- -------
that this subsection shall not apply when the assignment is made by a
Bank in favor of another Bank which was a Bank on the Closing Date;
and
(C) Company and Administrative Agent may continue to deal
solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (1) written notice of such assignment,
together with payment instructions, addresses and related information
with respect to the Assignee, shall have been given to Company and
Administrative Agent by such Bank and the Assignee; (2) such Bank and
its Assignee shall have delivered to Company and Administrative Agent
an Assignment and Acceptance and any Note or Notes subject to such
assignment; and (3) the assignor Bank or Assignee has paid
Administrative Agent a processing fee of $3,500.
(b) From and after the date that Administrative Agent notifies the
assignor Bank that it has provided its consent to and received an executed
Assignment and Acceptance and payment of the processing fee of $3,500, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other than
any rights of indemnity) and be released from its obligations under the Loan
Documents.
(c) Within five Business Days after its receipt of notice by
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, Company shall execute and deliver to
Administrative Agent, new Notes evidencing such Assignee's assigned Loans and,
if the assignor Bank has retained a portion of its Loans, replacement Notes in
the principal amount of the Loans retained by the assignor Bank (such Notes to
be in exchange for, but not in payment of, the Notes held by such Bank).
Immediately upon each Assignee's making its payment under the Assignment and
Acceptance, this Agreement, shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee. If an
assignor Bank has not retained a portion of its Loans, such Bank shall mark its
Notes "superseded" and return such Notes to Administrative Agent for delivery to
Company.
(d) Any Bank may at any time sell to one or more Eligible Assignees (a
"Participant") participating interests in any Loans and the other interests of
-----------
that Bank (the "Originator") hereunder and under the other Loan Documents;
----------
provided, however, that (i) the Originator's obligations under this Agreement
- -------- -------
shall remain unchanged, (ii) the Originator shall remain solely responsible for
the performance of such obligations, (iii) Company and Administrative Agent
shall continue to deal solely and directly with the Originator in connection
with the Originator's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the
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Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent as
described in Section 10.1. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by Company hereunder shall be determined
as if such Originator had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement (and the Notes held by it) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board or U.S. Treasury Regulation 31 CFR (S)203.14, and may assign all
or any portion of its rights under or interests in this Agreement (and the Notes
held by it) to any Affiliate for purposes of creating such a security interest
or pledge, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.9 Confidentiality. Each Bank agrees to take and to cause its
---------------
Affiliates, directors and employees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to it by Company or any Subsidiary of Company, or by Administrative
Agent or Collateral Agent on Company's or such Subsidiary's behalf or obtained
by a Bank pursuant to such Bank's exercise of its rights under Section 6.7,
under this Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in connection with
other business now or hereafter existing or contemplated with Company or any
Subsidiary of Company; except to the extent such information (a) was or becomes
generally available to the public other than as a result of disclosure by the
Bank or (b) was or becomes available on a non-confidential basis from a source
other than Company, provided that such source is not bound by a confidentiality
--------
agreement with Company known to the Bank; provided, however, that Administrative
-------- -------
Agent, Collateral Agent, and any Bank may disclose such information (i) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (ii) pursuant to subpoena or other court process; (iii) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (iv) to the extent reasonably required in connection with
any litigation or proceeding to which Administrative Agent, Collateral Agent,
any Bank, or their respective Affiliates may be party; (v) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (vi) to such Bank's Affiliates or any of their
Subsidiaries or their Affiliates' directors, officers, employees, auditors,
counsel, advisors, or representatives whom it determines need to know such
information for the purposes set forth in this Section, provided that such
--------
Person agrees to keep such information confidential to the same extent required
by Banks hereunder; (vii) to any bank or financial institution or other entity
to which such Bank has assigned or desires to assign an interest or
participation in the Loan Documents or
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the Obligations, provided that such Person agrees to keep such information
--------
confidential to the same extent required by Banks hereunder; (viii) to any Bank
or its Affiliate, as expressly permitted under the terms of any other document
or agreement regarding confidentiality to which Company or any Subsidiary of
Company is party or is deemed party with such Bank or such Affiliate; and (ix)
to its Affiliates in connection with any such Affiliate's business with Company.
10.10 Set-off. In addition to any rights and remedies of Banks provided
-------
by law, if an Event of Default exists (after the giving of any required notice
and the expiration of any grace period required to make the relevant event an
Event of Default), each Bank is authorized at any time and from time to time,
without prior notice to Company, any such notice being waived by Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owed by, such Bank or, in the case of
Citicorp U.S.A., Inc., Citibank, N.A., to or for the credit or the account of
Company against any and all Obligations owing to such Bank or Citibank, N.A.,
now or hereafter existing, irrespective of whether or not Administrative Agent
or such Bank shall have made a request for payment under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured and
Citibank, N.A. is hereby irrevocably authorized to permit such setoff and
application. Each Bank severally agrees promptly to notify Company and
Administrative Agent after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not affect the
- -------- --------
validity of such set-off and application. The rights of each Bank under this
Section are in addition to the other rights and remedies (including other rights
of set-off) which the Bank may have.
10.11 Notification of Addresses, Lending Offices, etc. Each Bank shall
------------------------------------------------
notify Administrative Agent and Company in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of each of its
Lending Offices, of payment instructions in respect of all payments to be made
to it hereunder and of such other administrative information as Administrative
Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties shall be lodged
with Company and Administrative Agent.
10.13 Severability. The illegality or unenforceability of any provision
------------
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of Company, Banks, Administrative
Agent, Collateral Agent, Administrative Agent-Related Persons and Collateral
Agent-Related Persons and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
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the other Loan Documents. None of Administrative Agent, Collateral Agent, any
Bank, any Administrative Agent-Related Persons and any Collateral Agent-Related
Persons shall have any obligation to any Person not a party to this Agreement or
other Loan Documents.
10.15 Change in Accounting Principles. If any change in GAAP occurs or
-------------------------------
takes effect after the Closing Date which would result in a change in any
quantity reported to Banks hereunder which provides the basis for any covenant,
performance obligation or standard of measurement used in this Agreement, the
parties hereto agree to enter into negotiations in order to amend such covenant,
performance obligation or standard of performance so as to reflect such change
with the result that the criteria for evaluating compliance with such covenant,
performance obligation or standard of performance shall be the same after the
change as if the change had not been made. Until the parties hereto agree to
such amendment, all covenants, performance obligations and standards of
performance shall be calculated without giving effect to the change in GAAP.
10.16 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES; PROVIDED THAT ADMINISTRATIVE AGENT,
COLLATERAL AGENT, BANKS, AND COMPANY SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, COMPANY, ADMINISTRATIVE AGENT, COLLATERAL AGENT, AND BANKS EACH
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. COMPANY, ADMINISTRATIVE AGENT, COLLATERAL AGENT,
AND BANKS EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
--------------------
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
COMPANY, ADMINISTRATIVE AGENT, COLLATERAL AGENT, AND BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
10.17 Interpretation. This Agreement is the result of negotiations
--------------
between and has been reviewed by counsel to Administrative Agent, Company and
other parties, and is the product of all parties hereto. Accordingly, this
Agreement and the other Loan Documents shall not be construed against Company,
Banks, or Administrative Agent merely because of their involvement in the
preparation of such documents and agreements.
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10.18 Representation of Banks. Each Bank party to and as of the date of
-----------------------
this Agreement severally and only with respect to itself and to its status as a
Bank represents that it is entitled to receive interest payments from Company
free and clear of and without deduction for any U.S. taxes collected by way of
withholding that are in effect as of the date of this Agreement. Each Bank
party to and as of the date of this Agreement severally and only with respect to
itself represents that it is either (a) a corporation, company or association,
incorporated or organized in or under the laws of the U.S. or a state of the
U.S. (a "U.S. corporation"); (b) a non-U.S. corporation lending through its U.S.
branch, which will treat the interest income as effectively connected with its
U.S. trade or business; or (c) a non-U.S. corporation, resident in a country
that has a treaty with the U.S. that exempts interest payments by Company from
withholding taxes.
10.19 Waiver of Jury Trial. COMPANY, BANKS, ADMINISTRATIVE AGENT AND
--------------------
COLLATERAL AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE AGENT-RELATED
PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. COMPANY, BANKS,
COLLATERAL AGENT AND ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
ARTICLE XI
GENERAL RELEASE
---------------
11.1 Except with respect to the matters, rights and obligations specified
in Section 11.2, Company for itself and on behalf of its parent, subsidiary and
controlled affiliate corporations, past or present, and each of them, as well as
each of their respective directors, officers, agents, servants, representatives,
attorneys, administrators, executors, heirs, assigns, predecessors and
successors in interest, and each of them (collectively, the "Releasors") hereby
---------
release and forever discharge Administrative Agent, Collateral Agent and Banks
and each of their respective parents, subsidiaries and affiliates, past or
present, and each of them, as well as each of their respective directors,
officers, agents, servants, employees, shareholders, representatives, attorneys,
administrators, executors, heirs, assigns, predecessors and successors in
interest, and all other persons, firms or corporations with whom any of the
former have been, are now, or may hereafter be affiliated, and each of them
(collectively, the "Releasees"), from and
---------
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against any and all claims, demands, liens, agreements, contracts, covenants,
actions, suits, causes of action in law or equity, obligations, controversies,
debts, costs, expenses, damages, judgments, orders and liabilities of whatever
kind or nature in law, equity or otherwise, whether known or unknown, fixed or
contingent, suspected or unsuspected by the Releasors, and whether concealed or
hidden, which Releasors now own or hold or have at any time heretofore owned or
held, which are based upon or arise out of or in connection with any matter,
cause or thing existing at any time prior to the date hereof or anything done,
omitted or suffered to be done or omitted at any time prior to the date hereof
in connection with the Existing Credit Agreement, this Agreement and the other
Loan Documents (collectively the "Released Matters").
----------------
11.2 Notwithstanding anything hereunder to the contrary, this Article XI
shall not release or alter any obligation arising subsequent to the date hereof
to comply with the terms and conditions of this Agreement and the other Loan
Documents. It is expressly understood and agreed that it is the intent of
Company to forever release certain claims against Administrative Agent,
Collateral Agent and Banks, including, but not limited to, any claims related to
the actions and omissions of Releasees prior to the date hereof, but that
nothing herein shall affect the obligations of the Releasees arising subsequent
to the date hereof, including, but not by way of limitation, compliance
subsequent to the date hereof with all terms and conditions of this Agreement
and the other Loan Documents.
11.3 Without limiting the generality of the foregoing, Company for itself
and on behalf of the other Releasors expressly releases any and all past,
present and future claims in connection with the Released Matters, about which
the Releasors do not know or suspect to exist in their favor, whether through
ignorance, oversight, error, negligence or otherwise, and which, if known, would
materially affect Company's decision to enter into this release, and to this end
Company for itself, and on behalf of each of the other Releasors, waives all
rights under Section 1542 of the Civil Code of California, which states in full
as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
Company knowingly and willingly waives the provisions of Section 1542
and acknowledges and agrees that this waiver is an essential and material term
of this release. Company has reviewed this release with Company's legal
counsel, and Company understands and acknowledges the significance and
consequence of this release and of the specific waiver of Section 1542 of the
Civil Code of California.
11.4 Company represents, warrants and agrees that in executing and entering
into this release, Company is not relying and has not relied upon any
representation, promise or statement made by anyone which is not recited,
contained or embodied in this Agreement or the other Loan Documents. Company
understands and expressly assumes the risk that any fact not recited, contained
or embodied therein may turn out hereafter to be other than, different from, or
contrary to the facts now known to Company or believed by Company to be true.
Nevertheless, Company intends by this release to release fully, finally and
forever all Released Matters and agrees that this release shall be effective in
all respects notwithstanding any such difference in facts, and
101
<PAGE>
shall not be subject to termination, modification or rescission by reason of any
such difference in facts.
102
<PAGE>
EXHIBIT 10.10
Exhibit VI
----------
[FORM OF] PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of
---------
January 31, 2000 and entered into by and among Levi Strauss & Co., a Delaware
corporation ("Company"), each of the undersigned direct and indirect
-------
Subsidiaries of Company (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively, "Subsidiary Grantors") and each
------------------ -------------------
Additional Grantor that may become a party hereto after the date hereof in
accordance with Section 21 hereof (Company, each Subsidiary Grantor, and each
Additional Grantor being a "Grantor" and collectively, "Grantors") and Bank of
------- --------
America, N.A. as Collateral Agent for and representative of (in such capacity
herein called "Secured Party") Administrative Agent and the several financial
-------------
institutions ("Banks") from time to time party to the Credit Agreement referred
-----
to below.
PRELIMINARY STATEMENTS
----------------------
A. Pursuant to the Amended and Restated 1999 180 Day Credit Agreement
dated as of January 31, 2000 (said Amended and Restated 1999 180 Day Credit
Agreement, as amended to the date hereof, and as it may hereafter be further
amended, modified, or supplemented from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined), by and among Company, the several financial
institutions from time to time party thereto (collectively, "Banks"); the
-----
several financial institutions party thereto as Co-Documentation Agents; Bank of
America, N.A. as Administrative Agent (in such capacity, "Administrative
--------------
Agent"); and Bank of America, N.A. as Collateral Agent (in such capacity,
- -----
"Collateral Agent"), Banks have made certain commitments, subject to the terms
----------------
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Subsidiary Grantors have executed and delivered that certain Guaranty
dated the date hereof (said Guaranty, as amended to the date hereof, and as it
may hereafter be further amended, modified, or supplemented from time to time,
being the "Guaranty") in favor of Secured Party for the benefit of Banks and
--------
Administrative Agent, pursuant to which each Subsidiary Grantor has guarantied
the prompt payment and performance when due of all obligations of Company under
the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that 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 Banks to enter into the Credit Agreement, each Grantor hereby
agrees with Secured Party as follows:
Section 1. Grant of Security. Each Grantor hereby assigns to Secured
-----------------
Party, and hereby grants to Secured Party a security interest in, all of such
Grantor's right, title and
VI-1
<PAGE>
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 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
---------
without limitation 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,
general intangibles 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, general intangibles or
other obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments, general intangibles and other 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 account established and maintained by Secured Party pursuant to Section
11 (the "Cash Collateral Account"), together with (i) all amounts on deposit
from 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 listed on Schedule 1(d);
(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 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 owned on the date hereof and described on
Schedule 1(e)(i), 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
-------
Shares"), 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
VI-2
<PAGE>
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 Shares;
provided, that if the issuer of any of such Pledged Shares is a controlled
--------
foreign corporation (used hereinafter as such term is defined in Section
957(a) or a successor provision of the Internal Revenue Code), the Pledged
Shares shall not include any shares of stock of such issuer in excess of
the number of shares of such issuer possessing up to but not exceeding 65%
of the voting power of all classes of Capital Stock entitled to vote of
such issuer, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Pledged Shares;
(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, including the indebtedness described on Schedule 1(e)(ii) and
issued by the obligors named therein, and the instruments evidencing such
indebtedness (the "Pledged Debt"), and all interest, cash, instruments and
------------
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Pledged Debt; and
(iii) all other investment property as that term is defined in the
Uniform Commercial Code ("UCC") of any relevant jurisdiction, of such
---
Grantor;
(f) the "Intellectual Property 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, without limitation, the trademarks specifically
identified in Schedule 1(f)(i), as the same may be amended pursuant hereto
from time to time) (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, without
limitation, the registrations and applications specifically identified in
Schedule 1(f)(i), as the same may be amended pursuant hereto from time to
time) (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");
-------------------
(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
VI-3
<PAGE>
Grantor in whole or in part (including, without limitation, the patents and
patent applications listed in Schedule 1(f)(ii), as the same may be amended
pursuant hereto from time to time), all rights corresponding thereto
(including, without limitation, the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to sue for
past, present and future infringements in the name of such Grantor or in
the name of Secured Party or Banks), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all
of the foregoing being collectively referred to as the "Patents"); 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
registered works listed on Schedule 1(f)(iii), 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, without limitation, the registrations
listed on Schedule 1(f)(iii), 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 to sue for past, present and future infringements of the Copyrights
and Copyright Rights;
(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 other general intangibles (including tax refunds, rights to payment or
performance, choses in action 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;
VI-4
<PAGE>
(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 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 (i) 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 or any of its rights or interests in other property 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) or any Negative Pledge permitted
under the Credit Agreement on such rights or interests; 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 and (ii) any real property leasehold, unless
a Grantor has executed a leasehold mortgage or leasehold deed of trust covering
such real property leasehold.
Notwithstanding anything herein to the contrary, neither Company 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 or (iii) any
Pledged Debt of or issued by any Restricted Subsidiary.
Section 2. Security for Obligations.
------------------------
(a) 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 without limitation 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:
-------------------
(i) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents,
and
VI-5
<PAGE>
(ii) 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;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Lender Letters of Credit, 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 Secured Party, Administrative
Agent or any Bank as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Grantors now or hereafter existing under this
Agreement.
(b) Any and all security interests, liens, rights and interest of
Secured Party in and to any or all of the Collateral are subordinated to any and
all security interests, liens, rights and interest of the several financial
institutions party to the Bridge Credit Agreement from time to time in and to
any or all of the Collateral pursuant to the Intercreditor Agreement.
Section 3. Grantors Remain Liable.
----------------------
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 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) 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
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.
------------------------------
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 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.
VI-6
<PAGE>
(b) Locations of Equipment and Inventory. All of the Equipment and
-------------------------------------
Inventory is, as of the date hereof, or in the case of each Additional Grantor,
the date of the applicable counterpart entered into pursuant to Section 21
hereof (each, a "Counterpart") located at the places specified in Schedule 4(b),
-----------
except for 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 specified in Schedule 4(b), (iii) from a supplier or a Grantor to a
processor, or (iv) to customers of a Grantor.
(c) Office Locations. 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 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);
(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 listed in Schedule 4(d) annexed hereto.
(e) Delivery of Certain Collateral. Except as permitted by Section
-------------------------------
6.11 of the Credit Agreement, all certificates or instruments (excluding checks)
evidencing, comprising or representing the Collateral (including, without
limitation, the Securities Collateral) have been delivered to Secured Party duly
endorsed or accompanied by duly executed instruments of transfer or assignment
in blank.
(f) Securities Collateral. (i) All of the Pledged Shares described on
----------------------
Schedule 1(e)(i) have been duly authorized and validly issued and are fully paid
and non-assessable; (ii) all of the Pledged Debt described on Schedule 1(e)(ii)
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) the Pledged Shares 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 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 Shares; (iv) the Pledged Debt 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) sets
forth all of the Pledged Shares owned by each Grantor on the date hereof; and
(vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt in existence on the
date hereof.
(g) Intellectual Property 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 in Schedule 1(f)(i);
VI-7
<PAGE>
(ii) a true and complete list of all Patents owned by such
Grantor, in whole or in part, that are material to such Grantor's business,
is set forth in Schedule 1(f)(ii);
(iii) a true and complete list of all Copyright Registrations and
applications for Copyright Registrations owned by such Grantor, in whole or
in part, is set forth in Schedule 1(f)(iii);
(iv) after reasonable inquiry, such Grantor is not aware of any
pending or threatened claim by any third party that any of the Intellectual
Property Collateral owned, held or used by such Grantor is invalid or
unenforceable that is reasonably likely to have a Material Adverse Effect;
and
(v) no effective security interest or other Lien covering all or
any part of the Intellectual Property 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
----------
Secured Party for the ratable benefit of Banks and Administrative Agent
hereunder constitute valid security interests in the Collateral, securing the
payment of the Secured Obligations. Upon (i) the filing of UCC financing
statements naming each Grantor as "debtor", naming Secured Party as "secured
party" and describing the Collateral in the filing offices with respect to such
Grantor set forth on Schedule 4(h), (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 Secured Party, in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank,
(iii) in the case of the Intellectual Property 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 Secured Party for the ratable benefit of Banks and Administrative
Agent will constitute perfected security interests therein, to the extent such
security interests may be perfected by filing in the United States or
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.
------------------
(a) Generally. Each Grantor agrees that from time to time, at the
---------
expense of 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 Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, each
VI-8
<PAGE>
Grantor will: (i) at the reasonable request of Secured Party, mark conspicuously
each item of chattel paper included in the Accounts, each Related Contract and,
at the reasonable request of Secured Party, each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to Secured
Party, indicating that such Collateral is subject to the security interest
granted hereby, (ii) at the reasonable request of Secured Party, deliver and
pledge to 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 Secured Party,
(iii) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby, (iv) furnish to
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 Secured Party may reasonably request, all in reasonable detail,
(v) if requested by Co-Agents, 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 Company,
deliver to 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 Secured Party, exhibit the Collateral to and allow
inspection of the Collateral by Secured Party, or persons designated by Secured
Party, and (viii) at Secured Party's request, appear in and defend any action or
proceeding that may affect such Grantor's title to or Secured Party's security
interest in all or any part of the Collateral. Each Grantor hereby authorizes
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
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to 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 Shares
- ---------- -----------------
or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to Secured Party, the representations and warranties
contained in subsections (i)-(iv) of Section 4(g) 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
Secured Party to attach each Pledge Supplement to this Agreement and agrees that
all Pledged Shares or Pledged Debt 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 Pledge Supplement
--------
with respect to any additional Pledged
VI-9
<PAGE>
Shares or Pledged Debt pledged pursuant to this Agreement shall not impair the
security interest of Secured Party therein or otherwise adversely affect the
rights and remedies of Secured Party hereunder with respect thereto.
(c) Intellectual Property Collateral. Without limiting the generality
--------------------------------
of the foregoing Section 5(a), if any Grantor shall hereafter obtain rights to
any new Intellectual Property Collateral or become entitled to the benefit of
(i) 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 (ii) any Copyright Registration, application for Copyright
Registration or renewals or extension of any Copyright, 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 Company,
notify 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, and of (i) any Trademark Registrations issued or application for a
Trademark Registration or application for a Patent made, and (ii) any Copyright
Registrations issued or applications for Copyright Registration made, in any
such case, after the date hereof. Within 45 days after the end of each fiscal
quarter of Company during which any Grantor files an application for any (1)
Trademark Registration; (2) Patent; and (3) Copyright Registration, each Grantor
shall execute and deliver to Secured Party and record in all places where a
Grant is recorded an IP Supplement, substantially in the form of Exhibit V (an
---------
"IP Supplement"), pursuant to which such Grantor shall grant to Secured Party a
-------------
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
--------
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Secured Party, such
Grantor shall give written notice to Secured Party on the day on which such
Grantor would otherwise be required to record the IP Supplement and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration or
Copyright Registration, as the case may be. Upon delivery to Secured Party of
an IP Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) 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 Intellectual Property Collateral or
any Intellectual Property Collateral included on Schedule A to such IP
Supplement. Each Grantor hereby authorizes 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 Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
--------
failure of any Grantor to execute an IP Supplement with respect to any
additional Intellectual Property Collateral pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
Section 6. Certain Covenants of 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
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<PAGE>
of insurance covering the Collateral, except where such violation would not have
a Material Adverse Effect;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days of such change;
(c) give 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;
(d) if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) except as otherwise not prohibited by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral.
Section 7. Special Covenants With Respect to Equipment and Inventory.
---------------------------------------------------------
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b), or upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable 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 permitted by Section 6.6 of 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. Each Grantor shall promptly furnish to Secured Party a statement
respecting any material loss or damage to 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 whole;
(c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such Inventory,
and such Grantor's cost therefor;
(d) if any Inventory is in the possession or control of any of such
Grantor's agents or processors, within 30 days of the Closing Date (with respect
to existing agents or processors) and promptly after any such Inventory comes
into the possession or control of such Grantor's agents or processors (with
respect to future agents or processors), instruct such agent
VI-11
<PAGE>
or processor to hold all such Inventory for the account of Secured Party and
subject to the instructions of Secured Party, and use commercially reasonable
efforts, but at no out-of-pocket cost to such Grantor, to obtain waivers or
bailee letters in form and substance reasonably satisfactory to Collateral Agent
from all public warehouses in which Inventory is maintained and all such agents
or processors; and
(e) each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit 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) or, upon
30 days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable 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
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 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 Secured Party, each Grantor shall deliver to Secured Party
complete and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than three (3) 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 Secured Party's direction, shall take)
such action as such Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
--------
however, that 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 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 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 Secured Party and, upon such notification and at the
expense of Grantors, to enforce collection of any such Accounts and to adjust,
settle or
VI-12
<PAGE>
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 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 Secured Party hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to 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 Account, 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 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 Secured Party. 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 (i) not, except as otherwise not
----------
prohibited by the Credit Agreement, permit any issuer of Pledged Shares 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 Shares which is a controlled
foreign corporation is a controlled foreign corporation, 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 Shares not to issue any stock, other equity interests or other
securities in addition to or in substitution for the Pledged Shares 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
Shares; (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 subsection (iv) to the contrary, such Grantor shall
only be required to pledge the outstanding Capital Stock of a controlled foreign
corporation possessing up to but not exceeding 65% of the voting power of all
classes of Capital Stock of such controlled foreign corporation 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 Debt; provided,
--------
notwithstanding anything contained in this subsection (v) to the contrary, any
such Grantor shall not be required to pledge any such
VI-13
<PAGE>
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 subsection (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 Secured Party of any event of which
such Grantor becomes aware causing loss or depreciation in the value of the
Securities Collateral that has a Material Adverse Effect; and (viii) at the
request of Secured Party, promptly execute and deliver to Secured Party an
agreement providing for the control, as that term is defined in the UCC, by
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 Secured Party shall have notified
such Grantor that, in Secured Party's reasonable judgment, such action would
have a Material Adverse Effect; and provided further, such Grantor shall give
-------- -------
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 Shares for or such Grantor's consent to the election of
directors or other members of a governing body of an issuer of Pledged Shares 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, and no notice of any such voting or consent need be given to 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 Secured
Party to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) 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 subsection (i) above and to
VI-14
<PAGE>
receive the dividends, distributions, principal or interest payments which it is
authorized to receive and retain pursuant to subsection (ii) above.
Upon the occurrence and during the continuation of an Event of Default, (i)
upon written notice from 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 Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights; (ii) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (iii) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of subsection (ii)
of the immediately preceding paragraph or subsection (ii) above shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of such Grantor and shall forthwith be paid over to Secured Party as
Securities Collateral in the same form as so received (with any necessary
endorsements).
In order to permit 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 Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (ii) without limiting the effect of subsection (i)
above, each Grantor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares 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 Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares 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.
(d) Investment Property. Company shall not maintain any investment
-------------------
property with any financial or other institution unless such institution has
executed a control agreement in form and substance reasonably satisfactory to
Collateral Agent.
Section 10. Special Covenants With Respect to the Intellectual
--------------------------------------------------
Property Collateral.
- -------------------
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the
Intellectual Property 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;
VI-15
<PAGE>
(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
Intellectual Property 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 Intellectual Property Collateral,
including, without limitation, 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 Intellectual Property Collateral, except where the failure to
give such notice would not have a Material Adverse Effect;
(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 Secured Party from time to time at Secured
Party's reasonable request statements and schedules further identifying and
describing any Intellectual Property 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 Intellectual Property 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
Secured Party's reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, 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 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 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 Intellectual Property
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to 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
VI-16
<PAGE>
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 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 Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), 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 Intellectual Property 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 Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by Grantors.
Subject to the foregoing, each Grantor shall give Secured Party written notice
of any abandonment of any Intellectual Property Collateral registered with a
Governmental Authority or any pending patent application or any Patent within 45
days after the end of each fiscal quarter of Company.
(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
Intellectual Property Collateral. Secured Party shall provide, at such
Grantor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party. Each Grantor shall, within 45 days after the end of each
fiscal quarter of Company, notify Secured Party of the institution of, or of any
adverse determination 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
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto requested by 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 Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral and any other
collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable 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 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,
VI-17
<PAGE>
assigns and transferees of 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 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 Intellectual Property 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. To the extent that the Credit Agreement permits any
Grantor to license the Intellectual Property Collateral, 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
Intellectual Property Collateral permitted hereunder in form and substance
reasonably satisfactory to Secured Party pursuant to which (i) 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 (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.
Section 11. Cash Collateral Account.
-----------------------
Secured Party is hereby authorized to establish and maintain as a blocked
account in the name of Company and under the sole dominion and control of
Secured Party, a restricted deposit account designated as "Levi Strauss & Co.
Cash Collateral Account". All amounts at any time held in the Cash Collateral
Account shall be beneficially owned by Grantors but shall be held in the name of
Secured Party hereunder, for the benefit of Banks, as collateral security for
the Secured Obligations upon the terms and conditions set forth herein.
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. Anything contained herein to the contrary notwithstanding, the 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 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 Secured Party. Each Grantor shall, promptly
after initiating a transfer of funds to the Cash Collateral Account, give notice
to Secured Party by telefacsimile of the date, amount and method of delivery of
such deposit. Cash held by Secured Party in the Cash Collateral Account shall
not be invested by Secured Party but instead shall be maintained as a cash
deposit in the 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 shall bear interest at the standard rate paid by Secured
Party to its customers for deposits of like amounts and terms. Subject to
Secured Party's rights hereunder, any interest earned on deposits of cash in the
Cash Collateral Account shall be deposited directly in, and held in the Cash
Collateral Account.
VI-18
<PAGE>
Section 12. Secured Party Appointed Attorney-in-Fact.
----------------------------------------
Each Grantor hereby irrevocably appoints 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, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(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 under the Credit Agreement;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(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 Sections 12(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
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) except as otherwise permitted by Section 6.5 of 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 Secured Party in its sole
discretion, any such payments made by Secured Party to become obligations of
such Grantor to 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
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and 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.
VI-19
<PAGE>
Section 13. Secured Party May Perform.
-------------------------
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Grantors under Section 18(b) hereof.
Section 14. Standard of Care.
----------------
The powers conferred on 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, 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. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property.
Section 15. Remedies.
--------
(a) Generally. If any Event of Default (as defined in the Credit
----------
Agreement) shall have occurred and be continuing, 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 Secured Party
forthwith, assemble all or part of the Collateral as directed by Secured Party
and make it available to Secured Party at a place to be designated by 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 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 subsection (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 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 Secured Party may deem commercially reasonable, (vi) exercise
dominion and control over and refuse to permit further withdrawals from any
Deposit Account maintained with Secured Party or any Bank constituting a part of
the Collateral and (vii) without notice to any Grantor, transfer to or to
register in the name of Secured Party or any of its nominees any or all of the
Securities Collateral. Secured Party or any Bank may be the purchaser of any or
all of the Collateral at any such sale and Secured Party, as agent for and
representative of Banks (but not any Bank in its individual capacity unless
Majority Banks 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 Secured
VI-20
<PAGE>
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. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed 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 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 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, Grantors shall be jointly
and severally liable for the deficiency and the fees of any attorneys employed
by Secured Party to collect such deficiency. Each Grantor further agrees that a
breach of any of the covenants contained in this Section will cause irreparable
injury to Secured Party, that 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 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 regulations
promulgated thereunder, (the "Securities Act") and applicable state
--------------
securities laws, 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 Secured Party by such Grantor pursuant
hereto, each Grantor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that 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 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
VI-21
<PAGE>
Shares to be sold hereunder from time to time to furnish to Secured Party
all such information as 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 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.
(ii) If Secured Party shall determine to exercise its right to sell
all or any of the Securities Collateral pursuant to this Section, each
Grantor agrees that, upon request of Secured Party (which request may be
made by 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 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 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 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 reasonable costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this Section.
(iii) Without limiting the generality of Sections 10.4 and 10.5 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) Secured Party
and each Bank 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
Secured Party and such other Persons for any legal or
VI-22
<PAGE>
other expenses reasonably incurred by 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 Secured Party and such other
Persons and counsel for 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 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 Secured Party or such Persons within the meaning of the
Securities Act.
(c) Collateral Account. If an Event of Default has occurred and is
------------------
continuing and, in accordance with Section 8.2 of the Credit Agreement, Company
is required to pay to Secured Party an amount (the "Aggregate Available Amount")
--------------------------
equal to the maximum amount that may at any time be drawn under all Lender
Letters of Credit then outstanding under the Credit Agreement, Company shall
deliver funds in such an amount for deposit in the Cash Collateral Account. If
for any reason the aggregate amount delivered by Company for deposit in the Cash
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Company shall be apportioned among all
outstanding Lender Letters of Credit for purposes of this Section in accordance
with the ratio of the maximum amount available for drawing under each such
Lender Letter of Credit (as to such Lender Letter of Credit, the "Maximum
-------
Available Amount") to the Aggregate Available Amount. Upon any drawing under
- ----------------
any outstanding Lender Letter of Credit in respect of which Company has
deposited in the Cash Collateral Account any amounts described above, Secured
Party shall apply such amounts to reimburse the Issuing Lender for the amount of
such drawing. In the event of cancellation or expiration of any Lender Letter
of Credit in respect of which Company has deposited in the Cash Collateral
Account any amounts described above, or in the event of any reduction in the
Maximum Available Amount under such Lender Letter of Credit, Secured Party shall
apply the amount then on deposit in the Cash Collateral Account in respect of
such Lender Letter of Credit (less, in the case of such a reduction, the Maximum
Available Amount under such Lender Letter of Credit immediately after such
reduction) first, to the payment of any amounts payable to 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
Lender Letters of Credit in respect of which Company has failed to pay all or a
portion of the amounts described above (such cash collateralization to be
apportioned among all such Lender 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 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.
Section 16. Additional Remedies for Intellectual Property Collateral.
--------------------------------------------------------
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents
VI-23
<PAGE>
required by Secured Party in aid of such enforcement and each Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
Sections 10.4 and 10.5 of the Credit Agreement and Section 18 hereof, as
applicable, in connection with the exercise of its rights under this Section,
and, to the extent that Secured Party shall elect not to bring suit to enforce
any Intellectual Property Collateral as provided in this Section, each Grantor
agrees to use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement of any of the Intellectual Property
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 Secured Party, each Grantor shall execute and deliver
to Secured Party an assignment or assignments of the Intellectual Property
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 Secured Party (or any Bank)
receives cash proceeds in respect of the sale of, or other realization upon, the
Intellectual Property Collateral; and (iv) within five Business Days after
written notice from Secured Party, each Grantor shall make available to 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 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 Secured Party's behalf and
to be compensated by 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 Secured Party of any rights, title and interests in and to the
Intellectual Property 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, 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 Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
--------
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of 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
Secured Party and Liens expressly permitted by the Credit Agreement.
Section 17. Application of Proceeds.
-----------------------
Except as expressly provided elsewhere in this Agreement and in the
Intercreditor Agreement, all proceeds received by Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied in the following order of priority:
VI-24
<PAGE>
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Grantors, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the exercise of any
right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) and, as to obligations arising
under the Credit Agreement, as provided in the Credit Agreement; and
THIRD: To the payment to or upon the order of Company, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
Section 18. Indemnity and Expenses.
----------------------
(a) Grantors jointly and severally agree to indemnify Secured Party
and each Bank 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 without limitation enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Bank's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Subject to Section 6.7 of the Credit Agreement, Grantors jointly
and severally agree to pay to Secured Party upon demand (i) the amount of any
and all reasonable costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with the administration of this Agreement or the failure by
any Grantor to perform or observe any of the provisions hereof and (ii) the
amount of any and all costs and expenses, including the fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with the exercise or enforcement of any of the rights of Secured
Party hereunder.
(c) The obligations of Grantors in this Section 18 shall (i) survive
the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, 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 Secured Obligations and the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Lender Letters
of Credit, (ii) be binding upon Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without
VI-25
<PAGE>
limiting the generality of the foregoing subsection (iii), but subject to the
provisions of Sections 10.7 and 10.8 of the Credit Agreement, any Bank 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 Banks herein or otherwise.
(b) Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Lender Letters of Credit, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the applicable Grantors. Upon any such termination Secured Party will, at
Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence such termination. 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 Secured Party, such Grantor shall deliver an
officers' certificate (i) stating that the Collateral subject to such
disposition is being sold, transferred or otherwise disposed of in compliance
with the terms of the Credit Agreement, and (ii) specifying the Collateral being
sold, transferred or otherwise disposed of in the proposed transaction. Upon
the receipt of such officers' certificate, Secured Party shall, at such
Grantor's expense, so long as Secured Party has no reason to believe that the
officers' certificate delivered by such Grantor with respect to such sale is not
true and correct, execute and deliver such releases of its security interest in
such Collateral which is to be so sold, transferred or disposed of, as may be
reasonably requested by such Grantor.
Section 20. Secured Party as Agent.
----------------------
(a) Secured Party has been appointed to act as Secured Party hereunder
by Banks. 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 without
limitation the release or substitution of Collateral), solely in accordance with
this Agreement and the Credit Agreement; provided that Secured Party shall
--------
exercise, or refrain from exercising, any remedies provided for in Section 15
hereof in accordance with the instructions of Majority Banks.
(b) Secured Party shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute notice of resignation as Secured Party under this Agreement; removal
of Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor collateral agent pursuant to Section 9.10 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
Section 9.10 of the Credit Agreement by a successor collateral agent, that
successor collateral agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed 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
VI-26
<PAGE>
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 or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed collateral
agent's resignation or removal hereunder as 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 Secured Party hereunder.
Section 21. Additional Grantors.
-------------------
The initial Subsidiary Grantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto as additional Grantors (each an "Additional Grantor"), by
------------------
executing a counterpart substantially in the form of Exhibit VI to this
----------
Agreement. Upon delivery of any such counterpart to Secured Party, notice of
which is hereby waived by 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 Company 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 Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided this Agreement may be modified by the execution of a counterpart by an
- --------
Additional Grantor in accordance with Section 21 hereof and 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.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
applicable signature page hereof, and (ii) shall be followed promptly by a hard
copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to any Grantor or Collateral Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as to each other party, at such other address as shall
be designated by such party in a written notice to each Grantor and Collateral
Agent.
VI-27
<PAGE>
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery.
Section 24. Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
Section 25. Severability.
------------
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 26. Headings.
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
Section 27. Governing Law; Terms; Rules of Construction.
-------------------------------------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. 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 Section 1.2 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 THE COURTS OF THE STATE OF NEW YORK OR OF THE
VI-28
<PAGE>
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR, SECURED PARTY, ADMINISTRATIVE AGENT
AND BANKS EACH CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GRANTOR, SECURED PARTY,
ADMINISTRATIVE AGENT AND BANKS EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
---------
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
- ----------
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH GRANTOR, SECURED PARTY, ADMINISTRATIVE AGENT AND BANKS EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 29. Waiver of Jury Trial.
--------------------
EACH GRANTOR, BANKS, ADMINISTRATIVE AGENT AND SECURED PARTY EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE
AGENT-RELATED PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH
GRANTOR, BANKS, ADMINISTRATIVE AGENT AND SECURED PARTY EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 30. Counterparts.
------------
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but 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.
[Remainder of page intentionally left blank]
VI-29
<PAGE>
LEVI STRAUSS & CO.
By:__________________________________________
Name: _______________________________________
Title:_______________________________________
Each of the entities listed on Schedule A annexed
----------
hereto
By:__________________________________________
on behalf of each of the entities listed on
Schedule A annexed hereto
----------
Name: _______________________________________
Title:_______________________________________
BANK OF AMERICA, N.A., as Collateral Agent, as
Secured Party
By:__________________________________________
Name: _______________________________________
Title:_______________________________________
VI-30
<PAGE>
Schedule A
----------
Name Notice Address for each Subsidiary
- ---- ----------------------------------
Grantor
-------
VI-Sch. A-1
<PAGE>
Schedule 1(d) to
----------------
Pledge and Security Agreement
-----------------------------
Deposit Accounts
- ----------------
VI-Sch. 1(d)
<PAGE>
Schedule 1(e)(i) to
-------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERCENTAGE OF
CLASS STOCK NUMBER OUTSTANDING
OF STOCK OR REGISTERED CERTIFICATE PAR OF SHARES
STOCK ISSUER EQUITY INTEREST OWNER NOS. VALUE SHARES PLEDGED
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
VI-Sch. 1(e)(i)-1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERCENTAGE OF
CLASS STOCK NUMBER OUTSTANDING
OF STOCK OR REGISTERED CERTIFICATE PAR OF SHARES
STOCK ISSUER EQUITY INTEREST OWNER NOS. VALUE SHARES PLEDGED
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
VI-Sch. 1(e)(i)-2
<PAGE>
Schedule 1(e)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AMOUNT OF
DEBT ISSUER PAYEE INDEBTEDNESS
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
VI-Sch. 1(e)(ii)-1
<PAGE>
Schedule 1(f)(i) to
-------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
U.S. Trademarks:
- ---------------
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
<S> <C> <C> <C>
Foreign Trademarks:
- ------------------
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
</TABLE>
<PAGE>
Schedule 1(f)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
U.S. Patents Issued:
- -------------------
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
---------- ---------- --------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Patents Pending:
- --------------------
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- ----------
Foreign Patents Issued:
- ----------------------
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
---------- ---------- --------- ---------- -----
</TABLE>
VI-Sch. 1(f)(ii)-1
<PAGE>
<TABLE>
<CAPTION>
Foreign Parents Pending:
- -----------------------
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- ----------
<S> <C> <C> <C> <C>
</TABLE>
VI-Sch. 1(f)(ii)-2
<PAGE>
Schedule 1(f)(iii) to
---------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
U.S. Copyrights:
- ---------------
Title Registration No. Date of Issue Registered Owner
- ----- ---------------- ------------- ----------------
<S> <C> <C> <C>
Foreign Copyright Registrations:
- --------------------------------
Country Title Registration No. Date of Issue Registered Owner
- ------- ----- ---------------- ------------- ----------------
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 [Registered Owner]
- ------- ----- ---------------- ------------- ----------------
</TABLE>
VI-Sch. 1(f)(iii)-1
<PAGE>
Schedule 4(b) to
----------------
Pledge and Security Agreement
-----------------------------
Locations of Equipment and Inventory
------------------------------------
Name of Grantor Locations of Equipment and Inventory
- --------------- ------------------------------------
VI-Sch. 4(b)-1
<PAGE>
Schedule 4(c) to
----------------
Pledge and Security Agreement
-----------------------------
Office Locations
----------------
Name of Grantor Office Locations
- --------------- ----------------
VI-Sch. 4(c)-1
<PAGE>
Schedule 4(d) to
----------------
Pledge and Security Agreement
-----------------------------
Other Names
-----------
Name of Grantor Other Names
- --------------- -----------
VI-Sch. 4(d)-1
<PAGE>
Schedule 4(h) to
----------------
Pledge and Security Agreement
-----------------------------
Filing Offices
--------------
Grantor Filing Offices
- ------- --------------
VI-Sch. 4(h)-1
<PAGE>
Exhibit I to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
Amended and Restated 1999 180 Day Credit Agreement dated as of January 31, 2000
(said Amended and Restated 1999 180 Day Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Co-Documentation
- ------
Agents; Bank of America, N.A. as Administrative Agent for Banks; and Bank of
America, N.A. as Collateral Agent for Banks (in such capacity, "Secured Party")
-------------
pursuant to which Banks have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Administrative Agent, pursuant to which Grantor has
guarantied the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by agreements
governing such license or other use) in and to all trademarks, service
marks, designs, logos, indicia, tradenames,
VI-I-1
<PAGE>
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, without limitation,
the trademarks specifically identified in Schedule A) (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, without limitation, the registrations and
applications specifically identified in Schedule A) (the "Trademark
---------
Registrations"), all common law and other rights (but in no event any of
-------------
the obligations) 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"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 is intentionally left blank.]
VI-I-2
<PAGE>
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 _______, 2000.
[NAME OF GRANTOR]
By:__________________________
Name:________________________
Title:_______________________
VI-I-3
<PAGE>
Schedule A to
-------------
Grant of Trademark Security Interest
------------------------------------
United States
Trademark Registration Registration
Registered Owner Description Number Date
- ---------------- ----------- ------ ----
VI-Sch. A-1
<PAGE>
Exhibit II to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns and
-------
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, Levi Strauss & Co., a Delaware corporation, has entered into the
Amended and Restated 1999 180 Day Credit Agreement dated as of January 31, 2000
(said Amended and Restated 1999 180 Day Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Co-Documentation
- ------
Agents; Bank of America, N.A. as Administrative Agent for Banks; and Bank of
America, N.A. as Collateral Agent for Banks (in such capacity, "Secured Party")
-------------
pursuant to which Banks have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Administrative Agent, pursuant to which Grantor has
guarantied the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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"):
-----------------
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by agreements
governing such license or other use) in and to all patents and patent
applications and rights and interests in patents and
VI-II-1
<PAGE>
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,
without limitation, the patents and patent applications listed in Schedule
--------
A), all rights (but not obligations) corresponding thereto to sue for past,
-
present and future infringements and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all
of the foregoing being collectively referred to as the "Patents"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 intentionally left blank.]
VI-II-2
<PAGE>
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 ____________, 2000.
[NAME OF GRANTOR]
By:_________________________
Name:_______________________
Title:______________________
VI-II-3
<PAGE>
Schedule A to
-------------
Grant of Patent Security Interest
---------------------------------
Patents Issued:
- --------------
Registered
Patent No. Issue Date Invention Inventor Owner
---------- ---------- --------- -------- -----
Patents Pending:
- ---------------
Applicant's Date Application
Name Filed Number Invention Inventor
----- ----- ------ --------- --------
VI-Sch. A-1
<PAGE>
Exhibit III to
--------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
Amended and Restated 1999 180 Day Credit Agreement dated as of January 31, 2000
(said Amended and Restated 1999 180 Day Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Co-Documentation
-----
Agents; Bank of America, N.A. as Administrative Agent for Banks; and Bank of
America, N.A. as Collateral Agent for Banks (in such capacity, "Secured Party")
-------------
pursuant to which Banks have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Administrative Agent, pursuant to which Grantor has
guarantied the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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 "Copyright Collateral"):
--------------------
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by agreements
governing such license or other use) under copyright in various published
and unpublished works of authorship including,
VI-III-1
<PAGE>
without limitation, computer programs, computer data bases, other computer
software layouts, trade dress, drawings, designs, writings, and formulas
(including, without limitation, the works listed on Schedule A, as the same
----------
may be amended pursuant hereto from time to time) (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 in the United States and any state thereof
and in foreign countries (including, without limitation, the registrations
listed on Schedule A, 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, without
----------------
limitation, 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 (but not the obligation) to renew and extend such Copyright
Registrations and Copyright Rights and to register works protectable by
copyright and the right (but not the obligation) to sue in the name of such
Grantor or in the name of Secured Party or Banks for past, present and
future infringements of the Copyrights and Copyright Rights; 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Copyright
Collateral granted hereby are
VI-III-2
<PAGE>
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 intentionally left blank.]
VI-III-3
<PAGE>
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 ___________, 2000.
[NAME OF GRANTOR]
By:_________________________
Name:_______________________
Title:______________________
VI-III-4
<PAGE>
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
- ----- ------------- ------------------- -------------------
VI-Sch. A-1
<PAGE>
Exhibit IV to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] PLEDGE SUPPLEMENT
This Pledge Supplement, dated __________________, is delivered pursuant to
the Pledge and Security Agreement, dated January 31, 2000, between Levi Strauss
& Co., a Delaware corporation, the other Grantors named therein, and Bank of
America, N.A. (as it may be from time to time amended, modified, or
supplemented, the "Pledge and Security Agreement"). Capitalized terms used
-----------------------------
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Pledge and Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt] listed on
the schedule attached hereto shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] 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:_________________________
Name:_______________________
Title:______________________
VI-IV-1
<PAGE>
Exhibit V to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] IP SUPPLEMENT
This IP SUPPLEMENT, dated _____________, is delivered pursuant to and
supplements (i) the Pledge and Security Agreement, dated as of January 31, 2000
(as it may be from time to time amended, modified, or supplemented, the "Pledge
------
and Security Agreement"), among Levi Strauss & Co., a Delaware corporation, the
- ----------------------
other Grantors named therein, and Bank of America, N.A., as Secured Party, and
(ii) the [Grant of Trademark Security Interest] [Grant of Patent Security
Interest] [Grant of Copyright Security Interest] dated as of ___________, 2000
(the "Grant") executed by Grantor. Capitalized terms used herein not otherwise
-----
defined herein shall have the meanings ascribed thereto in the Grant.
["Grantor"] grants to Secured Party a security interest in all of Grantor's
right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed 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:______________________
VI-V-1
<PAGE>
Exhibit VI to
-------------
Pledge And Security Agreement
-----------------------------
[FORM OF] COUNTERPART
This COUNTERPART (this "Counterpart"), dated _______, 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 Pledge
and Security Agreement, dated as of January 31, 2000 (as it may be from time to
time amended, modified, or supplemented, the "Pledge and Security Agreement";
-----------------------------
capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed therein), among Levi Strauss & Co., a Delaware corporation,
the other Grantors named therein, and Bank of America, N.A., as 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;
(ii) agrees that all Collateral of the undersigned, including the
items of property described 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:______________________
IX-Sch. 1-1
<PAGE>
EXHIBIT 10.11
Exhibit VII
-----------
[FORM OF] GUARANTY
This GUARANTY is entered into as of February 1, 2000 by the undersigned
(each a "Guarantor", and together with any future Subsidiaries executing this
---------
Guaranty, being collectively referred to herein as the "Guarantors") in favor of
----------
and for the benefit of Bank of America, N.A., as agent for and representative of
(in such capacity herein called "Guarantied Party") Collateral Agent and the
----------------
several financial institutions ("Banks") from time to time party to the Credit
-----
Agreement referred to below, and for the benefit of the other Beneficiaries (as
hereinafter defined).
PRELIMINARY STATEMENTS
----------------------
A. Levi Strauss & Co., a Delaware corporation ("Company"), has entered
-------
into that certain Amended and Restated 1999 180 Day Credit Agreement dated as of
January 31, 2000 with Banks, the several financial institutions party thereto as
Co-Documentation Agents and Guarantied Party, as Administrative Agent and
Collateral Agent for Banks (said Amended and Restated 1999 180 Day Credit
Agreement, as it may hereafter be amended, modified, or supplemented from time
to time, being the "Credit Agreement"; capitalized terms defined therein and not
----------------
otherwise defined herein being used herein as therein defined).
B. Guarantied Party, Banks and Collateral Agent are sometimes referred to
herein as "Beneficiaries".
-------------
C. A portion of the proceeds of the Loans may be advanced to Guarantors,
and thus the Guarantied Obligations (as hereinafter defined) are being incurred
for and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Company's obligations thereunder be guarantied by Guarantors.
E. Guarantors are willing irrevocably and unconditionally to guaranty
such obligations of Company.
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 Banks and Guarantied Party to enter into the Credit
Agreement, Guarantors hereby agree as follows:
1. Guaranty. (a) In order to induce Banks to extend credit to Company
--------
pursuant to the Credit Agreement, Guarantors jointly and severally irrevocably
and unconditionally guaranty, as primary obligors and not merely as sureties,
the due and punctual payment in full of all Guarantied Obligations (as
hereinafter defined) when the same shall become due, whether at
VII-1
<PAGE>
stated maturity, by acceleration, demand or otherwise (including amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term "Guarantied
----------
Obligations" is used herein in its most comprehensive sense and includes any and
- -----------
all Obligations of Company, now or hereafter made, incurred or created, whether
absolute or contingent, liquidated or unliquidated, whether due or not due, and
however arising under or in connection with the Credit Agreement, this Guaranty
and the other Loan Documents, including those arising under successive borrowing
transactions under the Credit Agreement which shall either continue the
Obligations of Company or from time to time renew them after they have been
satisfied.
Each Guarantor acknowledges that a portion of the Loans may be advanced to
it, that Lender Letters of Credit may be issued for the benefit of its business
and that the Guarantied Obligations are being incurred for and will inure to its
benefit.
Any interest on any portion of the Guarantied Obligations that accrues
after the commencement of any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company (or, if interest on any portion of the Guarantied
Obligations ceases to accrue by operation of law by reason of the commencement
of said proceeding, such interest as would have accrued on such portion of the
Guarantied Obligations if said proceeding had not been commenced) shall be
included in the Guarantied Obligations because it is the intention of each
Guarantor and Guarantied Party that the Guarantied Obligations should be
determined without regard to any rule of law or order that may relieve Company
of any portion of such Guarantied Obligations.
In the event that all or any portion of the Guarantied Obligations is paid
by Company, the obligations of each Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) is rescinded or recovered directly
or indirectly from Guarantied Party or any other Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments that are so rescinded or
recovered shall constitute Guarantied Obligations.
Subject to the other provisions of this Section 1, upon the failure of
Company to pay any of the Guarantied Obligations when and as the same shall
become due, each Guarantor will upon demand pay, or cause to be paid, in cash,
to Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the aggregate of the unpaid Guarantied Obligations.
(b) Anything contained in this Guaranty to the contrary notwithstanding,
the obligations of each Guarantor under this Guaranty shall be limited to a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
----------
Transfer Laws"), in each case after giving effect to all other liabilities of
- -------------
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (i) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be
VII-2
<PAGE>
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(ii) under any guaranty which contains a limitation as to maximum amount similar
to that set forth in this Section 1(b), pursuant to which the liability of such
Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement, indemnification or contribution of
such Guarantor pursuant to applicable law or pursuant to the terms of any
agreement.
(c) Each Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Credit Agreement (the "Related Guaranties")
------------------
that contain a contribution provision similar to that set forth in this Section
1(c), together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
-----------------------
arising under this Guaranty and the Related Guaranties. Accordingly, in the
event any payment or distribution is made on any date by a Guarantor under this
Guaranty or a guarantor under a Related Guaranty, each such Guarantor or such
other guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Guarantied Obligations paid to Beneficiaries.
2. Guaranty Absolute; Continuing Guaranty. The obligations of each
--------------------------------------
Guarantor hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees that: (a) this Guaranty is a guaranty
of payment when due and not of collectibility; (b) Guarantied Party may enforce
this Guaranty upon the occurrence of an Event of Default under the Credit
Agreement notwithstanding the existence of any dispute between Company and any
Beneficiary with respect to the existence of such event; (c) the obligations of
each Guarantor hereunder are independent of the obligations of Company under the
Loan Documents and the obligations of any other Guarantor and a separate action
or actions may be brought and prosecuted against each Guarantor whether or not
any action is brought against Company or any of such other Guarantors and
whether or not Company is joined in any such action or actions; and (d) a
payment of a portion, but not all, of the Guarantied Obligations by one or more
Guarantors shall in no way limit, affect, modify or abridge the liability of
such or any other Guarantor for any portion of the Guarantied Obligations that
has not been paid. This Guaranty is a continuing guaranty and shall be binding
upon each Guarantor and its successors and assigns, and each Guarantor
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guarantied Obligations.
3. Actions by Beneficiaries. Any Beneficiary may from time to time,
------------------------
without notice or demand and without affecting the validity or enforceability of
this Guaranty or giving rise to any limitation, impairment or discharge of any
Guarantor's liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other
VII-3
<PAGE>
obligations, (c) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Guaranty or the
Guarantied Obligations, (d) release, exchange, compromise, subordinate or
modify, with or without consideration, any security for payment of the
Guarantied Obligations, any other guaranties of the Guarantied Obligations, or
any other obligation of any Person with respect to the Guarantied Obligations,
(e) enforce and apply any security now or hereafter held by or for the benefit
of any Beneficiary in respect of this Guaranty or the Guarantied Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that Guarantied Party or the other Beneficiaries, or any of them, may
have against any such security, as Guarantied Party in its discretion may
determine consistent with the Credit Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and (f) exercise any other rights available to
Guarantied Party or the other Beneficiaries, or any of them, under the Loan
Documents.
4. No Discharge. This Guaranty and the obligations of Guarantors
------------
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations, (b) any waiver or modification
of, or any consent to departure from, any of the terms or provisions of the
Credit Agreement, any of the other Loan Documents or any agreement or instrument
executed pursuant thereto, or of any other guaranty or security for the
Guarantied Obligations, (c) the Guarantied Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (d) the application of payments received from any
source to the payment of indebtedness other than the Guarantied Obligations,
even though Guarantied Party or the other Beneficiaries, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations, (e) any failure to perfect or continue perfection of a security
interest in any collateral which secures any of the Guarantied Obligations, (f)
any defenses, set-offs or counterclaims which Company may assert against
Guarantied Party or any Beneficiary in respect of the Guarantied Obligations,
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury, and (g) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the risk of a
Guarantor as an obligor in respect of the Guarantied Obligations.
5. Waivers. Each Guarantor waives, for the benefit of Beneficiaries: (a)
-------
any right to require Guarantied Party or the other Beneficiaries, as a condition
of payment or performance by such Guarantor, to (i) proceed against Company, any
other guarantor (including any other Guarantor) of the Guarantied Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any other guarantor of the Guarantied Obligations or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the
VII-4
<PAGE>
books of any Beneficiary in favor of Company or any other Person, or (iv) pursue
any other remedy in the power of any Beneficiary; (b) any defense arising by
reason of the incapacity, lack of authority or any disability or other defense
of Company including, without limitation, any defense based on or arising out of
the lack of validity or the unenforceability of the Guarantied Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of Company from any cause other than payment in full of the
Guarantied Obligations; (c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (d) any
defense based upon Guarantied Party's or any other Beneficiary's errors or
omissions in the administration of the Guarantied Obligations, except behavior
that amounts to gross negligence or willful misconduct; (e) (i) any principles
or provisions of law, statutory or otherwise, that are or might be in conflict
with the terms of this Guaranty and any legal or equitable discharge of such
Guarantor's obligations hereunder, (ii) the benefit of any statute of
limitations affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that any Beneficiary protect, secure,
perfect or insure any Lien or any property subject thereto; (f) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guaranty,
notices of default under the Credit Agreement or any agreement or instrument
related thereto, notices of any renewal, extension or modification of the
Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
Sections 3 and 4 hereof and any right to consent to any thereof; and (g) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
As used in this paragraph, any reference to "the principal" includes
Company, and any reference to "the creditor" includes Guarantied Party and each
other Beneficiary. In accordance with Section 2856 of the California Civil Code
(a) each Guarantor waives any and all rights and defenses available to it by
reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code, including without limitation any and all rights or defenses such
Guarantor may have by reason of protection afforded to the principal with
respect to any of the Guarantied Obligations, or to any other guarantor of any
of the Guarantied Obligations with respect to any of such guarantor's
obligations under its guaranty, in either case pursuant to the antideficiency or
other laws of the State of California limiting or discharging the principal's
indebtedness or such guarantor's obligations, including without limitation
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure; and
(b) each Guarantor waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a Guarantied Obligation,
has destroyed such Guarantor's rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of any other
guarantor of any of the Guarantied Obligations, has destroyed such Guarantor's
rights of contribution against such other guarantor. No other provision of this
Guaranty shall be construed as limiting the generality of any of the covenants
and waivers set
VII-5
<PAGE>
forth in this paragraph. As provided below, this Guaranty shall be governed by,
and shall be construed and enforced in accordance with, the internal laws of the
State of New York, without regard to conflicts of laws principles. This
paragraph is included solely out of an abundance of caution, and shall not be
construed to mean that any of the above-referenced provisions of California law
are in any way applicable to this Guaranty or to any of the Guarantied
Obligations.
6. Guarantors' Rights of Subrogation, Contribution, Etc.; Subordination of
-----------------------------------------------------------------------
Other Obligations. Until the Guarantied Obligations shall have been paid in
- -----------------
full, the Commitments shall have terminated and all Lender Letters of Credit
shall have expired or been cancelled, no Guarantor shall exercise any claim,
right or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against Company or its assets in connection with this Guaranty or
the performance by such Guarantor of its obligations hereunder, in each case
whether such claim, right or remedy arises in equity, under contract, by statute
(including without limitation under California Civil Code Section 2847, 2848 or
2849), under common law or otherwise and including without limitation (a) any
right of subrogation, reimbursement or indemnification that such Guarantor now
has or may hereafter have against Company, (b) any right to enforce, or to
participate in, any claim, right or remedy that any Beneficiary now has or may
hereafter have against Company, and (c) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by any
Beneficiary. Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights Guarantied Party or the other Beneficiaries may have
against Company, to all right, title and interest Guarantied Party or the other
Beneficiaries may have in any such collateral or security, and to any right
Guarantied Party or the other Beneficiaries may have against such other
guarantor.
Any indebtedness of Company now or hereafter held by any Guarantor is
subordinated in right of payment to the Guarantied Obligations, and any such
indebtedness of Company to a Guarantor collected or received by such Guarantor
after an Event of Default has occurred and is continuing, and any amount paid to
a Guarantor on account of any subrogation, reimbursement, indemnification or
contribution rights referred to in the preceding paragraph when all Guarantied
Obligations have not been paid in full, shall be held in trust for Guarantied
Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied
Party for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations.
7. Expenses. Guarantors jointly and severally agree to pay, or cause to
--------
be paid, on demand, and to save Guarantied Party and the other Beneficiaries
harmless against liability for, any and all costs and expenses (including fees
and disbursements of counsel and allocated costs of internal counsel) incurred
or expended by Guarantied Party or any other Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.
VII-6
<PAGE>
8. Financial Condition of Company. No Beneficiary shall have any
------------------------------
obligation, and each Guarantor waives any duty on the part of any Beneficiary,
to disclose or discuss with such Guarantor its assessment, or such Guarantor's
assessment, of the financial condition of Company or any matter or fact relating
to the business, operations or condition of Company. Each Guarantor has
adequate means to obtain information from Company on a continuing basis
concerning the financial condition of Company and its ability to perform its
obligations under the Loan Documents, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations.
9. Representations and Warranties. Each Guarantor makes, for the benefit
------------------------------
of Beneficiaries, each of the representations and warranties made in the Credit
Agreement by Company as to such Guarantor, its assets, financial condition,
operations, organization, legal status, business and the Loan Documents to which
it is a party.
10. Covenants. Each Guarantor agrees that, so long as any part of the
---------
Guaranteed Obligations shall remain unpaid, any Lender Letter of Credit shall be
outstanding, or any Bank shall have any Commitment, such Guarantor will, unless
Majority Banks shall otherwise consent in writing, perform or observe, and cause
its Subsidiaries to perform or observe, all of the terms, covenants and
agreements that the Loan Documents state that Company is to cause a Guarantor
and such Subsidiaries to perform or observe.
11. Set Off. In addition to any other rights any Beneficiary may have
-------
under law or in equity, if any amount shall at any time be due and owing by a
Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized
at any time or from time to time, without notice (any such notice being
expressly waived), to set off and to appropriate and to apply any and all
deposits (general or special, including but not limited to indebtedness evidence
by certificates of deposit, whether matured or unmatured) and any other
indebtedness of such Beneficiary owing to a Guarantor and any other property of
such Guarantor held by a Beneficiary to or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to any Beneficiary under this Guaranty.
12. Discharge of Guaranty Upon Sale of Guarantor. If all of the stock of
--------------------------------------------
a Guarantor or any of its successors in interest under this Guaranty shall be
sold or otherwise disposed of (including by merger or consolidation) in a sale
in compliance with the terms of the Credit Agreement, the obligations of such
Guarantor or such successor in interest, as the case may be, hereunder shall
automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such sale; provided
--------
that, if the sale of such stock constitutes a Disposition as a condition
precedent to such discharge and release, Guarantied Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Guarantied Party of the Net Asset Disposition Proceeds (if any)
as required by the Credit Agreement.
13. Amendments and Waivers. No amendment, modification, termination or
----------------------
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom,
VII-7
<PAGE>
shall in any event be effective without the written concurrence of Guarantied
Party and, in the case of any such amendment or modification, Guarantors. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
14. Miscellaneous. It is not necessary for Beneficiaries to inquire into
-------------
the capacity or powers of any Guarantor or Company or the officers, directors or
any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiaries by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiaries by virtue of any statute or rule of law or in
any of the Loan Documents or any agreement between one or more Guarantors and
one or more Beneficiaries or between Company and one or more Beneficiaries. Any
forbearance or failure to exercise, and any delay by any Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS, GUARANTIED
PARTY AND THE OTHER BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Guaranty shall inure to the benefit of Beneficiaries and their
respective successors and assigns.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR, GUARANTIED
PARTY, COLLATERAL AGENT AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR
VII-8
<PAGE>
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
EACH GUARANTOR, COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE
AGENT-RELATED PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH
GUARANTOR, COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
15. Additional Guarantors. The initial Guarantor(s) hereunder shall be
---------------------
such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, Subsidiaries of
Company may become parties hereto, as additional Guarantors (each an "Additional
----------
Guarantor"), by executing a counterpart, a form of which is attached as
- ---------
Exhibit A, of this Guaranty. Upon delivery of any such counterpart to Guarantied
Party, notice of which is hereby waived by Guarantors, each such Additional
Guarantor shall be a Guarantor and shall be as fully a party hereto as if such
Additional Guarantor were an original signatory hereof. Each Guarantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Guarantor hereunder, nor by
any election of the Guarantied Party not to cause any Subsidiary of Company to
become an Additional Guarantor hereunder. This Guaranty shall be fully effective
as to any Guarantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Guarantor hereunder.
16. Counterparts; Effectiveness. This Guaranty may be executed in any
---------------------------
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by the Guaranteed Party of written or
telephonic notification of such execution and authorization of delivery thereof.
VII-9
<PAGE>
17. Guarantied Party as Agent.
-------------------------
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Banks. Guarantied 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, solely in
accordance with this Guaranty and the Credit Agreement.
(b) Guarantied 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 9.9 of the Credit Agreement shall
also constitute notice of resignation as Guarantied Party under this Guaranty;
removal of Administrative Agent pursuant to Section 9.9 of the Credit Agreement
shall also constitute removal as Guarantied Party under this Guaranty; and
appointment of a successor administrative agent pursuant to Section 9.9 of the
Credit Agreement shall also constitute appointment of a successor Guarantied
Party under this Guaranty. Upon the acceptance of any appointment as
administrative agent under Section 9.9 of the Credit Agreement by a successor
administrative agent, that successor administrative agent shall thereupon
succeed to become vested with all the rights, powers, privileges and duties of
the retiring or removed Guarantied party under this Guaranty, and the retiring
or removed Guarantied Party under this Guaranty shall promptly (i) transfer to
such successor Guarantied Party all sums held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Guarantied Party under this Guaranty,
and (ii) take such other actions as may be necessary or appropriate in
connection with the assignment to such successor Guarantied Party of the rights
created hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefits as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[The remainder of this page intentionally left blank.]
VII-10
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first written above.
BATTERY STREET ENTERPRISES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS FINANCIAL CENTER CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS FUNDING, LLC
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS GLOBAL FULFILLMENT SERVICES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
VII-11
<PAGE>
LEVI STRAUSS GLOBAL OPERATIONS, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS INTERNATIONAL
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI STRAUSS LATIN AMERICA, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
LEVI'S ONLY STORES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: _____________________________________
_____________________________________
_____________________________________
VII-12
<PAGE>
NF INDUSTRIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
Address: ____________________________
____________________________
____________________________
ACKNOWLEDGED AND FOR PURPOSES OF THE
WAIVER OF JURY TRIAL SET FORTH IN
SECTION 14 ONLY, AGREED AS OF THE DATE
FIRST WRITTEN ABOVE Bank of America,
N.A., as Administrative Agent
By:_______________________________
Title: ___________________________
VII-13
<PAGE>
Exhibit A to
------------
Guaranty
--------
[FORM OF] COUNTERPART FOR ADDITIONAL GUARANTORS
This COUNTERPART (this "Counterpart"), dated _______, _____, is delivered
-----------
pursuant to Section 15 of the Guaranty referred to below. The undersigned
hereby agrees that this Counterpart may be attached to the Guaranty, dated as of
February 1, 2000 (as it may be from time to time amended, modified, or
supplemented, the "Guaranty"; capitalized terms used herein not otherwise
--------
defined herein shall have the meanings specified therein), among the Guarantors
named therein and Bank of America, N.A., as Guarantied Party. The undersigned,
by executing and delivering this Counterpart, hereby becomes an Additional
Guarantor under the Guaranty in accordance with Section 15 thereof and agrees to
be bound by all of the terms thereof.
IN WITNESS WHEREOF, the undersigned has caused this Counterpart to be
duly executed and delivered by its officer thereunto duly authorized as of
______________, ____.
[NAME OF ADDITIONAL GUARANTOR]
By:__________________________
Name:________________________
Title:_______________________
Address: ___________________
___________________
___________________
IX-Sch. 1-1
<PAGE>
EXHIBIT 10.12
EXECUTION COPY
LEVI STRAUSS & CO.
LIMITED WAIVER
This LIMITED WAIVER (this "Waiver") is dated as of February
------
29, 2000 and entered into by and among Levi Strauss & Co., a Delaware
corporation ("Company"); the financial institutions party hereto ("Banks"); Bank
------- -----
of America, N.A. as Administrative Agent for Banks ("Administrative Agent"); and
--------------------
Bank of America, N.A. as Collateral Agent for Banks ("Collateral Agent"), and is
----------------
made with reference to that certain Amended and Restated 1999 180 Day Credit
Agreement dated as of January 31, 2000 (the "Credit Agreement"), by and among
----------------
Company; Banks; the several financial institutions party thereto as
Co-Documentation Agents; Administrative Agent; and Collateral Agent. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, Banks desire to waive certain provisions of the
Credit Agreement as set forth below:
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
Section 1. WAIVER
Subject to the terms and conditions set forth herein and in
reliance on the representations and warranties of Company contained herein,
Banks hereby waive compliance with the provisions of Section 7.1(o) of the
Credit Agreement to the extent, and only to the extent, necessary to permit
Company to become and remain liable with respect to unsecured Guaranty
Obligations under (i) the Permitted Foreign Receivables Purchase Facilities to
be entered into by Company and certain of its Subsidiaries and ABN AMRO Bank N.V
or its Affiliates on or about February 29, 2000 and (ii) additional Permitted
Foreign Receivables Purchase Facilities to be entered into by the above parties
with respect to Permitted Foreign Receivables generated by Levi Strauss
Nederland B.V., Dockers Europe B.V. and Levi Strauss Japan K.K.; provided that
--------
the aggregate amount of such Guaranty Obligations (including those related to
defaulted and diluted Permitted Foreign Receivables but excluding those related
to servicing Permitted Foreign Receivables) shall not exceed $15,000,000.
Without limiting the generality of the provisions of Section
10.1 of the Credit Agreement, the waiver set forth above shall be limited
precisely as written and relates solely to the noncompliance by Company with the
provisions of Section 7.1(o) of the Credit Agreement in the manner and to the
extent described above, and nothing in this waiver shall be deemed to:
<PAGE>
(a) constitute a waiver of compliance by Company with
respect to Section 7.1(o) of the Credit Agreement in any other instance or any
other term, provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein; or
(b) prejudice any right or remedy that Administrative Agent
or any Bank may now have or may have in the future under or in connection with
the Credit Agreement or any other instrument or agreement referred to therein.
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
Section 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Banks to enter into this Waiver, Company hereby
represents and warrants that after giving effect to this Waiver:
(a) as of the date hereof, there exists no Event of Default
under the Credit Agreement;
(b) all representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true and correct in all material respects on and as of such earlier date; and
(c) as of the date hereof, Company has performed all
agreements to be performed on its part as set forth in the Credit Agreement.
Section 3. GOVERNING LAW.
THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
Section 4. COUNTERPARTS; EFFECTIVENESS.
This Waiver may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but 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. This Waiver shall become effective upon the execution of a counterpart
hereof by Company and Majority Banks.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Waiver
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
LEVI STRAUSS & CO.
By:
----------------------------------------
Title:
-------------------------------------
BANK OF AMERICA, N.A., as a Bank
By:
----------------------------------------
Title:
-------------------------------------
THE BANK OF NOVA SCOTIA, as a Co-
Documentation Agent and as a Bank
By:
----------------------------------------
Title:
-------------------------------------
CITICORP U.S.A. INCORPORATED,
as a Co-Documentation Agent and as a Bank
By:
----------------------------------------
Title:
-------------------------------------
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Co-Documentation Agent and as a Bank
By:
----------------------------------------
Title:
-------------------------------------
3
<PAGE>
BANK OF AMERICA, N.A., as Administrative
Agent
By:
----------------------------------------
Title:
-------------------------------------
BANK OF AMERICA, N.A., as Collateral Agent
By:
----------------------------------------
Title:
-------------------------------------
ACKNOWLEDGED:
BATTERY STREET ENTERPRISES, INC.
By:
---------------------------------------
Title:
------------------------------------
LEVI STRAUSS FINANCIAL CENTER CORPORATION
By:
---------------------------------------
Title:
------------------------------------
LEVI STRAUSS FUNDING, LLC
By:
---------------------------------------
Title:
------------------------------------
LEVI STRAUSS GLOBAL FULFILLMENT SERVICES, INC.
By:
---------------------------------------
Title:
------------------------------------
LEVI STRAUSS GLOBAL OPERATIONS, INC.
By:
---------------------------------------
Title:
------------------------------------
4
<PAGE>
LEVI STRAUSS INTERNATIONAL
By:
---------------------------------------
Title:
------------------------------------
LEVI STRAUSS LATIN AMERICA, INC.
By:
---------------------------------------
Title:
------------------------------------
LEVI'S ONLY STORES, INC.
By:
---------------------------------------
Title:
------------------------------------
NF INDUSTRIES, INC.
By:
---------------------------------------
Title:
------------------------------------
5
<PAGE>
EXHIBIT 10.13
EXECUTION COPY
1997 SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
LEVI STRAUSS & CO.
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Senior Managing Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Managing Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Co-Agents
THE FINANCIAL INSTITUTIONS PARTY HERETO
as Banks
and
BANK OF AMERICA, N.A.,
as Agent for Banks
BANK OF AMERICA, N.A.,
as Collateral Agent for Banks
dated as of January 31, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS
1.1 Defined Terms...................................................... 1
1.2 Other Interpretive Provisions...................................... 25
1.3 Accounting Principles.............................................. 26
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments; the Credit....................... 27
2.2 Notes; Loan Accounts............................................... 27
2.3 Procedure for Committed Borrowing.................................. 27
2.4 Conversion and Continuation Elections.............................. 27
2.5 Utilization of Aggregate Commitment in Offshore Currencies......... 29
2.6 Bid Borrowings..................................................... 29
2.7 Procedure for Bid Borrowing........................................ 29
2.8 Voluntary Prepayments.............................................. 29
2.9 Mandatory Prepayments and Reductions of Aggregate Commitment....... 29
2.10 Repayment; Scheduled Reductions of Aggregate Commitment............ 31
2.11 Interest........................................................... 32
2.12 Fees............................................................... 32
2.13 Computation of Fees and Interest................................... 33
2.14 Payments by the Company............................................ 34
2.15 Payments by the Banks to the Agent................................. 34
2.16 Sharing of Payments, etc........................................... 35
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes.............................................................. 36
3.2 Illegality......................................................... 37
3.3 Increased Costs and Reduction of Return............................ 38
3.4 Funding Losses..................................................... 38
3.5 Inability to Determine Rates....................................... 39
3.6 Reserves on Offshore Rate Loans.................................... 39
3.7 Certificates of Banks.............................................. 39
3.8 Substitution of Banks.............................................. 39
3.9 Survival........................................................... 40
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Condition to Closing............................................... 40
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Good Standing, Business, Ownership of
Subsidiaries and Capitalization.................................... 44
5.2 Authorization of Borrowing, etc.................................... 44
5.3 Financial Condition................................................ 45
5.4 Title to Properties; Liens......................................... 46
5.5 Litigation; Adverse Facts.......................................... 46
5.6 Payment of Taxes................................................... 46
5.7 Materially Adverse Agreements; Performance......................... 46
5.8 Governmental Regulation............................................ 47
5.9 ERISA Compliance................................................... 47
5.10 Environmental Matters.............................................. 47
5.11 Compliance With Laws............................................... 48
5.12 Regulation U....................................................... 48
5.13 Disclosure......................................................... 48
5.14 Matters Relating to Collateral..................................... 48
5.15 Intangible Assets.................................................. 49
5.16 Insurance.......................................................... 49
5.17 Year 2000.......................................................... 49
5.18 Solvency........................................................... 50
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements and Other Reports............................. 50
6.2 Corporate Existence, etc........................................... 53
6.3 Compliance With Laws, etc.......................................... 54
6.4 Compliance with Agreements......................................... 54
6.5 Payment of Taxes and Claims........................................ 54
6.6 Maintenance of Properties; Insurance............................... 54
6.7 Inspection......................................................... 55
6.8 Use of Proceeds.................................................... 55
6.9 Execution of Guaranty and Collateral Documents by Additional
Subsidiaries....................................................... 55
6.10 Compliance with ERISA.............................................. 56
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
6.11 Post Closing Actions............................................... 57
6.12 Transfer of Receivables............................................ 59
ARTICLE VII
NEGATIVE COVENANTS
7.1 Indebtedness; Derivative/FX Contracts.............................. 59
7.2 Limitation on Liens and Negative Pledges........................... 61
7.3 Dispositions....................................................... 63
7.4 Fundamental Changes................................................ 64
7.5 Use of Proceeds.................................................... 65
7.6 Leverage Ratio..................................................... 66
7.7 Interest Coverage Ratio............................................ 66
7.8 Minimum Consolidated EBITDA........................................ 67
7.9 Change in Business................................................. 67
7.10 ERISA.............................................................. 67
7.11 Investments........................................................ 68
7.12 Restricted Payments................................................ 69
7.13 Operating Lease Obligations........................................ 69
7.14 Transactions with Affiliates....................................... 69
7.15 Amendments of Documents Relating to Indebtedness and Receivables... 69
7.16 Consolidated Capital Expenditures.................................. 70
7.17 Materially Adverse Agreements...................................... 70
7.18 Limitations on Upstreaming......................................... 70
7.19 Change in Auditors................................................. 70
7.20 Restricted Subsidiaries............................................ 71
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default................................................... 71
8.2 Remedies........................................................... 73
8.3 Rights Not Exclusive............................................... 74
ARTICLE IX
AGENT; COLLATERAL AGENT
9.1 Appointment and Authorization...................................... 74
9.2 Delegation of Duties............................................... 75
9.3 Liability of Agent or Collateral Agent............................. 75
9.4 Reliance by Agent and Collateral Agent............................. 75
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
9.5 Notice of Default.................................................. 76
9.6 Credit Decision; Disclosure of Information by Agent and Collateral
Agent.............................................................. 76
9.7 Indemnification of Agent and Collateral Agent...................... 77
9.8 Agent in Individual Capacity....................................... 77
9.9 Successor Agent.................................................... 78
9.10 Successor Collateral Agent......................................... 78
9.11 Withholding Tax.................................................... 79
9.12 Co-Agents; Managing Agents......................................... 80
9.13 Collateral Documents, Guaranties and Intercreditor Agreement....... 80
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers............................................. 81
10.2 Notices............................................................ 81
10.3 No Waiver; Cumulative Remedies..................................... 82
10.4 Costs and Expenses................................................. 82
10.5 Company's Indemnification.......................................... 83
10.6 Payments Set Aside................................................. 83
10.7 Successors and Assigns............................................. 84
10.8 Assignments, Participations, etc................................... 84
10.9 Designated Bidders................................................. 85
10.10 Confidentiality.................................................... 85
10.11 Set-off............................................................ 86
10.12 Notification of Addresses, Lending Offices, etc.................... 87
10.13 Counterparts....................................................... 87
10.14 Severability....................................................... 87
10.15 No Third Parties Benefited......................................... 87
10.16 Change in Accounting Principles.................................... 87
10.17 Governing Law and Jurisdiction..................................... 87
10.18 Interpretation..................................................... 88
10.19 Representation of Banks............................................ 88
10.20 Waiver of Jury Trial............................................... 88
10.21 Amendments and Waivers Regarding Collateral........................ 89
ARTICLE XI
GENERAL RELEASE
</TABLE>
iv
<PAGE>
EXHIBIT LIST
Exhibit I............................[FORM OF] NOTICE OF CONVERSION/CONTINUATION
Exhibit II........................................................[FORM OF] NOTE
Exhibit III.....................................[FORM OF] COMPLIANCE CERTIFICATE
Exhibit IV.........................[FORM OF] CLOSING DATE CERTIFICATE OF COMPANY
Exhibit V................................[FORM OF] PLEDGE AND SECURITY AGREEMENT
Exhibit VI....................................................[FORM OF] GUARANTY
Exhibit VII..................................[FORM OF] ASSIGNMENT AND ACCEPTANCE
Exhibit VIII......................................................PRIVITY LETTER
i
<PAGE>
An extra section break has been inserted above this paragraph. Do not
delete this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
1
<PAGE>
1997 SECOND AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------------
This 1997 SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as
of January 31, 2000 among Levi Strauss & Co., a Delaware corporation
("Company"); the several financial institutions from time to time party to this
-------
Agreement (collectively "Banks" and individually a "Bank"); the several
----- ----
financial institutions party to this Agreement as Senior Managing Agents; the
several financial institutions party to this Agreement as Managing Agents; the
several financial institutions party to this Agreement as Co-Agents; Bank of
America, N.A. as Agent for Banks; and Bank of America, N.A. as Collateral Agent
for Banks.
WHEREAS, Banks and Company are parties to the 1997 Amended and Restated
Credit Agreement dated as of February 7, 1997, as amended by First Amendment to
1997 Amended and Restated Credit Agreement dated as of February 2, 1999, Second
Amendment to 1997 Amended and Restated Credit Agreement dated as of April 6,
1999 and Third Amendment to 1997 Amended and Restated Credit Agreement dated as
of August 31, 1999 (the "Existing Credit Agreement"); and
-------------------------
WHEREAS, pursuant to a Waiver dated as of November 12, 1999, Banks agreed
to waive certain provisions of the Existing Credit Agreement until February 3,
2000; and
WHEREAS, Company and Banks have agreed to amend and restate the Existing
Credit Agreement; and
WHEREAS, Company has agreed to secure its Obligations hereunder and under
the other Loan Documents by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of its personal property and certain of its real
property (other than Principal Property), including a pledge of 100% of the
Capital Stock of certain of its Domestic Subsidiaries and 65% of the Capital
Stock of certain of its Foreign Subsidiaries (other than Restricted
Subsidiaries); and
WHEREAS, certain of the Domestic Subsidiaries of Company have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Collateral Agent, on behalf of Banks, a
Lien on substantially all of their respective personal property and certain of
their respective real property (other than Principal Property), including a
pledge of 100% of the Capital Stock of certain of their respective Domestic
Subsidiaries and 65% of the Capital Stock of certain of their respective Foreign
Subsidiaries (other than Restricted Subsidiaries);
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. In addition to the terms defined elsewhere in this
-------------
Agreement, the following terms have the following meanings:
"Affected Bank" has the meaning specified in Section 3.8.
-------------
1
<PAGE>
"Affiliate" means, as to any Person, any other Person which,
---------
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly,
(a) power to vote 10% or more of the Securities (on a fully diluted basis)
of the other Person having ordinary voting power for the election of
directors or managing general partners, or (b) to direct or cause the
direction of the management and policies of the other Person, whether
through the ownership of voting Securities, membership interests, by
contract, or otherwise.
"Affiliated Fund" means, with respect to any Bank, a fund that
---------------
invests in commercial loans and is managed by the same investment advisor
as such Bank, an Affiliate of such Bank or by an Affiliate of the same
investment advisor as such Bank.
"Agent" means Bank of America, in its capacity as agent for Banks
-----
hereunder, and any successor agent pursuant to Section 9.9.
"Agent-Related Persons" means Agent and any successor agent arising
---------------------
under Section 9.9, together with their respective Affiliates (including, in
the case of Bank of America, the Arranger), and the officers, directors,
employees, agents, counsel, and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set forth on
----------------------
the signature page hereto in relation to Agent or such other address as
Agent may from time to time specify in accordance with Section 10.2.
"Aggregate Bridge Commitment" means the combined Commitments (as
---------------------------
defined therein) under the Bridge Credit Agreement.
"Aggregate Commitment" means the combined Commitments of Banks. The
--------------------
Aggregate Commitment as of the Closing Date is $584,728,765.58.
"Agreement" means this 1997 Second Amended and Restated Credit
---------
Agreement, as amended, supplemented, or modified from time to time.
"Amended and Restated 1997 364 Day Credit Agreement" means the
--------------------------------------------------
Amended and Restated 1997 364 Day Credit Agreement dated as of January 31,
2000, between Company, Bank of America, as agent, Bank of America, as
collateral agent, and the other lenders parties thereto.
"Amended and Restated 1999 180 Day Credit Agreement" means the
--------------------------------------------------
Amended and Restated 1999 180 Day Credit Agreement dated as of January 31,
2000, between Company, Bank of America, as administrative agent, Bank of
America, as collateral agent, and the other lenders parties thereto.
"Applicable Margin" has the meaning specified in Section 2.11.
-----------------
"Arranger" means BancAmerica Securities, Inc., a Delaware
--------
corporation.
2
<PAGE>
"Asset Disposition" means the sale by Company or any of its
-----------------
Subsidiaries to any Person other than Company or any of its Subsidiaries of
(a) any of the stock of any of Company's Subsidiaries, (b) substantially
all of the assets of any division or line of business of Company or any of
its Subsidiaries, or (c) any other assets (whether tangible or intangible)
of Company or any of its Subsidiaries other than Dispositions permitted by
Sections 7.3(a), 7.3(c), 7.3(e), 7.3(f), 7.3(g), 7.3(h), and 7.3(m).
"Assignee" has the meaning specified in Section 10.8(a).
--------
"Assignment and Acceptance" means an Assignment and Acceptance
-------------------------
substantially in the form of Exhibit VII.
-----------
"Bank" and "Banks" have the meanings specified in the introductory
----------------
clause hereto; provided that for purposes of any determination made with
--------
respect to Citicorp U.S.A., Inc. under Section 3.2, 3.3, 3.4, 3.5 or 3.6,
"Bank" shall be deemed to include Citibank, N.A.
"Bank of America" means Bank of America, N.A.
---------------
"Bankruptcy Code" means Title 11 of the United States Code, entitled
---------------
"Bankruptcy" (11 U.S.C. (S)101, et seq.).
------
"Base Rate" means, for any day, a fluctuating rate per annum equal
---------
to the higher of (a) the Federal Funds Rate plus 1/2 of 1%, and (b) the
----
rate of interest in effect for such day as publicly announced from time to
time by Bank of America as its "prime rate." Such rate is a rate set by
Bank of America based upon various factors including Bank of America's
costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change.
"Base Rate Committed Loans" [Intentionally Omitted]
-------------------------
"Base Rate Loan" means a Loan that bears interest based on the Base
--------------
Rate.
"Borrower Party" means Company and any of its Material Domestic
--------------
Subsidiaries from time to time party to a Loan Document, and "Borrower
--------
Parties" means all such Persons, collectively.
-------
"Borrowing" [Intentionally Omitted]
---------
"Borrowing Date" [Intentionally Omitted]
--------------
"Bridge Credit Agreement" means the Bridge Credit Agreement dated as
-----------------------
of January 31, 2000, between Company, Bank of America, as administrative
agent, Bank of America, as collateral agent, and the other lenders parties
thereto.
3
<PAGE>
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York or San Francisco,
California are authorized or required by law to close and with respect to
calculations, disbursements, and payments relating to Offshore Rate Loans,
a day on which dealings are carried on in the offshore Dollar interbank
market in London.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Lease", as applied to any Person, means any lease of any
-------------
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Capital Markets Transaction" means (a) an issuance or sale of
---------------------------
Securities by Company, through a public offering or private placement, or
(b) a capital contribution to Company; provided, however, that in the case
-------- -------
of debt Securities, any such Securities (i) shall be unsecured, and (ii)
shall not have a stated maturity date or required principal payments
earlier than five years from the date of issuance thereof.
"Capital Stock" means (a) in the case of a corporation, corporate
-------------
stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of a
limited liability company, membership interests, and (e) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distribution of assets of, the issuing
Person.
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 4.1 are satisfied or waived by Majority Banks, or in the
case of Section 4.1(d), waived by the Person entitled to obtain such
payment.
"Co-Agent" means each of the financial institutions party to this
--------
Agreement which is identified as a Co-Agent in its signature block.
"Co-Documentation Agent" means each of The Bank of Nova Scotia,
----------------------
Citicorp USA, Inc. and Morgan Guaranty Trust Company of New York.
"Code" means the Internal Revenue Code of 1986 as amended and any
----
regulations promulgated thereunder.
"Collateral" means, collectively, all of the Property (including
----------
Capital Stock) in which Liens are purported to be granted pursuant to the
Collateral Documents as security for the Obligations.
"Collateral Agent" means Bank of America, in its capacity as
----------------
collateral agent for Banks hereunder, and any successor collateral agent.
4
<PAGE>
"Collateral Agent-Related Person" means Collateral Agent and any
-------------------------------
successor collateral agent arising under Section 9.10, together with their
respective Affiliates (including, in the case of Bank of America, the
Arranger), and the officers, directors, employees, agents, counsel, and
attorneys-in-fact of such Persons and Affiliates.
"Collateral Documents" means the Pledge and Security Agreement, the
--------------------
Foreign Pledge Agreements, the Mortgages, and all other instruments or
documents delivered by any Borrower Party pursuant to this Agreement or any
of the other Loan Documents in order to grant to Collateral Agent, on
behalf of Banks, a Lien on any Property of that Borrower Party as security
for the Obligations.
"Commitment" means, for each Bank, the amount set forth opposite
----------
such Bank's name on Schedule 2.1, as such amount may be reduced or adjusted
------------
from time to time in accordance with the terms of this Agreement.
"Commitment Percentage" means, as to any Bank, the percentage set
---------------------
forth opposite such Bank's name on Schedule 2.1, as adjusted as
------------
contemplated herein.
"Committed Borrowing" [Intentionally Omitted]
-------------------
"Committed Loan" [Intentionally Omitted]
--------------
"Company" has the meaning specified in the introductory clause
-------
hereto.
"Compliance Certificate" means a certificate substantially in the
----------------------
form of Exhibit III properly completed and signed by a Responsible Officer
-----------
of Company.
"Consolidated Capital Expenditures" means, for any period, the sum
---------------------------------
of the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries during that
period that, in conformity with GAAP, are included in "additions to
property, plant or equipment" or comparable items reflected in the
consolidated statement of cash flows of Company and its Subsidiaries;
provided, however, that Consolidated Capital Expenditures shall not include
-------- -------
software costs.
"Consolidated EBITDA" means, for any period, for Company and its
-------------------
Subsidiaries on a consolidated basis, an amount equal to (a) the sum,
without duplication, of (i) Consolidated Net Income, (ii) Consolidated
Interest Charges, (iii) the amount of taxes, based on or measured by
income, used or included in the determination of such Consolidated Net
Income, (iv) the amount of depreciation and amortization expense deducted
in determining such Consolidated Net Income, and (v) accruals for Company's
Global Success Sharing Plan, Long Term Performance Plan, Leadership Shares
and Long Term Incentive Payment Plan minus (b) Company's cash payments for
-----
Company's Global Success Sharing Plan, Long Term Performance Plan,
Leadership Shares and Long Term Incentive Payment Plan.
5
<PAGE>
"Consolidated Excess Cash Flow" means, for any period, an amount (if
------------------------------
positive) equal to (a) the sum, without duplication, of the amounts for
such period of (i) Consolidated EBITDA plus (or minus) (ii) loss (gain) on
---- -----
sales of assets plus (iii) to the extent not otherwise included, all
----
noncash expenses plus (iv) the first $50,000,000 of proceeds from the
----
Pending IceHouse Disposition plus (or minus) (v) the Consolidated Working
---- -----
Capital Adjustment minus (b) the sum, without duplication, of the amounts
-----
for such period for (i) scheduled repayments of Consolidated Funded
Indebtedness (excluding repayments of revolving loans except to the extent
the corresponding commitments are permanently reduced in connection with
such repayments), (ii) Consolidated Capital Expenditures (net of any
proceeds of related financings with respect to such expenditures), (iii)
Consolidated Interest Charges paid in cash, (iv) taxes based on income of
Company and its Subsidiaries paid in cash, (v) the excess of bank fees paid
over bank fees amortized, and (vi) cash payments for long-term employee
benefits and other related liabilities (other than changes in accruals
under the Global Success Sharing Plan, Long Term Performance Plan,
Leadership Shares and Long Term Incentive Payment Plan).
"Consolidated Funded Indebtedness" means, as of any date of
--------------------------------
determination, for Company and its Subsidiaries on a consolidated basis,
the sum, without duplication, of (a) the outstanding principal amount of
all obligations and liabilities, whether current or long-term, for borrowed
money (including Obligations in respect of Loans hereunder), (b) that
portion of obligations with respect to Capital Leases that are capitalized
in the consolidated balance sheet of Company and its Subsidiaries, in each
case to the extent treated as debt in accordance with GAAP, and (c) the
outstanding amount of all obligations under any Receivables Purchase
Facility.
"Consolidated Interest Charges" means, for any period, for Company
-----------------------------
and its Subsidiaries on a consolidated basis, all interest (net of all
interest income), premium payments, fees, charges and related expenses
payable by Company and its Subsidiaries in connection with borrowed money
(including capitalized interest) or in connection with the deferred
purchase price of assets, in each case to the extent treated as interest in
accordance with GAAP.
"Consolidated Net Income" means, for any period, for Company and its
-----------------------
Subsidiaries on a consolidated basis, the net income (or loss) of Company
and its Subsidiaries determined in accordance with GAAP for that period.
"Consolidated Net Tangible Assets" means the aggregate amount of
--------------------------------
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any indebtedness
for money borrowed having a maturity of less than 12 months from the date
of the most recent consolidated balance sheet of Company but which by its
terms is renewable or extendable beyond 12 months from such date at the
option of the borrower), and (b) all goodwill, trade names, patents,
unamortized debt discount and expense and any other like intangibles, all
as set forth on the most recent consolidated balance sheet of Company and
computed in accordance with generally accepted accounting principles.
6
<PAGE>
"Consolidated Working Capital Adjustment" means, for any period, for
---------------------------------------
Company and its Subsidiaries on a consolidated basis, an amount equal to
(a) the sum of the decrease (increase) during that period in current
assets, excluding changes in cash and cash equivalents, and changes in
current tax assets plus (b) the sum of the increase (decrease) during that
----
period in current liabilities, excluding changes in short-term Indebtedness
or current maturities of long-term Indebtedness, changes in short-term tax
liabilities and changes in short-term interest liabilities.
"Contractual Obligation" means, as to any Person, any provision of
----------------------
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which Company (a)
----------------------------
converts Base Rate Loans to Offshore Rate Loans, or (b) converts Offshore
Rate Loans to Base Rate Loans, or (c) continues Offshore Rate Loans having
Interest Periods expiring on such date as Offshore Rate Loans but with a
new Interest Period.
"Debtor Relief Laws" means the Bankruptcy Code, and all other
------------------
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means an interest rate equal to the Base Rate plus
------------ ----
the Applicable Margin, if any, applicable to Base Rate Loans plus 2% per
----
annum; provided, however, that with respect to an Offshore Rate Loan, the
-------- -------
Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Margin) otherwise applicable to such Loan plus 2%
----
per annum, in each case to the fullest extent permitted by applicable laws;
provided further that with respect to an Offshore Rate Loan, upon the
-------- -------
expiration of the Interest Period in effect at the time any such increase
in interest rate is effective, such Offshore Rate Loan shall thereupon
become a Base Rate Loan and shall thereafter bear interest at the Default
Rate applicable to Base Rate Loans.
"Derivative/FX Contract" means (a) any and all interest rate swaps,
----------------------
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions,
cap transactions, floor transactions, collar transactions, currency swaps,
cross-currency rate swaps, currency options, spot contracts or any other
similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any such
transaction is governed by or subject
7
<PAGE>
to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions
of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., the International
Foreign Exchange Master Agreement, or any other master agreement, including
any such obligations or liabilities under any such agreement.
"Derivative/FX Lender" means a Bank party to the Bridge Credit
--------------------
Agreement or any of its Affiliates.
"Designated Bidders" [Intentionally Omitted]
------------------
"Disposition" means the sale, transfer, license or other disposition
-----------
(including any sale and leaseback transaction) of any Property by any
Person, including any sale, assignment, transfer or other disposal with or
without recourse of any notes or accounts receivable or any rights and
claims associated therewith.
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
"Domestic Subsidiary" means any Subsidiary of Company that is
-------------------
incorporated or organized in the United States, any state thereof or in the
District of Columbia.
"Eligible Assignee" means (a) a financial institution organized
-----------------
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of any such country, and having a combined capital and surplus
of at least $100,000,000, provided that such bank is acting through a
--------
branch or agency located in the United States; (c) a Person that is
primarily engaged in the business of commercial banking and that is (i) a
Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (iii) a Person of which a Bank is a Subsidiary; (d) another
Bank, any Affiliate of a Bank and any Affiliated Fund of any Bank; and (e)
any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933, as amended) which extends
credit or buys loans as one of its businesses, including but not limited
to, insurance companies, mutual funds and lease financing companies. No
Borrower Party or any Affiliate of a Borrower Party shall be an Eligible
Assignee.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
------------------
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters, but excluding routine zoning ordinances.
8
<PAGE>
"Equipment Financing Transaction" means any financing arrangement
-------------------------------
with any Person of equipment pursuant to a lease intended as security which
will be treated as indebtedness under GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974
-----
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) under common control with Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
-----------
Plan; (b) a withdrawal by Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization, in each case which would
reasonably be expected to result in a liability to Company or any of its
Subsidiaries of more than $10,000,000; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Company
or any ERISA Affiliate.
"Event of Default" means any of the events or circumstances
----------------
specified in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
------------
regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning specified in the
-------------------------
recitals hereto.
"Existing Receivables Purchase Agreement" means the Receivables
---------------------------------------
Purchase Agreement dated as of April 28, 1999 among LSFCC, Levi Strauss
Funding Corp., Ciesco L.P., Receivables Capital Corporation, the financial
institutions from time to time party thereto and Citicorp North America,
Inc., as agent.
"Exposure Factor" means 125%.
---------------
"FDIC" means the Federal Deposit Insurance Corporation and any
----
Governmental Authority succeeding to any of its principal functions.
9
<PAGE>
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards to the nearest 1/100/th/ of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding
such day; provided that (a) if such day is not a Business Day, the Federal
--------
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged
to Bank of America on such day on such transactions as determined by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System and any Governmental Authority succeeding to any of its
principal functions.
"FinServ" means Levi Strauss & Co. Europe Financial Services,
-------
S.C.A., a Belgian corporation.
"Flood Hazard Property" means real property located in an area
---------------------
designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.
"Foreign Pledge Agreement" means each pledge agreement or similar
------------------------
instrument governed by the laws of a country other than the United States,
executed and delivered pursuant to Section 6.11 or from time to time
thereafter in accordance with Section 6.9 by Company or any Material
Domestic Subsidiary that owns Capital Stock of one or more Foreign
Subsidiaries organized in such country, in form and substance satisfactory
to Agent, as such Foreign Pledge Agreement may thereafter be amended,
supplemented, or modified from time to time.
"Foreign Subsidiary" means any Subsidiary of Company, other than a
------------------
Domestic Subsidiary.
"Four Facility Commitment Reduction Fraction" means, as of any date
-------------------------------------------
of determination, a fraction, the numerator of which is the Aggregate
Commitment and the denominator of which is the sum of (a) the Aggregate
Commitment plus (b) the Aggregate Bridge Commitment plus (c) the Aggregate
---- ----
180 Day Commitment (as defined therein) under the Amended and Restated 1999
180 Day Credit Agreement plus (d) the Aggregate Commitment (as defined
----
therein) under the Amended and Restated 1997 364 Day Credit Agreement.
"Funded Current Liability Percentage" means "funded current
-----------------------------------
liability percentage" within the meaning of Section 412(1)(8)(B) of the
Code.
"Further Taxes" means any and all present or future taxes, levies,
--------------
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section 3.1.
10
<PAGE>
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other statements by
such other entity as may be in general use by significant segments of the
U.S. accounting profession, which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or government, any state
----------------------
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantor" means any Material Domestic Subsidiary that executes and
---------
delivers a counterpart of the Guaranty on the Subsequent Closing Date or
from time to time thereafter pursuant to Section 6.9.
"Guaranty" means the Guaranty executed and delivered by existing
--------
Material Domestic Subsidiaries on the Subsequent Closing Date and to be
executed and delivered by additional Material Domestic Subsidiaries from
time to time thereafter in accordance with Section 6.9, substantially in
the form of Exhibit VI, as such Guaranty may thereafter be amended,
----------
supplemented, or modified from time to time.
"Guaranty Obligation" means, as to any Person, any (a) guaranty by
-------------------
such Person of Indebtedness of, or other obligation payable or performable
by, any other Person, or (b) assurance, agreement, letter of
responsibility, letter of awareness, undertaking or arrangement given by
such Person to an obligee of any other Person with respect to the payment
or performance of an obligation by, or the financial condition of, such
other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any agreement to
support the solvency or level of any balance sheet item of such other
Person or any "keep-well" or other arrangement of whatever nature given for
the purpose of assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided, however, that the
-------- -------
term Guaranty Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guaranty Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof,
covered by such Guaranty Obligation or, if less, the amount to which such
Guaranty Obligation is specifically limited, or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the person in good faith.
"Indebtedness" means, as to any Person at a particular time:
------------
11
<PAGE>
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) any direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), banker's
acceptances, bank guaranties, surety bonds and similar instruments;
(c) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (other than obligations under a long term supply
contract), which purchase price is (i) due more than 90 days from the date
of incurrence of the obligation in respect thereof, or (ii) evidenced by a
note or similar written instrument, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse;
(d) without duplication, lease payment obligations under Capital
Leases or Synthetic Lease Obligations; and
(e) without duplication, all Guaranty Obligations of such Person
in respect of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless such Indebtedness
is expressly made non-recourse to such Person except for customary
exceptions acceptable to Majority Banks.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
-----------------------
"Indemnified Person" has the meaning specified in Section 10.5.
------------------
"Indentures" means that certain Indenture dated as of November 6,
----------
1996 between Company and Citibank, N.A., as trustee, and that certain
Fiscal Agency Agreement dated as of November 22, 1996 between Company and
Citibank, N.A., as fiscal agent.
"Ineligible Securities" means securities which may not be
---------------------
underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as
amended.
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case covered by subsections
(a) and (b) undertaken under U.S. Federal, State or foreign law, including
the Bankruptcy Code.
12
<PAGE>
"Intellectual Property" means all patents, trademarks, tradenames,
---------------------
copyrights, technology, software, know-how and processes used in or
necessary for the conduct of the business of Company and its Subsidiaries
as currently conducted that are material to the condition (financial or
otherwise), business or operations of Company and its Subsidiaries, taken
as a whole.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
-----------------------
of January 31, 2000 between the respective lenders under this Agreement,
the Bridge Credit Agreement, the Amended and Restated 1999 180 Day Credit
Agreement, and the Amended and Restated 1997 364 Day Credit Agreement.
"Interest Coverage Ratio" means, as of any date of determination,
-----------------------
the ratio of (a) Consolidated EBITDA for the period specified to (b)
Consolidated Interest Charges during such period.
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each fiscal quarter;
provided, however, that if any Interest Period for an Offshore Rate Loan
-------- -------
exceeds three months, interest shall also be paid on last day of each
successive three-month period (commencing with the beginning of such
Interest Period) and each such day will be an Interest Payment Date.
"Interest Period" means, with respect to any Offshore Rate Loan, the
---------------
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date of such Loan, as applicable, and ending on the
date one, two, three, or six months thereafter (and if consented to by
Majority Banks in the given instance, nine months), as selected by Company
in its Notice of Conversion/Continuation;
provided that:
--------
(a) if any Interest Period pertaining to an Offshore Rate Loan
would otherwise end on a day which is not a Business Day, that Interest
Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(b) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period;
(c) no Interest Period shall extend beyond the Maturity Date; and
(d) unless Agent otherwise consents, there may not be more than 24
Interest Periods for Offshore Rate Loans in effect at any time under this
Agreement, the Bridge Credit Agreement, the Amended and Restated 1999 180
Day Credit Agreement, and the Amended and Restated 1997 364 Day Credit
Agreement.
13
<PAGE>
"Investment" means, as to any Person, any acquisition or any
----------
investment by such Person, whether by means of the purchase or other
acquisition of stock or other Securities of any other Person or by means of
a loan, creating a debt, capital contribution, guaranty or other debt or
equity participation or interest in any other Person, including any
partnership and joint venture interests in such other Person. For purposes
of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases
in the value of such Investment.
"IP Collateral" means, collectively, the Intellectual Property owned
-------------
by Company or any of its Material Domestic Subsidiaries that constitutes
Collateral under the Pledge and Security Agreement.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Lender Derivative/FX Contract" means any Ordinary Course
-----------------------------
Derivative/FX Contract entered into by Company or FinServ and a
Derivative/FX Lender that is subject to a legally enforceable netting
agreement between Company or FinServ, as the case may be, and such
Derivative/FX Lender with respect to all Ordinary Course Derivative
FX/Contracts between such parties.
"Lender Letters of Credit" means letters of credit issued or
------------------------
outstanding under the Bridge Credit Agreement or the Amended and Restated
1999 180 Day Credit Agreement.
"Lending Office" means, with respect to any Bank, the office or
--------------
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, below its name on
the signature pages hereto, or such other office or offices of such Bank as
it may from time to time specify to Company and Agent.
"Leverage Ratio" means, as of any date of determination, for Company
--------------
and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) (i) as of the end of the first
fiscal quarter of fiscal year 2000, Consolidated EBITDA for such fiscal
quarter times 4; (ii) as of the end of the second fiscal quarter of fiscal
-----
year 2000, Consolidated EBITDA for the first two fiscal quarters of fiscal
year 2000 times 2; (iii) as of the end of the third fiscal quarter of
-----
fiscal year 2000, Consolidated EBITDA for the first three fiscal quarters
of fiscal year 2000 times 1.333; and (iv) as of the end of any fiscal
-----
quarter thereafter, Consolidated EBITDA for the four fiscal quarter period
then ended.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease, any financing lease having substantially the same economic effect as
any of the foregoing, or
14
<PAGE>
the filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the UCC of any jurisdiction or any
comparable law, or the interest of the Person other than Company or any of
its Subsidiaries in connection with any Equipment Financing Transaction)
and any contingent or other agreement to provide any of the foregoing, but
not including the interest of a lessor under an operating lease or the
interest of a purchaser of Permitted Receivables under any Permitted
Receivables Purchase Facility.
"Loan" means a loan by a Bank to Company under Section 2.1, and may
----
be an Offshore Rate Loan or a Base Rate Loan.
"Loan Documents" means this Agreement, any Notes, the fee letters
--------------
referred to in Section 2.12, the Guaranty, the Collateral Documents, and
all other instruments, documents and agreements delivered to Agent or any
Bank in connection herewith.
"LOS/DOS Business" means the ownership and operation by Company or a
----------------
Subsidiary of Company, whether directly or through joint ventures with
third parties in partnership, corporate or other form, of businesses
engaged solely in selling apparel and accessories and related products
including, without limitation, selling through retail stores, outlet
stores, telephone sales, catalog or other mail orders, and electronic
sales. LOS/DOS Business shall not include any business engaging in
manufacturing or in selling and in manufacturing.
"LSFCC" means Levi Strauss Financial Center Corporation, a
-----
California corporation, formerly Levi Strauss Credit Corp., a California
corporation.
"LSFLLC" means Levi Strauss Funding, LLC, a Delaware limited
------
liability company.
"Majority Banks" means, at any time, (a) Banks holding more than 50%
--------------
of the Aggregate Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 50% of the then aggregate unpaid
principal amount of the Loans.
"Managing Agent" means each of the financial institutions party to
--------------
this Agreement which is identified as a Managing Agent in its signature
block.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise), business, assets, operations or
prospects of Company and its Subsidiaries, taken as a whole, or (c)
materially impairs or could reasonably be expected to materially impair the
ability of any Borrower Party to perform the Obligations.
15
<PAGE>
"Material Domestic Subsidiary" means any Domestic Subsidiary that
----------------------------
is a Material Subsidiary.
"Material Foreign Subsidiary" means any Foreign Subsidiary that is a
---------------------------
Material Subsidiary.
"Material Subsidiary" means (a) any Subsidiary of Company, (i) the
-------------------
net book value of which is $5,000,000 or more or (ii) the annual gross
revenue of which is $15,000,000 or more and (b) any other Subsidiary of
Company designated by Company to be a "Material Subsidiary" for purposes of
this Agreement.
"Maturity Date" means January 31, 2002.
-------------
"Mortgage" means a security instrument (whether designated as a deed
--------
of trust or a mortgage or by any similar title) containing standard and
customary terms and provisions executed and delivered by any Borrower
Party, in such form as may be approved by Co-Agents in their sole
discretion after consultation with Company, in each case with such changes
thereto as may be recommended by Agent's local counsel based on local laws
or customary local mortgage or deed of trust practices. "Mortgages" means
---------
all such instruments, collectively.
"Multiemployer Plan" means a "multiemployer plan", within the
------------------
meaning of Section 4001(a)(3) of ERISA, to which Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"Negative Pledge" means a Contractual Obligation that restricts
---------------
Liens on property.
"Net Asset Disposition Proceeds" means cash payments (including cash
------------------------------
received by way of deferred payment pursuant to, or by monetization of, a
note receivable or otherwise, but only as and when so received) received
for an Asset Disposition, net of any bona fide direct costs incurred in
connection with such Asset Disposition including (a) income taxes
reasonably estimated to be actually payable within one year of the date of
such Asset Disposition as a result of any gain recognized in connection
with such Asset Disposition, (b) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness
(other than the Loans and Indebtedness under the Bridge Credit Agreement,
the Amended and Restated 1999 180 Day Credit Agreement, and the Amended and
Restated 1997 364 Day Credit Agreement) that is secured by a Lien on the
stock or assets in question that is required to be repaid under the terms
thereof as a result of such Asset Disposition, and (c) brokers' fees and
legal fees incurred in connection with such Asset Disposition; provided,
--------
however, that the first $50,000,000 of proceeds from the Pending IceHouse
-------
Disposition shall not constitute Net Asset Disposition Proceeds.
"Net Equipment Financing Proceeds" means any cash proceeds received
--------------------------------
in connection with an Equipment Financing Transaction, net of (a) all
reasonable costs payable to Persons not Affiliates of Company in connection
with such Equipment
16
<PAGE>
Financing Transaction and (b) payment of the outstanding principal amount
of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans and Indebtedness under the Bridge Credit Agreement, the
Amended and Restated 1999 180 Day Credit Agreement, and the Amended and
Restated 1997 364 Day Credit Agreement) that is secured by a Lien on the
equipment in question that is required to be repaid under the terms thereof
as a result of such Equipment Financing Transaction.
"Net Insurance Proceeds" means any cash payments or proceeds
----------------------
received by Company or any of its Subsidiaries with respect to Collateral
under (a) any business interruption policy in respect of a covered loss
thereunder, or (b) under any property insurance policy in respect of a
covered loss thereunder, in each case, net of any actual and reasonable
documented costs incurred by Company or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of Company or
such Subsidiary in respect thereof.
"Net Real Estate Financing Proceeds" means any cash proceeds
----------------------------------
received in connection with a Real Estate Financing Transaction, net of all
reasonable costs payable to Persons not Affiliates of Company in connection
with such Real Estate Financing Transaction.
"Net Securities Proceeds" means (a) the cash proceeds (net of
-----------------------
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and
expenses) from the issuance of Securities of Company or any of its
Subsidiaries, or (b) any cash capital contribution to Company.
"Notes" has the meaning specified in Section 2.2.
-----
"Notice of Conversion/Continuation" means a notice, signed by
---------------------------------
Company, and given to Agent pursuant to Section 2.4, in substantially the
form of Exhibit I.
---------
"Obligations" means all advances to, and debts, liabilities,
-----------
obligations, covenants and duties of, any Borrower Party arising under any
Loan Document, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Laws by or against
any Borrower Party or any Subsidiary or Affiliate of any Borrower Party.
"Offshore Currency" [Intentionally Omitted]
-----------------
"Offshore Currency Loan" [Intentionally Omitted]
----------------------
"Offshore Rate" means for any Interest Period with respect to any
-------------
Offshore Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:
Offshore Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
17
<PAGE>
Where,
"Offshore Base Rate" means, for such Interest Period:
------------------
(a) the rate per annum equal to the rate determined by Agent to be
the offered rate that appears on the page of the Telerate Screen that
displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period, determined as of
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or
(b) in the event that the rate referenced in the preceding
subsection (a) does not appear on such page or service or such page or
service shall cease to be available, the rate per annum equal to the rate
determined by Agent to be the offered rate on such other page or other
service that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or
(c) in the event that the rates referenced in the preceding
subsections (a) and (b) are not available, the rate per annum determined by
Agent as the rate of interest at which Dollar deposits (for delivery on the
first day of such Interest Period) in same day funds in the approximate
amount of the applicable Offshore Rate Loan and with a term equivalent to
such Interest Period would be offered by Bank of America's London Branch to
major banks in the offshore Dollar market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
-----------------------------
Interest Period, the reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day, whether or not
applicable to any Bank, under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"). The Offshore Rate
for each outstanding Offshore Rate Loan shall be adjusted automatically as
of the effective date of any change in the Eurodollar Reserve Percentage.
The determination of the Eurodollar Reserve Percentage and the Offshore
Base Rate by Agent shall be conclusive in the absence of manifest error.
"Offshore Rate Loan" means a Loan that bears interest based on the Offshore
------------------
Rate.
18
<PAGE>
"Operating Lease" means, as applied to any Person, any lease
---------------
(including leases that may be terminated by the lessee at any time) of any
Property that is not a Capital Lease, other than any such lease under which
that Person is the lessor.
"Ordinary Course Derivative/FX Contracts" means any and all interest
---------------------------------------
rate swaps, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity
contracts, interest rate options, forward foreign exchange transactions,
cap transactions, floor transactions, collar transactions, currency swaps,
cross-currency rate swaps, currency options, spot contracts or any other
similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any such
transaction is governed by or subject to any master agreement, in each case
that are (or were) entered into by any Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or
reasonably anticipated by such Person, or changes in the value of
securities issued by such Person and not for purposes of speculation or
taking a "market view" and that do not contain any provision ("walk-away"
provision) exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party.
"Organization Documents" means, (a) with respect to any corporation,
----------------------
the certificate or articles of incorporation and the bylaws; (b) with
respect to any limited liability company, the articles of formation and
operating agreement; and (c) with respect to any partnership, joint
venture, trust or other form of business entity, the partnership or joint
venture agreement and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation with the secretary
of state or other department in the state of its formation, in each case as
amended from time to time.
"Originator" has the meaning specified in Section 10.8(d).
----------
"Other Taxes" means any present or future stamp, court or
-----------
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"Overnight Rate" [Intentionally Omitted]
--------------
"Participant" has the meaning specified in Section 10.8(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Pending IceHouse Disposition" means the proposed sale of the
----------------------------
property located at 151 Union Street, San Francisco, California.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which Company or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to
make contributions, or in the
19
<PAGE>
case of a multiple employer plan (as described in Section 4064(a) of ERISA)
has made contributions at any time during the immediately preceding five
plan years.
"Permitted Receivables" means all obligations of any obligor
---------------------
(whether now existing or hereafter arising) under a contract for sale of
goods or services by Company or any of its Subsidiaries, which includes any
obligation of such obligor (whether now existing or hereafter arising) to
pay interest, finance charges or amounts with respect thereto, and, with
respect to any of the foregoing receivables or obligations, (a) all of the
interest of Company or any of its Subsidiaries in the goods (including
returned goods) the sale of which gave rise to such receivable or
obligation after the passage of title thereto to any obligor, (b) all other
Liens and property subject thereto from time to time purporting to secure
payment of such receivables or obligations, (c) all guaranties, insurance,
letters of credit and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any such
receivables or obligations, (d) all books and records relating to the
foregoing, lockbox accounts containing primarily proceeds of the foregoing,
and other similar related assets customarily transferred (or in which
security interests are customarily granted) to purchasers in receivables
purchase transactions that are treated as sales under GAAP, (e) all rights
of Foreign Subsidiaries to refunds on account of value added tax in respect
of goods sold to an obligor, any receivable from whom is or becomes a
defaulted receivable, and (f) proceeds of or judgments relating to any of
the foregoing, any debts represented thereby and all rights of action
against any Person in connection therewith.
"Permitted Receivables Purchase Facility" means any agreement of
---------------------------------------
Company or any of its Subsidiaries providing for sales, transfers or
conveyances of, or granting of security interests in, Permitted Receivables
that do not provide, directly or indirectly, for recourse against the
seller of such Permitted Receivables (or against any of such seller's
Affiliates) by way of a guaranty or any other support arrangement, with
respect to the amount of such Permitted Receivables (based on the financial
condition or circumstances of the obligor thereunder), other than such
limited recourse as is reasonable given market standards for receivables
purchase transactions that are treated as sales under GAAP, taking into
account such factors as historical bad debt loss experience and obligor
concentration levels.
"Permitted Transferees" has the meaning specified in the
---------------------
Stockholders Agreement dated as of April 15, 1996 between Company and the
stockholders of Company party thereto as in effect as of the Closing Date,
except that transferees pursuant to Section 2.2(a)(A) thereof shall not be
deemed to be Permitted Transferees for purposes of this Agreement.
"Person" means an individual, partnership, corporation, limited
------
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which Company or any of its Subsidiaries sponsors or maintains or to
which Company or
20
<PAGE>
any of its Subsidiaries makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"Pledge and Security Agreement" means the Pledge and Security
-----------------------------
Agreement executed and delivered by Company on the Closing Date and
existing Material Domestic Subsidiaries on the Subsequent Closing Date and
to be executed and delivered by additional Material Domestic Subsidiaries
from time to time thereafter in accordance with Section 6.9, substantially
in the form of Exhibit V, as such Pledge and Security Agreement may
---------
thereafter be amended, supplemented, or modified from time to time.
"Pledged Collateral" means the "Pledged Collateral" as defined in
------------------
the Pledge and Security Agreement.
"Pledged Foreign Subsidiary" means a Foreign Subsidiary no more than
--------------------------
65% of the Capital Stock of which is pledged to Collateral Agent.
"Principal Property" means any contiguous or proximate parcel of
------------------
real property owned by, or leased to, Company or any of its Restricted
Subsidiaries, and any equipment located at or comprising a part of any such
property, having a gross book value (without deduction of any depreciation
reserves), as of the date of determination, in excess of 1% of Consolidated
Net Tangible Assets; provided, however, that in the event that the
-------- -------
Indentures, or the limitations regarding Liens granted by Company or
Restricted Subsidiaries contained in the Indentures, are no longer binding
on Company, no Property shall be a Principal Property.
"Professional Costs" means and includes all reasonable fees and
------------------
disbursements of any law firm or other external counsel, the allocated cost
of internal legal services and all disbursements of internal counsel and
the reasonable fees and costs of financial advisors, accountants,
appraisers, consultants, etc.
"Property" means any estate or interest in any kind of property or
--------
asset, whether real, personal or mixed, and whether tangible or intangible.
"Real Estate Financing Transaction" means any arrangement with any
---------------------------------
Person pursuant to which Company or any of its Subsidiaries incurs
Indebtedness secured by a Lien on real property of Company or any of its
Subsidiaries and related personal property.
"Receivables Purchase Facility" means any agreement providing for
-----------------------------
sales, transfers or conveyances of, or granting of security interests in,
accounts receivable that do not provide, directly or indirectly, for
recourse against the seller of such accounts receivable (or against any of
such seller's Affiliates) by way of a guaranty or any other support
arrangement, with respect to the amount of such accounts receivable (based
on the financial condition or circumstances of the obligor thereunder),
other than such limited recourse as is reasonable given market standards
for receivables purchase transactions that are treated as sales under GAAP,
taking into account such factors as historical bad debt loss experience and
obligor concentration levels.
21
<PAGE>
"Receivables Transfer Agreements" means that certain Receivables
-------------------------------
Purchase and Sale Agreement dated as of January 28, 2000 among Company,
LSFCC, Levi Strauss Funding Corp. and LSFLLC and that certain Third Amended
and Fully Restated Receivables Purchase and Sale Agreement between LSFCC
and Company effective January 28, 2000.
"Released Matters" has the meaning specified in Section 11.1.
----------------
"Releasees" has the meaning specified in Section 11.1.
---------
"Releasors" has the meaning specified in Section 11.1.
---------
"Replacement Bank" means an Eligible Assignee satisfactory to
----------------
Company which acquires and assumes all or a ratable part of all of a Bank's
Loans and Commitment pursuant to Section 3.8. Each designation of a
Replacement Bank shall be subject to the prior written consent of Agent
(which consent shall not be unreasonably withheld).
"Reportable Event" means, any of the events set forth in Section
----------------
4043(c) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Requisite Banks" means, at any time, (a) Banks holding more than
---------------
90% of the Aggregate Commitment, or (b) if the Commitments have been
terminated, Banks holding more than 90% of the then aggregate unpaid
principal amount of the Loans.
"Responsible Officer" of Company means the chief executive officer,
-------------------
the president, the chief financial officer, or the treasurer of Company, or
any other officer having substantially the same authority and
responsibility.
"Restatement Date" [Intentionally Omitted]
----------------
"Restricted Payment" means:
------------------
(a) the declaration or payment of any dividend or other
distribution by Company or any of its Subsidiaries, directly or indirectly,
either in cash or property, on any shares of the Capital Stock of any class
of Company or any of its Subsidiaries (except dividends or other
distributions payable solely in shares of Capital Stock of Company or any
of its Subsidiaries or payable by any Subsidiary to Company or to a wholly-
owned Subsidiary of Company);
(b) the purchase, redemption or retirement by Company or any of
its Subsidiaries of any shares of its Capital Stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
Capital Stock, whether directly or
22
<PAGE>
indirectly (except the purchase, redemption or retirement of Capital Stock
(or any such warrants, rights or options) held by Company or any wholly-
owned Subsidiary of Company); and
(c) the prepayment, repayment, redemption, defeasance or other
acquisition or retirement for value prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any Indebtedness
not otherwise permitted under any Loan Document to be so paid.
"Restricted Subsidiary" means any Subsidiary of Company which owns
---------------------
or leases a Principal Property; provided, however, that in the event that
-------- -------
the Indentures, or the limitations regarding Liens granted by or on the
Capital Stock or Indebtedness of Restricted Subsidiaries contained in the
Indentures, are no longer binding on Company, no Subsidiary of Company
shall be a Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission, or any successor
---
thereto.
"Securities" means any stock, shares, partnership interests, voting
----------
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.
"Senior Managing Agent" means each of the financial institutions
---------------------
party to this Agreement which is identified as a Senior Managing Agent in
its signature block.
"Solvent" means, with respect to any Person, that as of the date of
-------
determination both (a)(i) the then fair saleable value of the property of
such Person is (A) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (B) not less than the amount
that will be required to pay the probable liabilities on such Person's then
existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to
such Person; (ii) such Person's capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and
(iii) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts beyond its ability to pay
such debts as they become due; and (b) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become
an actual or matured liability.
"Subsequent Closing Date" means the date on which all conditions
-----------------------
precedent set forth in Section 4.2 are satisfied or waived by all Banks.
23
<PAGE>
"Subsidiary" of a Person means a corporation, partnership, joint
----------
venture, limited liability company or other business entity of which a
majority of the shares of Securities or other interests having ordinary
voting power for the election of directors or other governing body (other
than Securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.
"Synthetic Lease Obligations" means all monetary obligations of a
---------------------------
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations which do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such Person, would be
characterized as the Indebtedness of such Person (without regard to
accounting treatment).
"Taxes" means any and all present or future taxes, levies,
-----
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and Agent, respectively, taxes imposed on or measured by its
net income by the jurisdiction (or any political subdivision thereof) under
the laws of which such Bank or Agent, as the case may be, is organized or
maintains a lending office.
"Termination Value" means, in respect of any Derivative/FX Contract,
-----------------
after taking into account the effect of any legally enforceable netting
agreement relating to such Derivative/FX Contract, the termination value,
expressed in Dollars, as determined by Company; provided, however, that in
-------- -------
the event that two Banks determine that the mark-to-market value, expressed
in Dollars, for any Derivative/FX Contract, as determined based upon one or
more mid-market or other readily available quotations provided by any
recognized dealer in such Derivative/FX Contract, is greater than the
termination value for such Derivative/FX Contract determined by Company,
the Termination Value of such Derivative/FX Contract shall be the amount
determined by such Banks.
"Three Facility Commitment Reduction Fraction" means, as of any date
--------------------------------------------
of determination, a fraction, the numerator of which is the Aggregate
Commitment and the denominator of which is the sum of (a) the Aggregate
Commitment plus (b) the Aggregate 180 Day Commitment (as defined therein)
----
under the Amended and Restated 1999 180 Day Credit Agreement plus (c) the
----
Aggregate Commitment (as defined therein) under the Amended and Restated
1997 364 Day Credit Agreement.
"Two Facility Commitment Reduction Fraction" means, as of any date
------------------------------------------
of determination, a fraction, the numerator of which is the Aggregate
Commitment and the denominator of which is the sum of (a) the Aggregate
Commitment plus (b) the Aggregate Commitment (as defined therein) under the
----
Amended and Restated 1997 364 Day Credit Agreement.
24
<PAGE>
"UCC" means the Uniform Commercial Code (or any similar or
---
equivalent legislation) as in effect in any applicable jurisdiction.
"United States" and "U.S." each means the United States of America.
------------- ----
"Unpledged Foreign Subsidiaries" means Foreign Subsidiaries none of
------------------------------
the Capital Stock of which is pledged to Collateral Agent.
"Voting Trust Agreement" means the Voting Trust Agreement entered
----------------------
into as of April 15, 1996 by and among Robert D. Haas; Peter E. Haas, Sr.;
Peter E. Haas, Jr.; and F. Warren Hellman as the Voting Trustees and the
stockholders of LSAI Holding Corp. who are parties thereto.
"Voting Trustees" means the persons entitled to act as voting
---------------
trustees under the Voting Trust Agreement.
1.2 Other Interpretive Provisions.
-----------------------------
(a) Defined Terms. Except as provided in Section 1.1, unless
-------------
otherwise specified herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. Terms
(including uncapitalized terms) not otherwise defined herein and that are
defined in the UCC of California shall have the meanings therein described.
(b) The Agreement. The words "hereof", "herein", "hereunder" and
-------------
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section and exhibit references are to this Agreement unless otherwise specified.
(c) Certain Common Terms.
--------------------
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Whenever any performance obligation
-----------------
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding," and the word "through" means "to and including". If any
provision of this Agreement refers to any action taken or to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
25
<PAGE>
(e) Contracts. Unless otherwise expressly provided herein,
---------
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
----
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
--------
for convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this
--------------------------
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
1.3 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed in accordance with GAAP,
consistently applied; except that, subject to Section 10.16, all financial
computations required under this Agreement shall be made in accordance with GAAP
as in effect on the Closing Date.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of Company. The fiscal quarters of Company end on the
last Sunday in February, May, August, and November of each year. Each fiscal
year of Company ends on the last Sunday in November of such year.
(c) References herein to "consolidated" and "consolidated basis"
with reference to Company are to Company and its Subsidiaries on a consolidated
basis.
26
<PAGE>
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments; the Credit. Each Bank severally
--------------------------------------------
agrees, on the terms and conditions set forth herein, that all loans outstanding
on the Closing Date under the Existing Credit Agreement shall be deemed to be
Loans hereunder on the Closing Date and each Bank shall be deemed to have made a
Loan to Company in an amount equal to the product of the aggregate principal
amount of such outstanding loans times the percentage set forth opposite such
-----
Bank's name on Schedule 2.1 under the heading "Commitment Percentage" (such
------------
amount, as the same may be reduced pursuant to the terms of this Agreement or as
a result of one or more assignments under Section 10.8, the Bank's
"Commitment").
----------
2.2 Notes; Loan Accounts.
--------------------
(a) The Loans made by each Bank shall be evidenced by one or more
loan accounts or records maintained by such Bank in the ordinary course of
business. The loan accounts or records maintained by Agent and each Bank shall
be conclusive evidence, absent manifest error, of the amount of the Loans made
by Banks to Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of Company hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of any Bank made through Agent, the Loans
made by such Bank may be evidenced by one or more notes, as applicable
("Notes"), instead of or in addition to loan accounts. Each such Note shall be
in the form of Exhibit II. Each such Bank shall endorse on the schedules annexed
----------
to its Note the date, amount, and maturity of each Loan made by it and the
amount of each payment of principal made by Company with respect thereto. Each
such Bank is irrevocably authorized by Company to endorse its Note and each
Bank's record shall be conclusive absent manifest error; provided, however, that
-------- -------
the failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of
Company hereunder or under any such Note to such Bank.
2.3 Procedure for Committed Borrowing. [Intentionally Omitted]
---------------------------------
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) Company may upon irrevocable notice to Agent in accordance
with Section 2.4(b):
(i) elect to convert on any Business Day, any Base Rate
Loans (or any part thereof in an amount not less than $10,000,000 or that
is in an integral multiple of $1,000,000 in excess thereof) into Offshore
Rate Loans; or
(ii) elect to convert on any Interest Payment Date any
Offshore Rate Loans maturing on such Interest Payment Date (or any part
thereof in an amount not less than $10,000,000 or that is in an integral
multiple of $1,000,000 in excess thereof) into Base Rate Loans; or
27
<PAGE>
(iii) elect to renew on any Interest Payment Date any
Offshore Rate Loans maturing on such Interest Payment Date (or any part
thereof in an amount not less than $10,000,000 or that is in an integral
multiple of $1,000,000 in excess thereof);
provided that if the Aggregate Commitment shall have been reduced to less than
- --------
$10,000,000, on and after such reduction the right of Company to elect to
continue such Loans as, and convert such Loans into, Offshore Rate Loans shall
terminate.
(b) Company shall deliver in writing (or by facsimile transmission
confirmed immediately by a telephone call or by a telephone call confirmed
immediately by a facsimile transmission), an irrevocable Notice of
Conversion/Continuation to be received by Agent not later than 9:00 a.m., San
Francisco, California time, at least three Business Days in advance of the
Conversion/Continuation Date, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the nature of the proposed conversion or continuation;
and
(iv) with respect to Offshore Rate Loans, the duration of
the requested Interest Period.
(c) (i) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, Company has failed to select a new
Interest Period to be applicable to such Offshore Rate Loans, and if no
Event of Default shall then exist, Company shall be deemed to have elected
to continue such Offshore Rate Loans as Offshore Rate Loans with an
Interest Period of one month.
(ii) If an Event of Default exists at the time any Interest
Period applicable to Offshore Rate Loans expires, Company shall be deemed
to have elected to convert Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/ Continuation (or
telephonic notice in lieu thereof), Agent will promptly notify each Bank
thereof, or, if no timely notice is provided, Agent will promptly notify each
Bank of the details of any automatic conversion. All conversions and
continuations shall be made pro rata according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given or
which are subject to automatic conversion held by each Bank.
28
<PAGE>
2.5 Utilization of Aggregate Commitment in Offshore Currencies.
----------------------------------------------------------
[Intentionally Omitted]
2.6 Bid Borrowings. [Intentionally Omitted]
--------------
2.7 Procedure for Bid Borrowing. [Intentionally Omitted]
---------------------------
2.8 Voluntary Prepayments.
---------------------
(a) Subject to Section 3.4, Company may (from time to time)
ratably prepay Loans in whole or in part in the minimum amount of $10,000,000 or
any integral multiple of $1,000,000 in excess thereof, upon notice to Agent
given not later than 9:00 a.m. San Francisco, California time:
(i) at least three Business Days' prior to the proposed
date of prepayment for Offshore Rate Loans; and
(ii) on the Business Day prior to the proposed date of
prepayment for Base Rate Loans.
Each such notice of prepayment shall specify the date and amount of such
prepayment and whether such prepayment is of Base Rate Loans or Offshore Rate
Loans, or any combination thereof. In the event that Company fails to so
specify, any voluntary prepayments of the Loans pursuant to this Section 2.8
shall be applied first to Base Rate Loans to the full amount thereof before
application to Offshore Rate Loans. Such notice shall not thereafter be
revocable by Company and Agent will promptly notify each Bank thereof and the
amount of such Bank's Commitment Percentage of such prepayment. If such notice
is given by Company, Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and the
amounts required pursuant to Section 3.4. Amounts prepaid may not be reborrowed.
(b) Notice to Agent under this Section shall be in writing, signed
by Company or may be by telephone notice promptly confirmed by notice sent by
facsimile transmission.
2.9 Mandatory Prepayments and Reductions of Aggregate Commitment. The
------------------------------------------------------------
Loans shall be prepaid and the Aggregate Commitment shall be permanently reduced
in the amounts and under the circumstances set forth below, all such payments to
be applied as set forth below or as more specifically provided in Section
2.9(j). Each prepayment required under this Section shall be subject to Section
3.4.
(a) Permitted Receivables Purchase Facility. No later than five
---------------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
proceeds in respect of a Permitted Receivables Purchase Facility, Company shall
prepay the Loans and the Aggregate Commitment shall be permanently reduced in an
aggregate amount equal to the product of the net proceeds received by Company or
any of its Subsidiaries from such Permitted Receivables Purchase Facility times
-----
the Two Facility Commitment Reduction Fraction.
29
<PAGE>
(b) Equipment Financing Transactions. No later than (i) five
--------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
Net Equipment Financing Proceeds in respect of any equipment not constituting
Collateral and (ii) the date of receipt by Company or any of its Subsidiaries of
any other Net Equipment Financing Proceeds, Company shall prepay the Loans and
the Aggregate Commitment shall be permanently reduced in an aggregate amount
equal to the product of such Net Equipment Financing Proceeds times the Three
-----
Facility Commitment Reduction Fraction.
(c) Real Estate Financing Transactions. No later than (i) five
----------------------------------
Business Days following the receipt by Company or any of its Subsidiaries of any
Net Real Estate Financing Proceeds in respect of any real property not
constituting Collateral and (ii) the date of receipt by Company or any of its
Subsidiaries of any other Net Real Estate Financing Proceeds, Company shall
prepay the Loans and the Aggregate Commitment shall be permanently reduced in an
aggregate amount equal to the product of such Net Real Estate Financing Proceeds
times the Three Facility Commitment Reduction Fraction.
- -----
(d) Asset Dispositions. No later than (i) five Business Days
------------------
following the receipt by Company or any of its Subsidiaries of any Net Asset
Disposition Proceeds in respect to Asset Dispositions not involving Collateral
and (ii) the date of receipt by Company or any of its Subsidiaries of any Net
Asset Disposition Proceeds from the Pending IceHouse Disposition in excess of
$50,000,000 or any other Net Asset Disposition Proceeds, Company shall prepay
the Loans and the Aggregate Commitment shall be permanently reduced in an
aggregate amount equal to the product of such Net Asset Disposition Proceeds
times the Four Facility Commitment Reduction Fraction.
- -----
(e) Insurance. No later than two Business Days following the
---------
receipt by Company or any of its Subsidiaries of any Net Insurance Proceeds that
are required to be applied to prepay the Loans and reduce the Aggregate
Commitment pursuant to Section 6.6, Company shall prepay the Loans and the
Aggregate Commitment shall be permanently reduced in an aggregate amount equal
to the product of such Net Insurance Proceeds times the Four Facility Commitment
-----
Reduction Fraction.
(f) Excess Cash Flow. In the event that there shall be
----------------
Consolidated Excess Cash Flow for fiscal year 2000, Company shall, no later than
60 days after the end of such fiscal year, prepay the Loans and the Aggregate
Commitment shall be permanently reduced in an aggregate amount equal to (i) 60%
of such Consolidated Excess Cash Flow minus voluntary commitment reductions
-----
under this Agreement, the Bridge Credit Agreement, the Amended and Restated 1999
180 Day Credit Agreement, and the Amended and Restated 1997 364 Day Credit
Agreement made during such fiscal year times (ii) the Four Facility Commitment
-----
Reduction Fraction.
(g) Tax Refunds. No later than five Business Days following the
-----------
receipt by Company or any of its Subsidiaries of any proceeds in respect of any
federal tax refunds in respect of the 1999 fiscal year in excess of $70,000,000
in the aggregate, Company shall prepay the Loans and the Aggregate Commitment
shall be permanently reduced in an aggregate amount equal to the product of the
excess proceeds received times the Four Facility Commitment Reduction Fraction.
-----
30
<PAGE>
(h) Capital Markets Transactions. No later than two Business Days
----------------------------
following the receipt by Company or any of its Subsidiaries of any Net
Securities Proceeds, Company shall prepay the Loans and the Aggregate Commitment
shall be permanently reduced in an aggregate amount equal to the product of such
Net Securities Proceeds times (i) until Net Securities Proceeds in an amount
-----
equal to $300,000,000 in the aggregate have been applied to reduce the Aggregate
Bridge Commitment, zero (0)% and (ii) thereafter, the Four Facility Commitment
Reduction Fraction.
(i) Calculations of Net Proceeds Amounts; Additional Prepayments
------------------------------------------------------------
and Reductions Based on Subsequent Calculations. Concurrently with any
- -----------------------------------------------
prepayment of the Loans pursuant to this Section 2.9, Company shall deliver to
Agent an officer's certificate demonstrating the calculation of the amount of
the applicable proceeds or Consolidated Excess Cash Flow, as the case may be,
that gave rise to such prepayment. In the event that Company shall subsequently
determine that the actual amount was greater than the amount set forth in such
officer's certificate, Company shall promptly make an additional prepayment of
the Loans (and the Aggregate Commitment shall be permanently reduced in
accordance with the applicable subsection of this Section 2.9) in an amount
equal to the amount of such excess, and Company shall concurrently therewith
deliver to Agent an officer's certificate demonstrating the derivation of the
additional amount resulting in such excess.
(j) Application of Prepayments. Any mandatory prepayments of the
--------------------------
Loans pursuant to this Section 2.9 shall be applied first to Base Rate Loans to
the full extent thereof before application to Offshore Rate Loans and shall be
in addition to, and shall not be applied to reduce, the scheduled Commitment
reductions set forth in Section 2.10.
2.10 Repayment; Scheduled Reductions of Aggregate Commitment. Company
-------------------------------------------------------
shall make principal payments on the Loans in installments on the dates set
forth below, and the Commitments shall be permanently reduced on the dates set
forth below, in an amount equal to the product of the correlative amount
indicated times the Three Facility Commitment Reduction Fraction:
-----
Date Scheduled Reduction
---- -------------------
May 25, 2000 $ 50,000,000
August 24, 2000 $ 50,000,000
November 22, 2000 $ 100,000,000
February 22, 2001 $ 50,000,000
May 24, 2001 $ 50,000,000
August 23, 2001 $ 100,000,000
; provided, however, that Company shall repay the principal amount of the
outstanding Loans on the Maturity Date.
31
<PAGE>
2.11 Interest.
--------
(a) Subject to Section 2.11(d), each Loan shall bear interest on
the outstanding principal amount thereof (before and after default, before and
after maturity, before and after judgment, and before and after the commencement
of any proceeding under any Debtor Relief Laws) from the Closing Date until it
becomes due at a rate per annum equal to the Offshore Rate or the Base Rate, as
the case may be, plus the Applicable Margin (the "Applicable Margin"). The
---- -----------------
initial Applicable Margin, subject to adjustment as provided below, shall be a
rate per annum equal to 3.25% for Offshore Rate Loans and 2.00% for Base Rate
Loans. If Company has not completed (after the date hereof) one or more Capital
Markets Transactions and applied at least $300,000,000 of Net Securities
Proceeds therefrom in the aggregate to reduce the Aggregate Bridge Commitment on
or prior to January 31, 2001, then effective February 1, 2001, the Applicable
Margin shall increase to 4.25% for Offshore Rate Loans and 3.00% for Base Rate
Loans. In addition, the Applicable Margin shall increase by an additional 0.25%
at the beginning of each subsequent three-month period, commencing May 1, 2001,
unless and until Company shall have completed (after the date hereof) one or
more Capital Markets Transactions and applied at least $300,000,000 of Net
Securities Proceeds therefrom in the aggregate to reduce the Aggregate Bridge
Commitment.
(b) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Loans pursuant to Section 2.8, 2.9 or 2.10 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during any period when principal of the Loans is due and payable, interest shall
be payable on request for such payment by the holders of the Loans.
(c) While any Event of Default exists, Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law and including post-petition interest in any proceeding under any Debtor
Relief Law) on the principal amount of all Loans, at a rate per annum equal to
the Default Rate. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be payable upon demand.
(d) Anything herein to the contrary notwithstanding, the
obligations of Company to any Bank hereunder shall be subject to the limitation
that payments of interest shall not be required, for any period for which
interest is computed hereunder, to the extent (but only to the extent) that
contracting for or receiving such payment by such Bank would be contrary to the
provisions of any law applicable to such Bank limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such Bank,
and in such event Company shall pay such Bank interest at the lower of (i) the
highest rate permitted by applicable law and (ii) the rates required by this
Agreement.
2.12 Fees. In addition to fees due under other provisions of this
----
Agreement:
(a) Facility Fee. Company shall pay to Agent for the account of
------------
each Bank pro rata according to its Commitment Percentage, a facility fee equal
to 0.50% times the actual daily amount of its Commitment. The facility fee shall
-----
accrue at all times from the Closing Date until the Maturity Date, shall be
computed on a daily basis, and shall be payable in arrears (i) on
32
<PAGE>
the fifth Business Day after the last day of each fiscal quarter, commencing on
the first such day after the Closing Date and (ii) on the Maturity Date.
(b) Amendment Fee. On the Closing Date, Company shall pay to Agent
-------------
for the account of each Bank that approves the execution of this Agreement pro
rata according to its Commitment Percentage, an amendment fee in an amount equal
to 0.50% times the Aggregate Commitment. If Company has not completed (after the
-----
date hereof) one or more Capital Markets Transactions and applied at least
$300,000,000 of Net Securities Proceeds therefrom in the aggregate to reduce the
Aggregate Bridge Commitment on or prior to January 31, 2001, on February 1,
2001, Company shall pay to Agent for the account of each Bank pro rata according
to its Commitment Percentage, an additional amendment fee in an amount equal to
2.00% times the Aggregate Commitment.
-----
(c) Agency Fee. Company shall pay to Agent an agency fee in such
----------
amounts and at such times as set forth in a separate fee letter agreement
between Company and Agent. The agency fee is for services to be performed by
Agent acting as Agent and is fully earned on the date paid. The agency fee paid
to Agent is solely for its account and is nonrefundable.
(d) Collateral Agency Fee. Company shall pay to Collateral Agent a
---------------------
collateral agency fee in such amounts and at such times as set forth in a
separate fee letter agreement between Company and Collateral Agent. The
collateral agency fee is for services to be performed by Collateral Agent acting
as Collateral Agent and is fully earned on the date paid. The collateral agency
fee paid to Collateral Agent is solely for its accounts and is nonrefundable.
(e) Other Fees. Company shall pay Agent for its own account
----------
and/or the account of each Co-Agent such fees in such amounts and at such times
as set forth in separate fee letter agreements between Company and Agent.
2.13 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by Bank of America's "prime rate" shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue during
each period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Agent will notify Company and Banks of each determination of
an Offshore Rate. Any failure by Agent to give such notice and any failure by
Company and any Bank to receive such notice shall not relieve Company of any
obligation to pay interest or provide the basis for any claim against Agent.
Agent shall, upon request made by Company or any Bank from time to time, advise
such Person(s) of the relevant applicable Offshore Rate(s).
(c) Each determination of an interest rate by Agent pursuant to
any provision of this Agreement shall be conclusive and binding on Company and
Banks in the absence of manifest error.
33
<PAGE>
2.14 Payments by the Company.
-----------------------
(a) All payments (including prepayments) to be made by the Company
on account of principal, interest, fees and other amounts required hereunder
shall be made without set-off or counterclaim and shall, except as otherwise
expressly provided herein, be made to the Agent for the ratable account of the
Banks and Designated Bidders at the Agent's Payment Office, and, with respect to
principal of, interest on, and any other amounts relating to, any Offshore
Currency Loan, shall be made in the Offshore Currency in which such Loan is
denominated or payable, and, with respect to all other amounts payable
hereunder, shall be made in Dollars. Such payments shall be made in immediately
available funds and (i) in the case of Offshore Currency payments, no later than
such time on the dates specified herein as may be determined by the Agent to be
necessary for such payment to be credited on such date in accordance with normal
banking procedures in the place of payment, and (ii) in the case of any Dollar
payments no later than 11:00 a.m., San Francisco, California time, on the date
specified herein. The Agent will promptly distribute to each Bank or Designated
Bidder the amount of its Commitment Percentage (or other applicable share as
expressly provided herein) of such principal, interest, fees or other amounts,
in like funds as received. Any payment which is received by the Agent later than
11:00 a.m., San Francisco, California time, or later than the time specified by
the Agent as provided in clause (i) above in the case of Offshore Currency
payments shall be deemed to have been received on the immediately succeeding
Business Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be, subject to the provisions
set forth in the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks or Designated Bidder
hereunder from the Company that the Company will not make such payment in full,
the Agent may assume that the Company has made such payment in full to the Agent
on such date and the Agent may (but shall not be so required), in reliance upon
such assumption, cause to be distributed to each Bank or Designated Bidder on
such due date an amount equal to the amount then due such Bank or Designated
Bidder. If and to the extent the Company shall not have made such payment in
full to the Agent, each Bank or Designated Bidder shall repay to the Agent, on
request made by the Agent, such amount distributed to such Bank or Designated
Bidder, together with interest thereon for each day from the date such amount is
distributed to such Bank or Designated Bidder until the date such Bank or
Designated Bidder repays such amount to the Agent, at the Federal Funds Rate as
in effect for each such day with respect to amounts denominated in Dollars and
at the Overnight Rate with respect to amounts denominated in an Offshore
Currency.
2.15 Payments by the Banks to the Agent.
----------------------------------
(a) Unless the Agent shall have received notice from a Bank on the
Restatement Date or, with respect to each Borrowing after the Restatement Date,
at least one Business Day prior to the date of any proposed Committed Borrowing
(but prior to 10:00 a.m. San Francisco, California time on the same day with
respect to a Borrowing consisting of Base
34
<PAGE>
Rate Committed Loans) that such Bank will not make available to the Agent for
the account of the Company the amount of that Bank's Commitment Percentage of
the Committed Borrowing, the Agent may assume that each Bank has made such
amount available to the Agent on the Borrowing Date and the Agent may (but shall
not be so required), in reliance upon such assumption, make available to the
Company on such date a corresponding amount. If and to the extent any Bank shall
not have made its full amount available to the Agent and the Agent in such
circumstances has made available to the Company such amount, that Bank shall on
the next Business Day following such Borrowing Date make such amount available
to the Agent, together with interest at the Federal Funds Rate for and
determined as of each day during such period, or in the case of any Borrowing
consisting of Offshore Currency Loans, the Overnight Rate.
A certificate of the Agent submitted to any Bank with respect to amounts owing
under this subsection shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such Bank's
Committed Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the next Business Day
following such Borrowing Date, the Agent shall notify the Company of such
failure to fund and, upon request for payment made by the Agent, the Company
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the
Committed Loans comprising such Committed Borrowing.
(b) The failure of any Bank to make any Committed Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Committed Loan on such Borrowing Date, but no Bank shall be responsible
for the failure of any other Bank to make the Loan to be made by such other Bank
on any Borrowing Date.
2.16 Sharing of Payments, etc. If, other than as expressly contemplated
-------------------------
elsewhere herein, any Bank shall obtain on account of the Committed Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in an amount in excess of its Commitment
Percentage of payments on account of the Committed Loans obtained by all the
Banks, such Bank shall forthwith (a) notify the Agent of such fact, and (b)
purchase from the other Banks such participations in the Committed Loans made by
them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any portion
-------- -------
of such excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall repay to
the purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's Commitment Percentage (according to the proportion
of (i) the amount of such paying Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off but
subject to Section 10.11) with respect to such participation as fully as if such
Bank were the direct creditor of the Company in the amount of such
participation. The Agent will keep records (which shall be conclusive and
binding in the absence of manifest error), of participations purchased pursuant
to this Section and will in each case notify the Banks following any such
purchases and repayments.
35
<PAGE>
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes.
-----
(a) Any and all payments by Company to each Bank or Agent under
this Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, Company shall pay
all Other Taxes.
(b) If Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank, or Agent, then:
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Bank or Agent, as the case may be, receives and retains
an amount equal to the sum it would have received and retained had no such
deductions or withholdings been made;
(ii) Company shall make such deductions and withholdings;
(iii) Company shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) Company shall also pay to each Bank or Agent for the
account of such Bank, at the time interest is paid, Further Taxes in the
amount that the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) Company agrees to indemnify and hold harmless each Bank and
Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by Company of
Taxes, Other Taxes or Further Taxes, Company shall furnish to each Bank or Agent
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to such Bank or Agent.
(e) Company will not be required to pay any additional amounts in
respect of Section 3.1(b) to any Bank or Agent:
36
<PAGE>
(i) if such Bank shall have delivered to Company a Form
1001 (or any successor form) pursuant to Section 9.11(a)(i), and such Bank
shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
Company hereunder for any reason other than a change in United States law
or regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
Governmental Authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the date of delivery
of such Form 1001 (or any successor form); or
(ii) if such Bank shall have delivered to Company a Form
4224 (or any successor form) pursuant to Section 9.11(a)(ii), and such Bank
shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
Company hereunder for any reason other than a change in United States law
or regulations or in the official interpretation of such law or regulations
by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the
date of delivery of such Form 4224 (or any successor form).
(f) If, at any time, Company requests any Bank to deliver any
forms or other documentation pursuant to Section 9.11(a)(iii), then Company
shall, on demand of such Bank through Agent, reimburse such Bank for any costs
and expenses (including Professional Costs) reasonably incurred by such Bank in
the preparation or delivery of such forms or other documentation.
(g) If Company is required to pay additional amounts to any Bank
or Agent pursuant to this Section 3.1, then such Bank or Agent, as the case may
be, shall use its reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office or take any other
reasonable action so as to eliminate any such additional payment by Company
which may thereafter accrue if such change, in the reasonable judgment of such
Bank, is not otherwise materially disadvantageous to such Bank or Agent.
3.2 Illegality.
----------
(a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to Company through
Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies Agent and Company that the circumstances
giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful for such Bank to
maintain any Offshore Rate Loan, Company shall, upon receipt of notice of such
fact and demand from such Bank (with a copy to Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 3.4, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to
37
<PAGE>
maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans. If Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, Company shall borrow from the affected Bank, in the amount of such
repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, Company may elect, by giving
notice to the Bank through Agent that all Loans which would otherwise be made by
the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Bank determines that, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation, or (ii) the compliance by that Bank with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such Bank of agreeing
to make or making, funding or maintaining any Offshore Rate Loans in an amount
deemed material by such Bank, then Company shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to Agent), pay
to Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation; affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased in an amount
deemed material by such Bank as a consequence of its loans, credits or
obligations under this Agreement, then, upon request of such Bank (with a copy
to Agent), Company shall immediately pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
3.4 Funding Losses. Company agrees to reimburse each Bank and to hold
--------------
each Bank harmless from any loss, cost or expense which the Bank may sustain or
incur as a consequence of:
(a) any failure of Company to make, on a timely basis, any payment
or prepayment of principal of any Offshore Rate Loan (including payments made
after any acceleration thereof);
(b) any failure of Company to continue or convert a Loan after
Company has given (or are deemed to have given) a Notice of
Conversion/Continuation;
(c) any failure of Company to make any prepayment after Company
has given a notice in accordance with Section 2.8;
38
<PAGE>
(d) any prepayment of an Offshore Rate Loan on a day which is not
the last day of the Interest Period with respect thereto; or
(e) any conversion pursuant to Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period; or including any such loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its Offshore
Rate Loans hereunder or from fees payable to terminate the deposits from which
such funds were obtained.
3.5 Inability to Determine Rates. If Agent or Majority Banks shall have
----------------------------
determined that for any reason adequate and reasonable means do not exist for
ascertaining the Offshore Base Rate for any requested Interest Period with
respect to a proposed Offshore Rate Loan or that the Offshore Base Rate or the
Offshore Rate applicable pursuant to Section 2.11 for any requested Interest
Period with respect to a proposed Offshore Rate Loan does not adequately and
fairly reflect the cost to Banks of funding such Loan, Agent will forthwith give
notice of such determination to Company and each Bank. Thereafter, the
obligation of Banks to make or maintain Offshore Rate Loans hereunder shall be
suspended until Agent upon the instruction of Majority Banks revokes such notice
in writing. Upon receipt of such notice, Company may revoke any Notice of
Conversion/Continuation then submitted by Company. If Company does not revoke
such notice, Banks shall make, convert or continue the Loans, as proposed by
Company, in the amount specified in the applicable notice submitted by Company,
but such Loans shall be converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
3.6 Reserves on Offshore Rate Loans. Company shall pay to each Bank, as
-------------------------------
long as such Bank shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to actual costs of such reserves allocated to such Loan by the
Bank (as determined by the Bank in good faith, which determination shall be
conclusive) (without duplication for such costs included in the computation of
the Offshore Rate), payable on each date on which interest is payable on such
Loan provided Company shall have received at least 15 days' prior written notice
--------
(with a copy to Agent) of such additional sums from the Bank. Each such notice
from a Bank shall set forth in reasonable detail (as determined by the Bank) the
basis for such additional sums. If a Bank fails to give notice 15 days prior to
the relevant Interest Payment Date, such additional sums shall be payable 15
days from receipt of such notice.
3.7 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation pursuant to this Article shall deliver to Company (with a copy to
Agent) a certificate setting forth in reasonable detail the amount payable to
the Bank hereunder and such certificate shall be conclusive and binding on
Company in the absence of manifest error. Each certificate submitted under this
Section may not claim reimbursement or compensation for a period earlier than 30
days prior to the date of such certificate unless interpretation of the law or
regulation or the guideline or request in question is retroactive in effect in
which case the certificate can cover such retroactive period.
3.8 Substitution of Banks. Upon receipt by Company from any Bank of a
---------------------
claim for compensation under Section 3.1, 3.2, 3.3 or 3.6 (each such Bank an
"Affected Bank"), Company
-------------
39
<PAGE>
may: (a) request the Affected Bank to use its reasonable efforts without
incurring any material expense to obtain a Replacement Bank; (b) request one or
more of the other Banks to acquire and assume all or part of such Affected
Bank's Loans and Commitment; or (c) designate a Replacement Bank. Any assignment
to a Replacement Bank pursuant to this Section shall be pursuant to an
Assignment and Acceptance in compliance with Section 10.8 including payment of
the processing fee to Agent (except to the extent that there is any conflict
between the provisions of this Section and Section 10.8, in which case the
provisions of this Section shall control). If Bank of America is the Affected
Bank, it may, at its sole option, resign as Agent or Collateral Agent.
Notwithstanding the provisions of Section 9.9 or 9.10, any resignation as Agent
or Collateral Agent by Bank of America under this Section shall take effect upon
delivery of Bank of America's written resignation to Company and Banks without
necessity of further action or lapse of time.
3.9 Survival. The agreements and obligations of Company in this Article
--------
shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1 Condition to Closing. The effectiveness of this Agreement is
--------------------
subject to the following conditions:
(a) Agent shall have received, on or before the Closing Date, all
of the following documents, in form and substance reasonably satisfactory to
Agent and Majority Banks:
(i) Loan Documents. Originals of the Loan Documents to
--------------
which Company is a party executed by Company.
(ii) Organization Documents. Copies of the Organization
----------------------
Documents of each Borrower Party, certified by the Secretary of State of
its jurisdiction of organization or, if such document is of a type that may
not be so certified, certified by the secretary or similar officer of the
applicable Borrower Party, together with a good standing certificate from
the Secretary of State of its jurisdiction of organization and each other
state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each dated a recent date
prior to the Closing Date.
(iii) Resolutions; Incumbency.
-----------------------
(A) Copies of the resolutions of the board of
directors of each Borrower Party (or an authorized committee
thereof) approving and authorizing the execution, delivery, and
performance by such Borrower Party of the Loan Documents to which
such Borrower Party is a party, certified as of the Closing Date by
the Secretary or an Assistant Secretary of such Borrower Party.
40
<PAGE>
(B) A certificate of the Secretary or an Assistant
Secretary of each Borrower Party certifying, as of the Closing Date,
the names and true signatures of the officers of such Borrower Party
authorized to execute and deliver, as applicable, this Agreement,
and all other Loan Documents to be delivered hereunder.
(iv) Opinions. Opinions of Wachtell, Lipton, Rosen, & Katz,
--------
special counsel to Company, Albert F. Moreno Esq., Senior Vice President
and General Counsel of Company, and Legal Strategies Group, dated the
Closing Date, and addressed to Agent and Banks, in form and substance
reasonably satisfactory to Banks.
(v) Closing Certificates from Company. A certificate from
---------------------------------
the president, the chief financial officer, or the treasurer of Company,
dated as of the Closing Date, substantially in the form of Exhibit IV.
----------
(vi) No Material Adverse Effect. There has occurred since
--------------------------
November 28, 1999, as reflected in the draft consolidated financial
statements delivered on January 24, 2000 and the accompanying draft notes,
no event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(vii) Security Interests in Collateral. Evidence satisfactory
--------------------------------
to Agent that Borrower Parties shall have taken or caused to be taken all
such actions, executed and delivered or caused to be executed and delivered
all such agreements, documents and instruments, and made or caused to be
made all such filings and recordings (other than the filing or recording of
items described in subsections (B), (C) and (D) below) that may be
necessary or, in the opinion of Agent, desirable in order to create in
favor of Agent, for the benefit of Banks, a valid and (upon such filing and
recording) perfected Lien on the Collateral. Such actions shall include the
following:
(A) Stock Certificates and Instruments. Delivery to
----------------------------------
Agent of (1) certificates (which certificates shall be accompanied
by irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Agent) representing
all Capital Stock pledged pursuant to the Pledge and Security
Agreement and (2) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Agent)
evidencing any Collateral;
(B) Lien Searches and UCC Termination Statements.
--------------------------------------------
Delivery to Agent of (1) the results of a recent search, by a Person
satisfactory to Agent, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have
been made with respect to any personal or mixed property of any
Borrower Party, together with copies of all such filings disclosed
by such search, and (2) UCC termination statements duly executed by
all applicable Persons for filing in all applicable jurisdictions as
may be necessary to terminate any effective UCC financing statements
or fixture filings disclosed in such search (other than any such
financing statements or fixture filings in respect
41
<PAGE>
of Liens permitted to remain outstanding pursuant to the terms of
this Agreement);
(C) UCC Financing Statements and Fixture Filings.
--------------------------------------------
Delivery to Agent of UCC financing statements and, where
appropriate, fixture filings, duly executed by each applicable
Borrower Party with respect to all personal and mixed property
Collateral of such Borrower Party, for filing in all jurisdictions
as may be necessary or, in the opinion of Agent, desirable to
perfect the security interests created in such Collateral pursuant
to the Collateral Documents; and
(D) Intellectual Property Filings. Delivery to Agent
-----------------------------
of all cover sheets or other documents or instruments required to be
filed with the United States Patent and Trademark Office in order to
create or perfect Liens in respect of any IP Collateral.
(viii) Foreign Subsidiaries. Copies of the Organization
--------------------
Documents of each Pledged Foreign Subsidiary.
(ix) Financial Statements. A copy of a draft of the
--------------------
unaudited (A) consolidated and consolidating balance sheets of Company and
its Subsidiaries as at the end of the fiscal year ended November 28, 1999,
(B) related consolidated and consolidating statements of income of Company
and its Subsidiaries for such fiscal year, and (C) related consolidated
statement of cash flows of Company and its Subsidiaries for such fiscal
year.
(x) Evidence of Insurance. A certificate from Company's
---------------------
insurance broker or other evidence satisfactory to Agent that all insurance
required to be maintained pursuant to Sections 5.16 and 6.6 is in full
force and effect.
(xi) Financial Plan. A consolidated plan and financial
--------------
forecast for fiscal years 2000 and 2001 including (A) forecasted
consolidated balance sheets and forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for each such fiscal
year and for each month of fiscal year 2000 and each quarter of fiscal year
2001, together with a pro forma calculation of compliance with Sections
7.6, 7.7 and 7.8 for each quarter of each such fiscal year, and (B) such
other information as Agent may reasonably request.
(xii) Intercreditor Agreement. Executed copies of the
-----------------------
Intercreditor Agreement.
(xiii) Other Credit Facilities. Executed copies of the Bridge
-----------------------
Credit Agreement, the Amended and Restated 1999 180 Day Credit Agreement,
and the Amended and Restated 1997 364 Day Credit Agreement, together with
evidence satisfactory to Agent that all conditions precedent to the
effectiveness of such agreements have been satisfied.
(xiv) Other Documents. Such other approvals, opinions,
---------------
documents or materials as Agent or any Bank may reasonably request.
42
<PAGE>
(b) Representations and Warranties. The representations and
------------------------------
warranties made by Company herein, or which are contained in any certificate,
document or financial or other statement furnished at any time under or in
connection herewith or therewith, shall be correct on and as of the Closing
Date.
(c) Existing Receivables Facility. On the Closing Date, LSFLLC
------------------------------
shall have (i) repurchased all accounts receivable sold under the Existing
Receivables Purchase Agreement, (ii) terminated any commitments to purchase any
accounts receivable or make other extensions of credit thereunder, and (iii)
delivered to Agent all documents or instruments necessary to assign to LSFLLC
all financing statements filed in respect of transactions under the Existing
Receivables Purchase Agreement. In addition, the Levi Strauss Receivables
Transfer Agreement dated as of April 28, 1999 among Company, Levi Strauss
Financial Center Corporation and Levi Strauss Funding Corp. shall have been
terminated.
(d) Payment of Fees. On the Closing Date, Agent shall have
---------------
received evidence of payment by Company of all accrued and unpaid fees, costs
and expenses to the extent then due and payable on the Closing Date pursuant to
the terms of this Agreement, together with Professional Costs of Bank of
America, to the extent invoiced prior to or on the Closing Date; including any
such costs, fees and expenses arising under or referenced in Sections 2.12 and
10.4.
(e) LSFLLC. LSFLLC shall have entered into a Receivables Transfer
------
Agreement with Levi Strauss Financial Center Corporation similar to the
Receivables Transfer Agreement between Levi Strauss Financial Center Corporation
and Levi Strauss Funding Corp. and Agent shall have received duly executed UCC
financing statements for filing in all appropriate jurisdictions.
4.2 Conditions Subsequent. No later than the day following the Closing
---------------------
Date, Agent shall have received all of the following documents, in form and
substance satisfactory to Agent and Majority Banks:
(a) Loan Documents. Originals of the Guaranty and the Pledge and
--------------
Security Agreement executed by all Material Domestic Subsidiaries; and
(b) Opinions. An opinion of Wachtell, Lipton, Rosen & Katz,
--------
special counsel to Company, and Albert F. Moreno, Esq., Senior Vice President
and General Counsel of Company, dated the Subsequent Closing Date, addressed to
Agent and Banks, in form and substance reasonably satisfactory to Banks.
43
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Company represents and warrants to Agent and each Bank that:
5.1 Organization, Powers, Good Standing, Business, Ownership of
-----------------------------------------------------------
Subsidiaries and Capitalization.
- -------------------------------
(a) Organization and Powers. Each Borrower Party is a corporation
-----------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1(a) and has all
---------------
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to enter
into each Loan Document, to issue the Notes (in the case of Company) and to
carry out the transactions contemplated hereby and thereby.
(b) Good Standing. Each Borrower Party is duly qualified to do
-------------
business and is in good standing wherever necessary to carry on its respective
present business and operations, except in jurisdictions in which the failure to
be so qualified or to be in good standing has not had and will not have a
Material Adverse Effect.
(c) Conduct of Business. Company and its Subsidiaries, considered
-------------------
together, are engaged only in businesses related or incidental to the
manufacture and sale of clothing and accessories and the LOS/DOS Business.
(d) Common Stock of Company. All of the issued and outstanding
-----------------------
shares of Capital Stock of Company and each of its Subsidiaries have been duly
and validly issued and are fully paid and non-assessable.
(e) Restricted Subsidiaries. As of the Closing Date, the only
-----------------------
Restricted Subsidiaries are those listed on Schedule 5.1(e).
---------------
(f) Organizational Structure. As of the Closing Date, the
------------------------
organizational structure of Company and its Subsidiaries is set forth on
Schedule 5.1(f).
- ---------------
(g) Material Subsidiaries. As of the Closing Date, all Material
---------------------
Subsidiaries are listed on Schedule 5.1(g). As of the end of each fiscal
---------------
quarter, the aggregate gross revenues of the Subsidiaries of Company not
constituting Material Subsidiaries for the preceding four fiscal quarter period
shall not be more than 1% of the aggregate gross revenues of Company and its
Subsidiaries on a consolidated basis for such period.
5.2 Authorization of Borrowing, etc.
--------------------------------
(a) Authorization of Borrowing. The execution, delivery and
--------------------------
performance by each Borrower Party of each Loan Document to which it is a party
and the issuance, delivery and payment of the Notes by Company as contemplated
herein have been duly authorized by all necessary corporate action by such
Borrower Party. Each of the Loan Documents (other than the Notes) to which any
Borrower Party is a party has been duly executed and delivered by such
44
<PAGE>
Borrower Party, and the Notes, when executed and delivered, will be duly
executed and delivered by Company.
(b) No Conflict. The execution, delivery and performance by each
-----------
Borrower Party of each Loan Document to which it is a party and the issuance,
delivery and performance of the Notes by Company do not and will not (i) violate
any Borrower Party's Organization Documents or any order, judgment or decree of
any court or other Governmental Authority binding on any Borrower Party, (ii)
conflict with, result in a breach of, constitute a default under, or require the
termination of, any Contractual Obligation of any Borrower Party, except where
such conflicts, breaches, defaults and terminations, in the aggregate, would not
have a Material Adverse Effect, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any of the properties or
assets of any Borrower Party (other than pursuant to the Collateral Documents),
or (iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of any Borrower Party except for such
approvals or consents which will be obtained on or before the Closing Date or
where the failure to obtain such approvals and consents would not, in the
aggregate, have a Material Adverse Effect.
(c) Governmental Consents. The execution, delivery and performance
---------------------
by Borrower Parties of the Loan Documents, the application of the proceeds of
the Loans and the issuance, delivery and performance of the Notes by Company do
not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any Governmental Authority except
actions which are required due to a change in applicable law after the date
hereof and which have been or will be duly taken within the time period
prescribed by any such law.
(d) Binding Obligation. Each of the Loan Documents (other than the
------------------
Notes) to which any Borrower Party is a party is, and the Notes, when executed
and delivered, will be, the legally valid and binding obligations of such
Borrower Party, enforceable against such Borrower Party in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability, whether
enforcement is sought in a proceeding at law or in equity.
5.3 Financial Condition. On January 24, 2000, Company delivered to Agent
-------------------
a draft of its unaudited financial statements for its fiscal year ending
November 28, 1999 and the accompanying draft notes. The foregoing financial
statements were prepared in conformity with GAAP, and fairly present, in all
material respects, the consolidated financial position of Company and its
Subsidiaries as of the date thereof and the consolidated results of operations
and cash flows of Company and its Subsidiaries for the period covered thereby,
subject, to changes resulting from audit and normal year-end adjustments. As of
the date of this Agreement, Company and its Subsidiaries, taken as a whole, have
no material contingent obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in the unaudited financial statements for its fiscal year ending
November 28, 1999, the notes thereto, or the most recent financial statements
delivered pursuant to Section 6.1 (if any), and which is required by GAAP to be
reflected therein. Since November 28, 1999, there has been no event or
circumstance which has a Material Adverse Effect.
45
<PAGE>
5.4 Title to Properties; Liens. Each of Company and its Subsidiaries has
--------------------------
good, sufficient and legal title to all of its respective properties and assets
reflected in the balance sheets referred to in Section 5.3 or in the most recent
financial statements delivered pursuant to Section 6.1 (if any), except for
assets acquired or disposed of in the ordinary course of business since the date
of such balance sheet and assets disposed of where such disposition would not be
prohibited by Sections 7.3 and 7.4 and except for those imperfections of title
which would not in the aggregate have a Material Adverse Effect. Except as
permitted under Section 7.2, all such properties and assets are free and clear
of Liens. As of the Closing Date, the only Principal Properties are those listed
on Schedule 5.4. As of the Closing Date, all domestic real property that is
------------
owned or leased by Company and its Subsidiaries is listed on Schedule 5.4.
------------
5.5 Litigation; Adverse Facts. Except as to any confidential
-------------------------
governmental proceeding of which Borrower Parties are unaware, there is no
action, suit, proceeding, claim or dispute (whether or not purportedly on behalf
of Company or any of its Subsidiaries) at law or in equity or before or by any
Governmental Authority, pending or, to the knowledge of any Borrower Party,
threatened in writing against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries, which any Borrower Party
reasonably expects to (a) result in any Material Adverse Effect, or (b)
materially and adversely affect the ability of any Borrower Party to perform the
Obligations or the ability of Banks to enforce the Obligations. Neither Company
nor any of its Subsidiaries is (i) in violation of any applicable Requirement of
Law which (as to all such violations in the aggregate) would have a Material
Adverse Effect, or (ii) subject to or in default with respect to any final
judgment, writ, injunction, decree, rule or regulation of any Governmental
Authority, domestic or foreign, which (as to all such matters in the aggregate)
would have a Material Adverse Effect. There is no action, suit or proceeding
pending or, to the knowledge of any Borrower Party, threatened in writing
against or affecting Company or any of its Subsidiaries which challenges the
validity or the enforceability of this Agreement, the Notes or the other Loan
Documents.
5.6 Payment of Taxes. All federal and state tax returns and reports of
----------------
Company and each of its Subsidiaries required to be filed by such Person, where
the failure to file such returns or reports would have a Material Adverse
Effect, have been timely filed, and all taxes, assessments, fees and other
governmental charges upon such Persons and upon their respective properties,
assets, income and franchises which are due and payable, where the failure to
pay such amounts when due and payable would in the aggregate have a Material
Adverse Effect, have been paid when due and payable. No Borrower Party knows of
any proposed tax assessment against Company or any of its Subsidiaries that
would have a Material Adverse Effect which is not being actively contested in
good faith by the applicable corporation to the extent affected thereby (and as
to which any provision therefor required pursuant to Section 6.5 has been made).
5.7 Materially Adverse Agreements; Performance.
------------------------------------------
(a) Agreements. Neither Company nor any of its Subsidiaries is a
----------
party to or subject to any material agreement or instrument or charter or other
internal restriction which (in the aggregate as to all such matters) would have
a Material Adverse Effect.
46
<PAGE>
(b) Performance. Neither Company nor any of its Subsidiaries is in
-----------
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation of Company or
any of its Subsidiaries, nor will any default result from the consummation of
this Agreement or any of the other Loan Documents, and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or indirect, of such
default or defaults, if any, would not have a Material Adverse Effect.
5.8 Governmental Regulation. Neither Company nor any of its Material
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, any state public utilities code or to any federal or state
statute or regulation limiting its ability to incur Indebtedness for money
borrowed.
5.9 ERISA Compliance. Except as specifically disclosed in Schedule 5.9:
---------------- ------------
(a) And except as would not have a Material Adverse Effect, each
Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of any Borrower Party, nothing has
occurred which would cause the loss of such qualification. Company and each
ERISA Affiliate have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the best knowledge of any Borrower
Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event that requires notice to be given to the
PBGC has occurred or is reasonably expected to occur; (ii) no Pension Plan has a
Funded Current Liability Percentage of less than 90%; (iii) neither Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); and (iv) neither Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan.
5.10 Environmental Matters. Company and each of its Subsidiaries conducts
---------------------
in the ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business, operations
and properties, and as a result thereof each Borrower Party has reasonably
concluded that, except as specifically disclosed in Schedule 5.10,
-------------
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such Environmental Laws and Environmental Claims are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect.
5.11 Compliance With Laws. Each of Company and its Subsidiaries is in
--------------------
compliance with all Requirements of Law applicable to their properties, assets
and business where the failure to so comply would (as to all such failures to
comply in the aggregate) have a Material Adverse Effect. There are no
proceedings pending or, to the knowledge of any Borrower Party, threatened in
writing, to terminate or modify any license, permit or other approval issued by
a Governmental Authority, the termination or modification of which (in the
aggregate as to all such matters) would have a Material Adverse Effect.
5.12 Regulation U. None of Company nor any of its Subsidiaries is engaged
------------
principally, nor as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. No
part of the proceeds of the Loans will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. No part of the proceeds of the Loans will be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X of the Federal Reserve Board.
5.13 Disclosure. No representation or warranty of any Borrower Party
----------
contained in this Agreement or any other document, certificate or written
statement furnished to Agent or any Bank by any Borrower Party for use in
connection with any transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits to state or will omit
to state a material fact known to such Borrower Party necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
5.14 Matters Relating to Collateral.
------------------------------
(a) The execution and delivery of the Collateral Documents by
Borrower Parties, together with (i) the actions taken on or prior to the date
hereof pursuant to Sections 4.1(a)(vii) and 4.1(a)(viii), (ii) the actions taken
pursuant to Sections 6.9 and 6.11, and (iii) the delivery to Agent of any
Pledged Collateral not delivered to Agent at the time of execution and delivery
of the applicable Collateral Document (all of which Pledged Collateral has been
so delivered) are effective to create in favor of Agent for the benefit of
Banks, as security for the respective Secured Obligations (as defined in the
applicable Collateral Document in respect of any Collateral), a valid and
perfected Lien on all of the Collateral, a security interest in which may be
perfected by filing in the United States or possession, and all filings and
other actions necessary or desirable to perfect and maintain the perfection of
such Liens have been duly made or taken and remain in full force and effect,
other than the filing of any UCC financing statements delivered to Agent for
filing (but not yet filed) and the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of
Agent.
(b) No authorization, approval or other action by, and no notice
to or filing with, any Government Authority in the United States is required for
either (i) the pledge or grant by any Borrower Party of the Liens purported to
be created in favor of Agent pursuant to any of the Collateral Documents, or
(ii) the exercise by Agent of any rights or remedies in respect of
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any Collateral (whether specifically granted or created pursuant to any of the
Collateral Documents or created or provided for by applicable law), except for
filings or recordings contemplated by Section 5.14(a) and except as may be
required, in connection with the disposition of any Pledged Collateral, by laws
generally affecting the offering and sale of securities.
(c) The pledge of the Pledged Collateral pursuant to the
Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
(d) All information supplied to Agent by or on behalf of any
Borrower Party with respect to any of the Collateral (in each case taken as a
whole with respect to any particular Collateral) is accurate and complete in all
material respects.
5.15 Intangible Assets. Company and its Subsidiaries own, or possess the
-----------------
right to use, all trademarks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intangible assets that are used in the conduct of
their respective businesses as now operated, and none of such items, to the best
knowledge of any Borrower Party, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such failure to own or possess or such conflict has a Material
Adverse Effect.
5.16 Insurance. The properties of Company and its Subsidiaries are
---------
insured with financially sound and reputable insurance companies not Affiliates
of Company or with Majestic Insurance International Ltd., a wholly-owned
Subsidiary of Company, in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where Company and its Subsidiaries
operate. From and after the date that is 30 days following the Closing Date,
property, general liability, business interruption and automobile insurance
policies shall name Collateral Agent for the benefit of Banks as an additional
insured thereunder as its interests may appear and, in the case of property
insurance, contain a loss payable subsection or endorsement, satisfactory in
form and substance to Agent, that names Collateral Agent for the benefit of
Banks as the loss payee thereunder for any covered loss with respect to the
Collateral, as appropriate. Insurance policies shall provide for at least 30
days prior written notice to Agent of any material modification or cancellation
of such policy.
5.17 Year 2000. Company has (a) initiated a review and assessment of all
---------
areas within its and each of its Subsidiaries' business and operations
(including those affected by customers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by Company or
any of its Subsidiaries (or their respective customers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (b) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(c) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, Company believes that all computer applications and devices
containing imbedded computer chips (including those of its and its Subsidiaries'
customers and vendors) that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and
49
<PAGE>
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so does not have a Material Adverse Effect.
5.18 Solvency. Each Borrower Party is and, upon the incurrence of any
--------
Obligations by such Borrower Party on any date on which this representation is
made, will be, Solvent.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall (except in the case of Company's reporting covenants)
cause each of its Subsidiaries to, perform and comply with all covenants in this
Article.
6.1 Financial Statements and Other Reports.
--------------------------------------
(a) Company shall maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP and in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Company or any of its subsidiaries. Company shall deliver to
Agent for distribution to Banks:
(i) as soon as practicable and in any event within 30 days
after the end of each fiscal month, a copy of the consolidated and
consolidating balance sheets of Company and its Subsidiaries, as at the end
of such period, the related consolidated and consolidating statement of
income of Company and its Subsidiaries for such fiscal month and for the
fiscal year to date, and the related consolidated statement of cash flows
of Company and its Subsidiaries for such fiscal month and for the fiscal
year to date, certified by the chief financial officer, treasurer or
controller of Company as fairly presenting the financial condition of
Company and its Subsidiaries in all material respects as at the dates
indicated and the results of their operations and changes in cash flows for
the periods indicated in accordance with GAAP, except for the absence of
footnotes and subject to changes resulting from audit and normal year-end
adjustment;
(ii) as soon as practicable and in any event within 45 days
after the end of each of the first three fiscal quarters of the fiscal
year, a copy of the consolidated and consolidating balance sheets of
Company and its Subsidiaries, as at the end of such period, the related
consolidated and consolidating statement of income of Company and its
Subsidiaries for such fiscal quarter and for the fiscal year to date, and
the related consolidated statement of cash flows of Company and its
Subsidiaries for such fiscal quarter and for the fiscal year to date,
certified by the chief financial officer, treasurer or controller of
Company as fairly presenting the financial condition of Company and its
Subsidiaries in all material respects as at the dates indicated and the
results of their operations and changes in cash flows for the periods
indicated in accordance with GAAP, except for the absence of footnotes and
subject to changes resulting from audit and normal year-end adjustment;
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(iii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a copy of the consolidated and
consolidating balance sheets of Company and its Subsidiaries, as at the end
of such year, the related consolidated and consolidating statements of
income of Company and its Subsidiaries for such fiscal year and the related
consolidated statements of stockholders' equity and cash flows of Company
and its Subsidiaries for such fiscal year, accompanied by a report thereon
of and a letter from Arthur Andersen LLP or other independent public
accountants of recognized national standing selected by Company and
satisfactory to Majority Banks substantially in the form of Exhibit VIII,
------------
which report shall be unqualified as to going concern and scope of audit
and shall state that such consolidated financial statements present fairly
in all material respects the financial position of Company and its
Subsidiaries as at the dates indicated and the results of operations and
cash flows for the periods indicated in conformity with GAAP (except as
otherwise stated therein) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) together with each delivery of any financial statements
pursuant to Section 6.1(a)(ii) or 6.1(a)(iii) a Compliance Certificate from
Company executed by a Responsible Officer, stating that the signer does not
have knowledge of the existence as at the date of such certificate, of any
condition or event which constitutes a Default or Event of Default, or, if
any such condition or event existed at such date or exists, specifying the
nature and period of existence thereof and what action Company has taken,
is taking and proposes to take with respect thereto, and demonstrating in
reasonable detail compliance during or at the end of such accounting
periods, as applicable, with Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.11
and 7.16; and, should there be any material change in GAAP as in effect as
of the Closing Date, such Compliance Certificate shall include computations
setting forth reconciliation of the items used in computing compliance with
the covenants under this Agreement by reason of the differences between
GAAP used in the preparation of such financial statements and GAAP as in
effect as of the Closing Date;
(v) concurrently with the delivery of the financial
statements referred to in Section 6.1(a)(iii), a certificate of Company's
independent certified public accountants certifying such financial
statement and stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default hereunder or, if
any such Default or Event of Default shall exist, stating the nature and
status of such event;
(vi) as soon as practicable and in any event no later than
10 Business Days after the end of each fiscal month, a cash flow forecast
for Company and its Subsidiaries for the then following 13 weeks and a
report setting forth the cash flows of Company and its Subsidiaries for the
prior 13 weeks, together with an explanation of any material variance
between those results and the results previously projected for those 13
weeks;
(vii) (A) as soon as practicable and in any event no later
than 10 Business Days after the end of each fiscal month, (1) a report
setting forth the details of
51
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(y) any Lender Derivative/FX Contract to which Company or FinServ is a
party, including the Termination Value of any such Lender Derivative/FX
Contract, and (z) all other outstanding unsecured Indebtedness of Company
or any of its Subsidiaries (including any letters of credit (other than
Lender Letters of Credit) issued for the benefit of Company and its
Subsidiaries) incurred in accordance with Section 7.1(r), and (2)
information with respect to all other Derivative/FX Contracts to which
Company or any of its Subsidiaries is a party, and (B) promptly upon
request, any other information concerning such Derivative/FX Contracts
reasonably requested by Agent;
(viii) as soon as practicable and in any event no later than
30 days after the end of fiscal year 2000, a consolidated plan and
financial forecast for fiscal year 2001 including (A) forecasted
consolidated balance sheets and forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for such fiscal year
and for each month of such fiscal year, together with a pro forma
--- -----
calculation of compliance with Sections 7.6, 7.7 and 7.8 for each quarter
of such fiscal year and an explanation of the major assumptions on which
such forecasts are based, and (B) such other information as Agent may
reasonably request;
(ix) promptly after the same are available, copies of each
annual report or proxy statement sent to the stockholders of Company, and
copies of all annual, regular, periodic and special reports and
registration statements which Company may file or, if Company were subject
to the Exchange Act, would be required to file with the Securities and
Exchange Commission under Sections 13 or 15(d) of the Exchange Act, and not
otherwise required to be delivered to Agent pursuant hereto;
(x) promptly upon any Responsible Officer of Company
obtaining knowledge of any condition or event which constitutes a Default
or Event of Default, or becoming aware that any Bank has given any written
notice of a claimed Default or Event of Default, a certificate from
Company, executed by a Responsible Officer of Company, specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or action taken, and the nature of such claimed
Default or Event of Default, event or condition, and what action Company
has taken, is taking, and proposes to take with respect thereto;
(xi) promptly upon any Responsible Officer of Company
obtaining knowledge of (A) the institution of, or non-frivolous threat of,
any material action, suit, proceeding or arbitration against or affecting
Company or any of its Subsidiaries or any property of Company or any of its
Subsidiaries not previously disclosed in writing by Company to Agent, or
(B) any material development in any action, suit, proceeding or arbitration
already disclosed, and in each case Company reasonably expects such
institution, threat, or material development to result in any Material
Adverse Effect or materially and adversely to affect the ability of Company
and its Subsidiaries, taken as a whole, to perform the Obligations or the
ability of Banks to enforce the Obligations, Company shall promptly give
notice thereof to Agent and provide such other information (excluding
communications covered by the attorney-client privilege) as may be
reasonably requested by Agent or a Bank to enable their counsel to evaluate
such matters;
52
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(xii) promptly upon any Responsible Officer of Company
becoming aware of its occurrence, notice of any of the following events
affecting Company or any ERISA Affiliate (but in no event more than 10 days
after such event), and such Responsible Officer shall also deliver to Agent
and each Bank a copy of any notice with respect to such event that is filed
with a Governmental Authority and any notice delivered by a Governmental
Authority to Company or any ERISA Affiliate with respect to such event:
(A) an ERISA Event;
(B) a decrease in the Funded Current Liability
Percentage for any Pension Plan at the end of any fiscal quarter to
less than 90%; or
(C) any significant change in the status of any item
disclosed on Schedule 5.9;
------------
(xiii) promptly upon receipt thereof, copies of any detailed
audit reports, management letters or recommendations submitted to the board
of directors (or the audit committee of the board of directors) of Company
by independent accountants in connection with the accounts or books of
Company or any of its Subsidiaries, or any audit of any of them;
(xiv) promptly upon any discovery or determination that any
computer application (including those of its suppliers and vendors) that is
material to the business and operations of Company or any of its
Subsidiaries will not be Year 2000 Compliant on a timely basis, except to
the extent that such failure does not have a Material Adverse Effect, a
notice thereof; and
(xv) promptly upon any Responsible Officer of Company
becoming aware of its occurrence, a notice of any material change in
accounting policies or financial reporting practices by Company or any of
its Subsidiaries.
(b) Company will deliver to Agent for distribution to each Bank
together with the Compliance Certificate required under subsection (iv) of
subsection (a) of this Section, a copy of all press releases and other
statements made available generally by Company to the public during the period
covered by the Compliance Certificate. The press releases and such other
statements covered by this subsection are those which concern material
developments in the business of Company and its Subsidiaries taken as a whole.
(c) Company will deliver to Agent for distribution to each Bank
copies of material financial and other information as Agent or Majority Banks
may reasonably request from time to time.
6.2 Corporate Existence, etc. Except as permitted by Section 7.4,
-------------------------
Company shall, and shall cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its corporate existence and rights
and franchises material to its business and its goodwill except where the
failure to do so would not in the aggregate have a Material Adverse Effect.
53
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6.3 Compliance With Laws, etc. Company shall, and shall cause each of
--------------------------
its Subsidiaries to, comply with the requirements of each applicable Requirement
of Law, including all laws relating to environmental, health, safety and land
use matters applicable to any property, except where the failure to do so would
not in the aggregate have a Material Adverse Effect.
6.4 Compliance with Agreements. Company shall, and shall cause each of
--------------------------
its Subsidiaries to, promptly and fully comply with all Contractual Obligations
to which any one or more of them is a party, except for any such Contractual
------
Obligations (a) the performance of which would cause a Default or Event of
Default, (b) then being contested by any of them in good faith by appropriate
proceedings, or (c) if the failure to comply therewith does not have a Material
Adverse Effect.
6.5 Payment of Taxes and Claims. Company shall, and shall cause each of
---------------------------
its Subsidiaries to pay, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges not exceeding
$5,000,000 in the aggregate) imposed upon any of them or any of their properties
or assets or in respect of any of their franchises, business, income or property
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
(other than claims not exceeding $5,000,000 in the aggregate) which have become
due and payable and which by law have or may become a Lien upon any of their
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such governmental charge or
--------
claim need be paid if it is being contested in good faith by appropriate
proceedings and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
6.6 Maintenance of Properties; Insurance.
------------------------------------
(a) Company shall, and shall cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
all properties used or useful in the business of Company and its Subsidiaries
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof, if the failure to perform such actions would
in the aggregate have a Material Adverse Effect. Company shall, and shall cause
each of its Subsidiaries to, maintain or cause to be maintained, through self-
insurance or with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations, if the failure
to do so would (as to all such failures in the aggregate) have a Material
Adverse Effect. From and after the date that is 30 days following the Closing
Date, property, general liability, business interruption and automobile
insurance policies shall (i) name Collateral Agent for the benefit of Banks as
an additional insured thereunder with respect to all Collateral as its interests
may appear and, in the case of property insurance, (ii) contain a loss payable
subsection or endorsement, satisfactory in form and substance to Agent, that
names Collateral Agent for the benefit of Banks as the loss payee thereunder for
any covered loss with respect to all Collateral, as appropriate. Insurance
policies shall provide for at least 30 days prior written notice to Agent of any
material modification or cancellation of such policy.
54
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(b) Upon receipt by Company or any of its Subsidiaries of any
insurance proceeds constituting Net Insurance Proceeds, (i) so long as no Event
of Default shall have occurred and be continuing, Company or such Subsidiary may
retain and apply such Net Insurance Proceeds for working capital purposes, in
the case of business interruption insurance proceeds, or to pay or reimburse the
costs of repairing, restoring or replacing the assets or substantially similar
assets in respect of which such Net Insurance Proceeds were received or, to the
extent not so applied, as provided in Section 2.9, and (ii) if an Event of
Default shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance Proceeds as provided in Section 2.9.
6.7 Inspection.
----------
(a) Company shall, and shall cause each of its Subsidiaries to,
(i) permit any authorized representatives designated by a Bank, at the expense
of that Bank, to visit and inspect any of the properties of Company or any of
its Subsidiaries, including their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss their affairs, finances and
accounts with their officers and independent public accountants, all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested, and (ii) following the occurrence and
during the continuation of an Event of Default, permit any authorized
representatives designated by a Bank, at the expense of Company, to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
their financial and accounting records, and to make copies and take extracts
therefrom, and to discuss their affairs, finances and accounts with their
officers and independent public accountants, immediately upon request by Agent.
(b) Company shall, and shall cause each of its Subsidiaries to,
permit E & Y Restructuring LLC and its affiliates, at the expense of Company, to
have access to and review their financial and accounting records in connection
with the services to be performed by E & Y Restructuring LLC for Banks and to
discuss their affairs, finances and accounts. The scope of such services shall
be determined by Banks from time to time and shall include a monthly review
during the first six months following the Closing Date (including a review of
all Derivative/FX Contracts) and a quarterly review thereafter. Banks agree that
provided no Event of Default has occurred and is continuing, the Professional
- --------
Costs for the services of E & Y Restructuring LLC for which Company shall be
liable shall not exceed $600,000 in the aggregate plus all related expenses.
----
Information acquired by a Bank pursuant to this Section shall be subject to the
confidentiality provisions of Section 10.10.
6.8 Use of Proceeds. Company shall use the proceeds of the Loans for
---------------
working capital and other general corporate purposes and not in contravention of
any applicable Requirement of Law.
6.9 Execution of Guaranty and Collateral Documents by Additional
------------------------------------------------------------
Subsidiaries.
- ------------
(a) In the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will notify Agent of that fact and
cause such Material Domestic Subsidiary to execute and deliver to Agent a
counterpart of the Guaranty and the Pledge and Security Agreement, and to take
all such further actions and execute such further documents and
55
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instruments as may be necessary or, in the opinion of Agent, desirable to create
in favor of Collateral Agent, for the benefit of Banks, a valid and perfected
Lien on the assets of such Material Domestic Subsidiary described in the
applicable Collateral Documents within 30 days of such Person becoming a
Material Domestic Subsidiary; provided, however, that neither Company nor any of
-------- -------
its Subsidiaries shall be required to grant Liens on any Principal Property, the
Capital Stock of a Restricted Subsidiary or any Indebtedness of or issued by a
Restricted Subsidiary.
(b) Company shall deliver to Agent, together with such Loan
Documents, (i) certified copies of such Subsidiary's Organization Documents,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its organization and each other state in which such Person is
qualified to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to Agent,
(ii) a certificate executed by the secretary or similar officer of such
Subsidiary as to (A) the fact that the attached resolutions of the board of
directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Loan Documents are in full force and effect and have not
been modified or amended and (B) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iii) a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to Agent and
its counsel, as to (A) the due organization and good standing of such
Subsidiary, (B) the due authorization, execution and delivery by such Subsidiary
of such Loan Documents, (C) the enforceability of such Loan Documents against
such Subsidiary, and (D) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Agent and its counsel.
(c) In the event that (i) Company or any Material Domestic
Subsidiary acquires any fee interest or leasehold interest in real property
after the date hereof or (ii) at the time any Person becomes a Material Domestic
Subsidiary, such Person owns or holds any fee interest or leasehold interest in
real property, Company or such Material Domestic Subsidiary will notify Agent of
that fact and deliver, or cause such Material Domestic Subsidiary to, execute
and deliver to Agent, within 30 days of such Person acquiring such Property or
becoming a Material Domestic Subsidiary, as the case may be, a fully executed
and notarized Mortgage, in proper form for recording in all appropriate places
in all applicable jurisdictions, encumbering the interest of such Borrower Party
in such Property, and the opinions, appraisals, documents, title insurance,
environmental reports described in Section 6.11(a) or that may be reasonably
required by Agent; provided, however, that neither Company nor any of its
-------- -------
Subsidiaries shall be required to grant Liens on any Principal Property.
6.10 Compliance with ERISA. Company shall and shall cause each of its
---------------------
Subsidiaries and their respective ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code.
56
<PAGE>
6.11 Post Closing Actions.
--------------------
(a) Real Estate.
-----------
(i) On or prior to the date that is 60 days after the
Closing Date, Company shall have delivered to Agent:
(A) Fully executed and notarized Mortgages in proper
form for recording in all appropriate places in all applicable
jurisdictions, encumbering the Property listed on Schedule
--------
6.11(a)(i);
----------
(B) An opinion of counsel (which counsel shall be
reasonably satisfactory to Agent) in each state in which any such
Property is located with respect to the enforceability of the
form(s) of Mortgages to be recorded in such state and such other
matters as Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Agent;
(C) (1) ALTA mortgagee title insurance policies or
unconditional commitments therefor issued by a title company
satisfactory to Agent with respect to the Property listed on
Schedule 6.11(a)(i), in amounts not less than the respective amounts
-------------------
designated therein with respect to any particular Property, insuring
fee simple title to each such Property vested in Company and
assuring Agent that the applicable Mortgage creates valid and
enforceable mortgage Liens on the respective Property encumbered
thereby subject only to a standard survey exception, which policies
(y) shall include an endorsement for mechanics' liens, for future
advances under this Agreement and for any other matters reasonably
requested by Agent and (z) shall provide for affirmative insurance
and such reinsurance as Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to Agent;
and (2) evidence satisfactory to Agent that Company has delivered to
the title company all certificates and affidavits required by the
title company in connection with the issuance of the policies and
paid to the title company or to the appropriate governmental
authorities all expenses and premiums of the title company in
connection with the issuance of the policies and all recording and
stamp taxes (including mortgage recording and intangible taxes)
payable in connection with recording the Mortgages in the
appropriate real estate records;
(D) With respect to each Property listed on Schedule
--------
6.11(a)(i), a title report issued by the title company with respect
----------
thereto, dated not more than 30 days prior to the Closing Date and
satisfactory in form and substance to Agent;
(E) Copies of all recorded documents listed as
exceptions to title or otherwise referred to in the policies or in
the title reports delivered pursuant to subsection (D); and
(F) (1) Evidence, which may be in the form of a letter
from an insurance broker or a municipal engineer, as to whether any
Property is a Flood Hazard Property and the community in which any
such Flood Hazard Property is
57
<PAGE>
located is participating in the National Flood Insurance Program;
(2) if there are any such Flood Hazard Properties, Company's written
acknowledgement of receipt of written notification from Agent (y) as
to the existence of each such Flood Hazard Property and (z) as to
whether the community in which each such Flood Hazard Property is
located is participating in the National Flood Insurance Program;
and (3) in the event that any such Flood Hazard Property is located
in a community that participates in the National Flood Insurance
Program, evidence that Company has obtained flood insurance in
respect of such Flood Hazard Property to the extent required under
the applicable regulations of the Board of Governors of the Federal
Reserve System.
(ii) In the event that the pending sale of any of the
Properties listed on Schedule 6.11(a)(ii) is not consummated on or prior to
--------------------
the date that is 90 days after the Closing Date, Company will notify Agent
of that fact and promptly execute and deliver to Agent a fully executed and
notarized Mortgage, in proper form for recording in all appropriate places
in all applicable jurisdictions encumbering the interest of Company in such
Property and the opinions, appraisals, documents, title insurance and
environmental reports described in Section 6.11(a)(i) or that may be
reasonably required by Agent.
(iii) In the event that a contract of sale is not entered
into by Company within 120 days after the Closing Date with respect to any
of the Properties listed on Schedule 6.11(a)(iii), Company will notify
---------------------
Agent of that fact and promptly execute and deliver to Agent a fully
executed and notarized Mortgage, in proper form for recording in all
appropriate places in all applicable jurisdictions encumbering the interest
of Company in such Property and the opinions, appraisals, documents, title
insurance and environmental reports described in Section 6.11(a)(i) or that
may be reasonably required by Agent; provided, however, that in the event a
-------- -------
contract of sale is entered into with respect to any such Property during
such period and a sale is not consummated on or prior to the date that is
60 days after the execution of any such contract, Company will notify Agent
of that fact and promptly take the actions described above with respect to
such Property.
Notwithstanding the foregoing, in the event that any Property listed
on Schedule 6.11(a)(ii) or Schedule 6.11(a)(iii) becomes a Principal
-------------------- ---------------------
Property prior to the date on which a Mortgage with respect to such
Property is required to be delivered, Company shall have no obligation to
make the deliveries or take the actions set forth above with respect to
such Property.
(b) Insurance. On or prior to the date that is 30 days after the
---------
Closing Date, Company shall have delivered to Collateral Agent a certificate
from Company's insurance broker or other evidence satisfactory to Collateral
Agent that Collateral Agent on behalf of Banks has been named as additional
insured and/or loss payee under all insurance policies to the extent required
under Sections 5.16 and 6.6.
(c) Derivative/FX Contracts. On or prior to the date that is 60
-----------------------
days after the Closing Date, Company shall have delivered to Agent executed
copies of amendments to the existing master agreements pursuant to which Lender
Derivative/FX Contracts are issued
58
<PAGE>
providing that the obligations of Company and FinServ under such agreements will
be secured by the Collateral Documents (as defined in the Bridge Credit
Agreement).
(d) Foreign Collateral. Company shall use its best efforts to take
------------------
or cause to be taken all such actions, execute and deliver or cause to be
executed and delivered all such agreements, documents and instruments and make
or cause to be made all such filings and recordings that may be necessary or, in
the opinion of Agent, desirable in order to create in favor of Collateral Agent,
for the benefit of Banks, a valid and perfected security interest in all foreign
registrations of IP Collateral and 65% of the Capital Stock owned by Company or
any Domestic Subsidiary of all Material Foreign Subsidiaries (other than the
Capital Stock of Restricted Subsidiaries).
(e) Intercompany Transactions. On or prior to the date that is 10
-------------------------
Business Days after the Closing Date, Company shall deliver a certificate
setting forth (i) all Indebtedness of Company to any of its Subsidiaries and of
any of its Subsidiaries to Company or any of its other Subsidiaries, and (ii)
all Investments by Company in any of its Subsidiaries and Investments of any of
its Subsidiaries in Company or any of its other Subsidiaries. On or prior to the
date that is 30 days after the Closing Date, Company shall deliver a fully
executed copy of an intercompany note evidencing all Indebtedness of Foreign
Subsidiaries to Domestic Subsidiaries that are Guarantors.
6.12 Transfer of Receivables. LSFCC shall sell to LSFLLC all accounts
-----------------------
receivable purchased by it from Company immediately upon consummation of such
purchase.
ARTICLE VII
NEGATIVE COVENANTS
------------------
Company covenants and agrees that, until full and final payment of all
Loans and other Obligations, unless Majority Banks waive compliance in writing,
Company shall, and shall cause each of its Subsidiaries to, perform and comply
with all covenants in this Article.
7.1 Indebtedness; Derivative/FX Contracts. Company shall not, and shall
-------------------------------------
not suffer or permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Indebtedness or Derivative/FX Contracts,
except
(a) Indebtedness of Company outstanding on the Closing Date and
listed on Schedule 7.1 and any refinancing of the industrial revenue bond
------------
obligations listed on Schedule 7.1 provided there is no increase in the
------------ --------
aggregate principal amount of such obligations;
(b) Indebtedness under the Loan Documents;
(c) Indebtedness arising from the honoring of a check, draft or
similar instrument against insufficient funds;
(d) Guaranty Obligations of Company guaranteeing the Indebtedness
of Material Foreign Subsidiaries permitted under Section 7.1(r);
59
<PAGE>
(e) Indebtedness of Company and the other Borrower Parties under
the Amended and Restated 1997 364 Day Credit Agreement and the related loan
documents;
(f) Indebtedness of Company in respect of Capital Leases not
exceeding $5,000,000 in the aggregate at any time;
(g) Indebtedness of Company to any wholly-owned Subsidiary that is
a Guarantor and Indebtedness of any wholly-owned Domestic Subsidiary that is a
Guarantor to Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor; provided that (i) all such intercompany Indebtedness shall be
--------
evidenced by promissory notes pledged to Agent on behalf of Banks, (ii) all such
intercompany Indebtedness owed by Company to any of its Subsidiaries shall be
subordinated in right of payment to the payment in full of the Obligations in
any Insolvency Proceeding pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, (iii) any payment by any
Subsidiary of Company under any guaranty of the Obligations shall result in a
pro tanto reduction of the amount of any intercompany Indebtedness owed by such
Subsidiary to Company or any of its Subsidiaries for whose benefit such payment
is made;
(h) Indebtedness of Pledged Foreign Subsidiaries to other Pledged
Foreign Subsidiaries;
(i) Indebtedness of Unpledged Foreign Subsidiaries to Pledged
Foreign Subsidiaries or other Unpledged Foreign Subsidiaries;
(j) Indebtedness of Company and its Subsidiaries (other than LSFCC
or LSFLLC) to FinServ and Indebtedness of FinServ to Company and its other
Subsidiaries (other than LSFCC or LSFLLC) in the ordinary course of business;
(k) other Indebtedness of Company to any of its Subsidiaries and
other Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries incurred after the date hereof; provided, however, that the sum of
-------- -------
(i) the aggregate principal amount of all such Indebtedness incurred after the
date hereof plus (ii) the aggregate Investments permitted by Section 7.11(j),
----
plus (iii) the aggregate Dispositions permitted by Section 7.3(j) shall not
- ----
exceed $50,000,000 in the aggregate during fiscal year 2000 or $100,000,000 in
the aggregate during fiscal year 2001;
(l) Derivative/FX Contracts between Company or FinServ and FinServ
and the other Subsidiaries of Company (other than LSFCC or LSFLLC) in the
ordinary course of business;
(m) Indebtedness of Company in the form of Securities issued in a
Capital Markets Transaction; provided (i) Company makes the prepayments required
--------
pursuant to Section 2.9, (ii) the stated maturity date of such Indebtedness is
not earlier than five years from the issuance thereof, and (iii) such
Indebtedness is unsecured;
(n) Indebtedness of Company and its Material Subsidiaries (other
than LSFCC or LSFLLC) secured by Liens permitted under Section 7.2(h) not
exceeding $25,000,000 in the aggregate at any time;
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<PAGE>
(o) Indebtedness of Company and its Subsidiaries in the form of
Permitted Receivables Purchase Facilities, provided Company and its Subsidiaries
--------
make the prepayment required pursuant to Section 2.9;
(p) Indebtedness of Company and its Subsidiaries in the form of
Real Estate Financing Transactions not exceeding the limitations in Section
7.2(m) at any time, provided Company and its Subsidiaries make the prepayment
--------
required pursuant to Section 2.9;
(q) Indebtedness of Company and its Subsidiaries in the form of
Equipment Financing Transactions not exceeding the limitations in Section 7.2(m)
at any time, provided Company and its Subsidiaries make the prepayment required
--------
pursuant to Section 2.9;
(r) (i) Indebtedness under the Bridge Credit Agreement and the
Amended and Restated 1999 180 Day Credit Agreement, (ii) unsecured Indebtedness
of Company and its Subsidiaries (other than LSFCC and LSFLLC), (iii) unsecured
reimbursement obligations of Company and its Subsidiaries (other than LSFCC and
LSFLLC) under letters of credit (other than Lender Letters of Credit), and (iv)
obligations of Company and its Subsidiaries (other than LSFCC and LSFLLC) under
secured and unsecured Ordinary Course Derivative/FX Contracts (other than Lender
Derivative/FX Contracts and intercompany Ordinary Course Derivative/FX
Contracts) not exceeding $750,000,000 in the aggregate at any time; provided,
--------
however, that the amount of the obligation under any Ordinary Course
- -------
Derivative/FX Contract for purposes of this subsection 7.1(r) shall be the
Termination Value thereof times the Exposure Factor minus the undrawn face
----- -----
amount of any outstanding Lender Letter of Credit issued with respect to such
Ordinary Course Derivative/FX Contract;
(s) Indebtedness of Company to any of its Subsidiaries and other
Indebtedness of any of its Subsidiaries to Company or any of its other
Subsidiaries outstanding on the Closing Date and set forth on the certificate
delivered pursuant to Section 6.11(e); and
(t) other Indebtedness of Company and its Subsidiaries not
exceeding $5,000,000 in the aggregate at any time.
7.2 Limitation on Liens and Negative Pledges. Company shall not, and
----------------------------------------
shall not suffer or permit any of its Subsidiaries to, directly or indirectly,
incur, assume or suffer to exist any Lien or Negative Pledge upon any of their
Property, whether now owned or hereafter acquired, except:
(a) any Lien or Negative Pledge existing on the property of
Company or its Subsidiaries on the Closing Date and listed on Schedule 7.2;
------------
(b) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.5;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of
61
<PAGE>
the Property subject thereto or if such reserve or other appropriate provision,
if any, required by GAAP shall have been made therefor;
(d) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens securing (i) the performance of tenders, bids, trade
contracts (other than for borrowed money), government contracts, leases,
statutory obligations, and performance and return-of-money bonds, (ii)
contingent obligations on surety and appeal bonds, and (iii) other obligations
of a like nature; in each case, incurred in the ordinary course of business;
(f) Liens consisting of judgment or judicial attachment liens,
provided that the judgment secured by any such Lien shall, within 45 days after
- --------
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall have been discharged within 45 days after the expiration of any
such stay and such Liens do not constitute an Event of Default;
(g) easements, rights-of-way, restrictions and other similar
encumbrances that do not interfere with the ordinary conduct of the businesses
of Company and its Subsidiaries;
(h) purchase money mortgages (including chattel mortgages) or
other purchase money liens or conditional sale or other title retention or
security agreements incurred by Company or any of its Material Subsidiaries
(other than LSFCC or LSFLLC) in connection with the acquisition or construction
of any real or personal property, or mortgages or liens or conditional sale or
other title retention agreements or security agreements existing on any such
property at the time of acquisition or construction or placed thereon within one
year of the acquisition or completion of construction thereof and any extension,
renewal or replacement of any such purchase money mortgage or lien in respect of
all or part of the same property; provided that the aggregate outstanding amount
--------
of Indebtedness secured by such Liens does not exceed $25,000,000 in the
aggregate at any time; provided still further that every such mortgage, lien or
--------
agreement shall apply only to the property originally subject thereto and fixed
improvements, if any, then existing or thereafter erected thereon;
(i) any interest or title of a lessor under any Capital or
Operating Lease permitted hereunder (other than any Equipment Financing
Transaction);
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
--------
dedicated cash collateral account and is not subject to restrictions against
access by Company or any of its Subsidiaries owning the affected deposit account
or other funds maintained with a creditor depository institution in excess of
those set forth by regulations promulgated by the Federal Reserve Board, and
(ii) such deposit account is not intended by Company or any of its Subsidiaries
to provide collateral to the depository institution;
(k) leases or subleases granted to others in the ordinary course
of business not interfering with the ordinary conduct of the business of the
grantor thereof;
62
<PAGE>
(l) Liens attaching to ownership interests in joint ventures
(whether in partnership, corporate or other form) engaged in the LOS/DOS
Business or attaching to intellectual property rights relating to the LOS/DOS
Business;
(m) Liens created in connection with (i) Equipment Financing
Transactions and (ii) Real Estate Financing Transactions so long as (A) the
aggregate amount of all such transactions permitted by this Section 7.2(m) at
any time outstanding (as measured by the sum of all Indebtedness secured by such
Liens then outstanding or to be so created or assumed) shall not exceed
$175,000,000 and (B) Company shall cause, in connection therewith, the
prepayments of Loans required by Section 2.9;
(n) Liens created pursuant to applications or reimbursement
agreements pertaining to documentary letters of credit which encumber documents
and other property relating to such documentary letters of credit and the
products and proceeds thereof;
(o) Liens granted pursuant to the Collateral Documents;
(p) Liens securing (i) Indebtedness under the Bridge Credit
Agreement, the Amended and Restated 1999 180 Day Credit Agreement, and the
Amended and Restated 1997 364 Day Credit Agreement, and (ii) obligations under
Lender Derivative/FX Contracts;
(q) Liens securing Ordinary Course Derivative/FX Contracts
permitted by Section 7.1(r);
(r) other Liens so long as the aggregate outstanding amount of
Indebtedness secured by such Liens does not exceed $2,000,000 at any time;
(s) Negative Pledges on accounts receivables of Foreign
Subsidiaries and the associated assets of Foreign Subsidiaries in connection
with Permitted Foreign Receivable Purchase Facilities;
(t) Negative Pledges on Intellectual Property licensed from third
parties; and
(u) Negative Pledges with respect to specific property encumbered
to secure payment of particular Indebtedness permitted hereunder.
7.3 Dispositions. Company shall not, and shall not suffer or permit any
------------
of its Subsidiaries to, directly or indirectly, make any Dispositions, except:
(a) Dispositions of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory by Company or any of Subsidiaries to
Company or any of its Subsidiaries in ordinary course of business arm's length
transactions;
(c) Dispositions of inventory in the ordinary course of business;
63
<PAGE>
(d) Dispositions of accounts receivable from Company to LSFCC and
from LSFCC to LSFLLC;
(e) Dispositions of Permitted Receivables pursuant to Permitted
Receivables Purchase Facilities, provided Company and its Subsidiaries make the
--------
prepayments required pursuant to Section 2.9;
(f) Dispositions of equipment pursuant to Equipment Financing
Transactions not exceeding the limitations in Section 7.2(m) at any time,
provided Company and its Subsidiaries make the prepayments required pursuant to
- --------
Section 2.9;
(g) Dispositions of real property pursuant to Real Estate
Financing Transactions not exceeding the limitations in Section 7.2(m) at any
time, provided Company and its Subsidiaries make the prepayments required
--------
pursuant to Section 2.9;
(h) licenses of Intellectual Property in the ordinary course of
business;
(i) the Pending IceHouse Disposition;
(j) other Dispositions by Company to any of its Subsidiaries of
Property other than accounts receivable and other Dispositions by any of its
Subsidiaries to Company or any of its other Subsidiaries of Property other than
accounts receivable; provided, however, that the sum of (i) the fair market
-------- -------
value of the assets sold, transferred, licensed or otherwise disposed of plus
----
(ii) the aggregate principal amount of Indebtedness permitted by Section 7.1(k)
plus (iii) the aggregate Investments permitted by Section 7.11(j) shall not
- ----
exceed $50,000,000 in the aggregate during fiscal year 2000 or $100,000,000 in
the aggregate during fiscal year 2001;
(k) Asset Dispositions by Company and its Subsidiaries of Property
other than accounts receivable; provided that (i) at the time of any
--------
Disposition, no Event of Default shall exist or shall result from such
Disposition; (ii) the consideration received for such Disposition shall be in an
amount at least equal to the fair market value of the assets sold, transferred,
licensed or otherwise disposed of; (iii) the sole consideration received shall
be cash; (iv) the aggregate fair market value of all assets so sold,
transferred, licensed or otherwise disposed of by Company and its Subsidiaries
shall not exceed $50,000,000 in any fiscal year; and (v) Company and its
Subsidiaries make the prepayments required pursuant to Section 2.9;
(l) Dispositions of the Capital Stock of Domestic Subsidiaries
that are Guarantors to Company and wholly owned Domestic Subsidiaries that are
Guarantors; Dispositions of the Capital Stock of Pledged Foreign Subsidiaries to
Company, Domestic Subsidiaries that are Guarantors and other Pledged Foreign
Subsidiaries; and Dispositions of the Capital Stock of Unpledged Foreign
Subsidiaries to Company or any of its other Subsidiaries; and
(m) Dispositions of accounts receivable to collection agencies the
aggregate face amount of which does not exceed $2,000,000.
7.4 Fundamental Changes. Company shall not and shall not suffer or
-------------------
permit its Subsidiaries to, merge or consolidate with or into any Person or
liquidate, wind-up or dissolve
64
<PAGE>
themselves, or permit or suffer any liquidation or dissolution or sell all or
substantially all of their respective assets, except that so long as no Default
or Event of Default exists or would result therefrom (a) any Domestic Subsidiary
may merge with or into Company or any other Domestic Subsidiary that is a
Guarantor or be liquidated, wound up or dissolved or all or any part of its
business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of to Company or any other Domestic Subsidiary that is a
Guarantor, provided that, in the case of a merger, Company or such Guarantor, as
--------
the case may be, shall be the continuing or surviving corporation; (b) any
Pledged Foreign Subsidiary may merge with or into any other Pledged Foreign
Subsidiary or be liquidated, wound up or dissolved or all or any part of its
business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of to Company or any other Pledged Foreign Subsidiary; (c)
any Unpledged Foreign Subsidiary may merge with or into any other Unpledged
Foreign Subsidiary or any Pledged Foreign Subsidiary or be liquidated, wound up
or dissolved or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of to any other
Unpledged Foreign Subsidiary or a Pledged Foreign Subsidiary, provided that, in
--------
the case of a merger, such Pledged Foreign Subsidiary shall be the continuing or
surviving corporation; and (d) Company and its Subsidiaries may make Asset
Dispositions permitted by Section 7.3(k).
7.5 Use of Proceeds.
---------------
(a) Company shall not use any portion of the Loan proceeds
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance Indebtedness of Company or others incurred to purchase or
carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Sections 13 or 14 of the Exchange Act.
(b) Company shall not, directly or indirectly, use any portion of
the proceeds of the Loans (i) knowingly to purchase Ineligible Securities from
the Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of Company or any Affiliate of Company. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in certain Ineligible
Securities.
65
<PAGE>
7.6 Leverage Ratio. Company shall not permit the Leverage Ratio on the
--------------
last day of any period set forth below to be more than the correlative amount
indicated:
PERIOD LEVERAGE RATIO
------ --------------
First Fiscal Quarter of Fiscal Year 2000 6.00 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 6.00 to 1.00
Fiscal Year 2000 5.75 to 1.00
Four Fiscal Quarter Period ending on the last day of the
First Fiscal Quarter of Fiscal Year 2001 5.25 to 1.00
Four Fiscal Quarter Period ending on the last day of the
Second Fiscal Quarter of Fiscal Year 2001 5.00 to 1.00
Four Fiscal Quarter Period ending on the last day of the
Third Fiscal Quarter of Fiscal Year 2001 4.50 to 1.00
Fiscal Year 2001 4.25 to 1.00
7.7 Interest Coverage Ratio. Company shall not permit the Interest
-----------------------
Coverage Ratio for any period set forth below to be less than the correlative
amount indicated:
INTEREST
PERIOD COVERAGE RATIO
------ --------------
First Fiscal Quarter of Fiscal Year 2000 1.6 to 1.00
First Two Fiscal Quarter Period of Fiscal Year 2000 1.6 to 1.00
First Three Fiscal Quarter Period of Fiscal Year 2000 1.7 to 1.00
Fiscal Year 2000 1.8 to 1.00
Four Fiscal Quarter Period ending on the last day of the
First Fiscal Quarter of Fiscal Year 2001 1.9 to 1.00
Four Fiscal Quarter Period ending on the last day of the
Second Fiscal Quarter of Fiscal Year 2001 2.0 to 1.00
Four Fiscal Quarter Period ending on the last day of the
Third Fiscal Quarter of Fiscal Year 2001 2.1 to 1.00
Fiscal Year 2001 2.2 to 1.00
66
<PAGE>
7.8 Minimum Consolidated EBITDA. Company shall not permit Consolidated
---------------------------
EBITDA for any period set forth below to be less than the correlative amount
indicated:
MINIMUM
PERIOD CONSOLIDATED EBITDA
------ -------------------
($ in millions)
First Fiscal Quarter of Fiscal Year 2000 $ 102
First Two Fiscal Quarter Period of Fiscal Year 2000 $ 205
First Three Fiscal Quarter Period of Fiscal Year 2000 $ 320
Fiscal Year 2000 $ 440
Four Fiscal Quarter Period ending on the last day of the
First Fiscal Quarter of Fiscal Year 2001 $ 465
Four Fiscal Quarter Period ending on the last day of the
Second Fiscal Quarter of Fiscal Year 2001 $ 490
Four Fiscal Quarter Period ending on the last day of the
Third Fiscal Quarter of Fiscal Year 2001 $ 510
Fiscal Year 2001 $ 540
7.9 Change in Business. Company shall not, and shall not suffer or
------------------
permit any of its Subsidiaries to, engage in any business not related or
incidental to the manufacture and sale of clothing and accessories. The LOS/DOS
Business is a business that is related or incidental to the manufacture and sale
of clothing within the meaning of the preceding sentence. Company shall not
suffer or permit LSFLLC to engage in any business other than the purchase and
holding of accounts receivable and shall not suffer or permit LSFCC to engage in
any business other than the purchase and servicing of accounts receivable
generated by Company, the processing of accounts payable of Company and its
Subsidiaries, and other accounting and general customer relationship functions.
7.10 ERISA. Company shall not, and shall not permit or suffer any of its
-----
Subsidiaries or ERISA Affiliates to:
(a) engage in any transaction in connection with which Company or
any of its Subsidiaries or any of their respective ERISA Affiliates would be
subject to either a civil penalty assessed pursuant to Section 502(i) or 502(l)
of ERISA or a tax imposed by Section 4975 of the Code, in either case in an
amount in excess of $5,000,000;
(b) fail to make full payment within five Business Days after the
date when due of all amounts exceeding $5,000,000 which, under the provisions of
any Pension Plan, Company or any of its Subsidiaries or any of their respective
ERISA Affiliates is required to pay as contributions thereto, or (as to any
Subsidiary organized under the laws of any of the United States) permit to exist
any accumulated funding deficiency, whether or not waived, with respect to any
Pension Plan in an aggregate amount greater than $5,000,000;
67
<PAGE>
(c) permit the Funded Current Liability Percentage for any Pension
Plan to be less than 90%; or
(d) fail to make any payments in an aggregate amount greater than
$5,000,000 to any Multiemployer Plan that Company or any of its Subsidiaries, or
any of their respective ERISA Affiliates may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto.
As used in this Section, the term "accumulated funding
deficiency" has the meaning specified in Section 3(23) of ERISA and Section 412
of the Code and the term "accrued benefit" has the meaning specified in Article
3 of ERISA.
7.11 Investments. Company shall not, and shall not suffer or permit any
-----------
of its Subsidiaries to, directly or indirectly, make any Investments, or
acquire, by purchase or otherwise, all or substantially all the business,
property or fixed assets of, or stock or other ownership interest of any Person,
or any division or line of business of, any Person except:
------
(a) Investments existing on the Closing Date and listed on
Schedule 7.11;
- -------------
(b) cash and cash equivalents;
(c) advances to officers, directors and employees of Company or
any of their respective Subsidiaries for travel, entertainment, relocation and
analogous ordinary business purposes;
(d) extensions of credit to customers or suppliers of Company or
any of its Subsidiaries in the ordinary course of business and any Investments
received in satisfaction or partial satisfaction thereof;
(e) Investments permitted by Section 7.4;
(f) intercompany loans permitted by Sections 7.1(g), 7.1(h),
7.1(i), and 7.1(j);
(g) Investments by Company in any wholly-owned Subsidiary that is
a Guarantor and Investments of any wholly-owned Domestic Subsidiary that is a
Guarantor in Company or any other wholly-owned Domestic Subsidiary that is a
Guarantor;
(h) Investments by Pledged Foreign Subsidiaries in other Pledged
Foreign Subsidiaries;
(i) Investments by Unpledged Foreign Subsidiaries in other
Unpledged Foreign Subsidiaries;
(j) other Investments by Company in any of its Subsidiaries and
other Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries made after the date hereof; provided, however, that (i) such
-------- -------
Investments plus (ii) the aggregate principal amount of Indebtedness permitted
----
by Section 7.1(k) plus (iii) the aggregate Dispositions permitted by Section
----
7.3(j) shall not exceed $50,000,000 in the aggregate during fiscal year 2000 or
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$100,000,000 in the aggregate during fiscal year 2001; provided further that
-------- -------
Investments in Subsidiaries of Company that are not Solvent immediately prior to
the making of any such Investment shall not exceed $10,000,000 in the aggregate
in any fiscal year;
(k) Investments by Company in any of its Subsidiaries and other
Investments of any of its Subsidiaries in Company or any of its other
Subsidiaries on the Closing Date and set forth on the certificate delivered
pursuant to Section 6.11(e); and
(l) other Investments not exceeding $25,000,000 at any time.
7.12 Restricted Payments. Company shall not, and shall not permit or
-------------------
suffer any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment other than (a) payments of
Indebtedness in connection with Asset Dispositions as contemplated by the
definition of Net Asset Disposition Proceeds or Equipment Financing Transactions
as contemplated by the definition of Net Equipment Financing Proceeds and (b)
repayments and prepayments of Indebtedness under the Bridge Credit Agreement,
the Amended and Restated 1999 180 Day Credit Agreement, and the Amended and
Restated 1997 364 Day Credit Agreement.
7.13 Operating Lease Obligations. Company shall not, and shall not suffer
---------------------------
or permit any of its Subsidiaries to, directly or indirectly, create or suffer
to exist any obligations for the payment of rent for any property under
Operating Leases, except:
------
(a) Operating Leases in existence on the Closing Date; and
(b) Operating Leases entered into or assumed by Company or any
Subsidiary after the date hereof in the ordinary course of business.
7.14 Transactions with Affiliates. Company shall not, and shall not
----------------------------
suffer or permit any of its Subsidiaries to directly or indirectly, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
Company other than arm's-length transactions with Affiliates that are otherwise
not prohibited hereunder.
7.15 Amendments of Documents Relating to Indebtedness and Receivables.
----------------------------------------------------------------
(a) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of any Indebtedness (other
than Indebtedness under the Bridge Credit Agreement, the Amended and Restated
1999 180 Day Credit Agreement or the Amended and Restated 1997 364 Day Credit
Agreement), or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate or make less onerous any such event or default or increase any grace
period related thereto), change the redemption, prepayment or defeasance
provisions thereof, or change any collateral therefor (other than to release
such collateral), or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder or to confer any
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additional rights on the holders of such Indebtedness (or a trustee or other
representative on their behalf) which would be materially adverse to Company or
to Banks. Company shall not amend or otherwise change the terms of the Bridge
Credit Agreement, the Amended and Restated 1999 180 Day Credit Agreement or the
Amended and Restated 1997 364 Day Credit Agreement without the written consent
of Majority Banks if the effect of such amendment is to extend the stated
maturity date thereof or increase the aggregate commitments thereunder. Company
shall not amend or otherwise change the terms of the Bridge Credit Agreement,
the Amended and Restated 1999 180 Day Credit Agreement or the Amended and
Restated 1997 364 Day Credit Agreement to provide for an earlier stated maturity
date unless this Agreement is amended to provide for the same maturity date.
(b) Company shall not, and shall not suffer or permit any of its
Subsidiaries to, amend or otherwise change the terms of the Receivables Transfer
Agreements other than amendments to extend the term thereof or to preserve the
arm's length nature of the purchase and sale effected thereby.
7.16 Consolidated Capital Expenditures. Company shall not, and shall not
---------------------------------
suffer or permit any of its Subsidiaries to make or incur Consolidated Capital
Expenditures, in any fiscal year indicated below, in an aggregate amount in
excess of the corresponding amount set forth below opposite such fiscal year:
MAXIMUM CAPITAL
FISCAL YEAR EXPENDITURES
----------- ------------
2000 $60,000,000
2001 $60,000,000
7.17 Materially Adverse Agreements. Company shall not, and shall not
-----------------------------
suffer or permit any of its Subsidiaries to, become a party to or become subject
to any material agreement or instrument or charter or other internal restriction
which (in the aggregate as to all such matters) would have a Material Adverse
Effect.
7.18 Limitations on Upstreaming. Company shall not, and shall not suffer
--------------------------
or permit any of its Subsidiaries to, agree to any restriction or limitation on
the making of Restricted Payments or transferring of assets from any Subsidiary
to its parent except pursuant to this Agreement, the Bridge Credit Agreement,
the Amended and Restated 1999 180 Day Credit Agreement, and the Amended and
Restated 1997 364 Day Credit Agreement.
7.19 Change in Auditors. Company shall not terminate the certified public
------------------
accountants auditing the books of Company or any of its Subsidiaries unless
Company shall have informed Agent of the reason for the termination and selected
new certified public accountants of recognized national standing and reasonably
satisfactory to Agent.
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7.20 Restricted Subsidiaries. Company shall not permit any of its
-----------------------
Subsidiaries existing as of the Closing Date to become a Restricted Subsidiary
other than as a result of a change in Consolidated Net Tangible Assets.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.1 Event of Default. Any of the following shall constitute an "Event of
----------------
Default":
(a) Non-Payment. Company fails to pay, (i) when and as required to
-----------
be paid herein, any amount of principal of any Loan or (ii) within three
Business Days after the same becomes due, any other interest, fee or any other
amount payable hereunder or under any other Loan Document; or
(b) Cross Default. Failure of Company or any of its Subsidiaries
-------------
to pay, or any default in the payment of, any principal, interest or any other
amount on any Indebtedness or Derivative/FX Contract beyond any period of grace
provided; or breach or default with respect to any other material term of any
evidence of any Indebtedness or Derivative/FX Contract, or of any loan
agreement, mortgage, indenture or other agreement relating thereto, if such
breach or default continues beyond any applicable period of grace provided, if
and for so long as the effect of such failure, default or breach is to cause or
permit the holder or holders of that Indebtedness or Derivative/FX Contract (or
a trustee on behalf of such holder or holders) to cause, with or without the
giving of notice, that Indebtedness or Derivative/FX Contract to become or be
declared due prior to its stated maturity; provided, however, that this
-------- -------
subsection shall not apply with respect to Indebtedness and Derivative/FX
Contracts, the aggregate principal amount of which or the Termination Value of
which, as the case may be, does not exceed $25,000,000 in the aggregate; or
(c) Representation or Warranty. Any representation or warranty
--------------------------
made by any Borrower Party herein or in any other Loan Document or any
representation or warranty in any statement or certificate at any time given by
any Borrower Party in writing pursuant to any of the Loan Documents or in
connection herewith shall be false in any material respect on the date as of
which made; or
(d) Specific Defaults. Failure to perform or observe any term,
-----------------
covenant or agreement contained in Section 6.8 or Article VII; or
(e) Other Defaults. Failure to perform or observe any term,
--------------
covenant or agreement contained in this Agreement or any other Loan Document and
such default shall not have been remedied or waived within 30 days after receipt
of notice from Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction shall enter a decree or
order for relief in respect of Company or any of its Material Subsidiaries
in an involuntary case under any
71
<PAGE>
applicable Debtor Relief Laws, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable Debtor Relief
Laws; or
(ii) A decree or order of a court having jurisdiction for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian
or other officer having similar powers over Company or any of its Material
Subsidiaries or over all or a substantial part of their property, shall
have been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Material Subsidiaries
for all or a substantial part of their property; or the issuance of a
warrant of attachment, execution or similar process against any substantial
part of the property of Company or any of its Material Subsidiaries, and
the continuance of any such events described in this subsection (f)(ii) for
60 days unless stayed, dismissed, bonded or discharged; or
(iii) an involuntary case under any applicable Debtor Relief
Laws shall have been commenced against Company or any of its Material
Subsidiaries and shall not have been dismissed within 60 days after the
commencement of such case; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Company or
---------------------------------------------------
any of its Material Subsidiaries shall commence a voluntary case under any
applicable Debtor Relief Laws, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such Debtor Relief Laws, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of their property; the making by Company or any of
its Material Subsidiaries of any assignment for the benefit of creditors; or the
inability or failure of Company or any of its Material Subsidiaries or the
admission by Company or any of its Material Subsidiaries in writing of their
inability to pay their debts as such debts become due; or the Board of Directors
of Company or any of its Material Subsidiaries (or any committee thereof) adopts
any resolution or otherwise authorizes action to approve any of the foregoing;
or
(h) Judgments and Attachments. Any money judgment, writ or warrant
-------------------------
of attachment, or similar process involving in any case an amount in excess of
$10,000,000 in excess of available insurance coverage as to which the insurer
has not denied coverage shall be entered or filed against Company or any of its
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded and unstayed for a period of 45 days or in any
event later than five days prior to the date of any proposed sale thereunder; or
(i) Unfunded ERISA Liabilities. Any Pension Plan maintained by
--------------------------
Company or any of its ERISA Affiliates shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan, or the PBGC (or any
successor thereto) shall institute proceedings to terminate any Pension Plan or
to appoint a trustee to administer any Pension Plan, and, in each case,
Company's or any such ERISA Affiliate's liability (after giving effect to the
tax consequences thereof) as of the date thereof to the PBGC (or any successor
thereto) for unfunded guaranteed vested benefits under such Pension Plan or
Company's obligations to contribute to any Pension Plan in order to voluntarily
terminate such Pension Plan exceed $20,000,000 (or in the case of a termination
involving Company or any of its ERISA Affiliates as a "substantial employer" (as
defined in
72
<PAGE>
Section 4001(a)(2) of ERISA) the withdrawing employer's proportionate share of
such liability shall exceed such amount); or
(j) Withdrawal Liability Under Multiemployer Plan. Company or any
---------------------------------------------
of its ERISA Affiliates as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an amount exceeding
$20,000,000; or
(k) Change of Control. (i) Any person or two or more persons
-----------------
(other than Permitted Transferees) acting in concert shall acquire beneficial
ownership, directly or indirectly, of Securities of Company or Voting Trust
Certificates issued under the Voting Trust Agreement (or other securities
convertible into such securities) representing 30% or more of the combined
voting power of all Securities of Company entitled to vote (or would be entitled
to vote in the absence of the Voting Trust Agreement) in the election of
directors (except that the provisions of this subsection (i) shall not apply to
Voting Trustees serving in their capacities as such under the Voting Trust
Agreement); or (ii) during any period of up to 12 consecutive months, commencing
after the Closing Date, individuals who at the beginning of such 12 month period
were directors of Company shall cease for any reason to constitute a majority of
the Board of Directors of Company unless the persons replacing such individuals
were nominated by the Board of Directors of Company, by Permitted Transferees or
by any of the Voting Trustees; or
(l) Failure to Deliver Certain Loan Documents; Invalidity of
--------------------------------------------------------
Guaranties; Failure of Security; Repudiation of Obligations. The Guaranty or the
- -----------------------------------------------------------
Pledge and Security Agreement shall not be executed and delivered by the
Material Domestic Subsidiaries on or prior to the day following the Closing
Date. At any time after the execution and delivery thereof, (i) any Guaranty for
any reason, other than the satisfaction in full of all Obligations, shall cease
to be in full force and effect (other than in accordance with its terms) or
shall be declared to be null and void, (ii) any Collateral Document shall cease
to be in full force and effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the satisfaction in
full of the Obligations or any other termination of such Collateral Document in
accordance with the terms hereof or thereof) or shall be declared null and void
by a court of competent jurisdiction, or Collateral Agent shall not have or
shall cease to have a valid and perfected Lien in any Collateral (other than
Inventory in the possession or control of Company's agents or processors)
purported to be covered thereby having a fair market value, individually or in
the aggregate, exceeding $5,000,000, in each case for any reason other than the
failure of Agent or any Bank to take any action within its control, or (iii) any
Borrower Party shall contest the validity or enforceability of any Loan Document
in writing or deny in writing that it has any further liability, including with
respect to future advances by Banks, under any Loan Document to which it is a
party.
8.2 Remedies. If any Event of Default occurs, Agent shall, at the
--------
request of, or may, with the consent of, Majority Banks,
(a) declare the Commitment of each Bank to be terminated,
whereupon such Commitments shall forthwith be terminated;
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<PAGE>
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable;
without presentment, demand, request, protest or other notice of any kind, all
of which are hereby expressly waived by Company;
(c) exercise on behalf of itself and Banks all rights and remedies
available to it and Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in Section
- -------- -------
8.1(f) or (g) above (after the expiration of any grace or cure period provided
therein), the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable
without further act of Agent or any Bank.
8.3 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
No Bank may exercise any rights or remedies with respect to the Obligations
without the consent of Majority Banks in their sole and absolute discretion. The
order and manner in which Agent's and Banks' rights and remedies are to be
exercised shall be determined by Majority Banks in their sole and absolute
discretion. Regardless of how a Bank may treat payments for the purpose of its
own accounting, for the purpose of computing the Obligations hereunder, payments
shall be applied first, to costs and expenses (including Professional Costs)
incurred by Agent and each Bank, second, to the payment of accrued and unpaid
interest on the Loans to and including the date of such application, third, to
the payment of the unpaid principal of the Loans, and fourth, to the payment of
all other amounts (including fees) then owing to Agent and Banks under the Loan
Documents, in each case paid pro rata to each Bank in the same proportions that
the aggregate Obligations owed to each Bank under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all Banks, without
priority or preference among Banks. No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Agent and Banks hereunder or thereunder or at
law in equity.
ARTICLE IX
AGENT; COLLATERAL AGENT
-----------------------
9.1 Appointment and Authorization. Each Bank hereby irrevocably (subject
-----------------------------
to Section 9.9) appoints, designates and authorizes Agent and Collateral Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, neither Agent nor Collateral Agent
shall have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent or Collateral Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants,
74
<PAGE>
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against Agent
or Collateral Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to Agent or
Collateral Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.2 Delegation of Duties. Agent and Collateral Agent may execute any of
--------------------
their respective duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. Neither Agent nor
Collateral Agent shall be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.
9.3 Liability of Agent or Collateral Agent. No Agent-Related Person or
--------------------------------------
Collateral Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any of Banks
for any recital, statement, representation or warranty made by any Borrower
Party or any Subsidiary or Affiliate of any Borrower Party, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent or Collateral Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower Party or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person or Collateral Agent-Related Person shall be under any
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Properties, books or
records of any Borrower Party, or any of Company's Subsidiaries or Affiliates.
9.4 Reliance by Agent and Collateral Agent.
--------------------------------------
(a) Agent and Collateral Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to Company), independent accountants and other
experts selected by Agent or Collateral Agent. Agent and Collateral Agent shall
be fully justified in failing or refusing to take any action under any Loan
Document unless Agent or Collateral Agent, as the case may be, shall first
receive such advice or concurrence of Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Agent shall in all cases
be fully protected in acting, or in
75
<PAGE>
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of Majority Banks (or all of Banks if
required hereunder) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of Banks. Where this agreement
expressly permits or prohibits an action unless Majority Banks otherwise
determine, and in all other instances, Agent or Collateral Agent, as the case
may be, may, but shall not be required to, initiate any solicitation for the
consent or a vote of Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
either sent by Agent or Collateral Agent to such Bank for consent, approval,
acceptance, or satisfaction, required thereunder to be consented to or approved
by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. Neither Agent nor Collateral Agent shall be
-----------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except that Agent shall be deemed to have knowledge with respect to
defaults in the payment of principal, interest and fees required to be paid to
Agent for the account of Banks, unless Agent shall have received written notice
from a Bank or Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". Agent
will notify Banks of its receipt of any such notice. Agent shall take such
action with respect to such Default or Event of Default as may be directed by
Majority Banks in accordance with Article VIII; provided, however, that unless
-------- -------
and until Agent has received any such direction, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of Banks.
9.6 Credit Decision; Disclosure of Information by Agent and Collateral
------------------------------------------------------------------
Agent Each Bank acknowledges that no Agent-Related Person or Collateral Agent-
- -----
Related Person has made any representation or warranty to it, and that no act by
Agent or Collateral Agent hereinafter taken, including any consent to and
acceptance of any assignment or review of the affairs of Company or any of its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person or Collateral Agent-Related Person to any
Bank as to any matter, including whether Agent-Related Persons or Collateral
Agent-Related Persons have disclosed material information in their possession.
Each Bank, including any Bank by assignment, represents to Agent that it has,
independently and without reliance upon any Agent-Related Person or Collateral
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Company and its Subsidiaries and Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person or Collateral
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decision in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business prospects, operations, property, financial
and other condition and creditworthiness of Company and its Subsidiaries and
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to Banks by Agent or
76
<PAGE>
Collateral Agent herein, neither Agent or Collateral Agent shall have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Company or any of its Subsidiaries or
Affiliates which may come into the possession of any Agent Related Person or any
Collateral Agent-Related Person.
9.7 Indemnification of Agent and Collateral Agent. Whether or not the
---------------------------------------------
transactions contemplated hereby are consummated, Banks shall indemnify upon
demand each Agent-Related Person and each Collateral Agent-Related Person (to
the extent not reimbursed by or on behalf of any Borrower Party and without
limiting the obligation of any Borrower Party to do so), pro rata, and hold
harmless each Agent Related Person and each Collateral Agent-Related Person from
and against any and all Indemnified Liabilities incurred by it; provided,
--------
however, that no Bank shall be liable for the payment to any Agent-Related
- -------
Person or any Collateral Agent-Related Person of any portion of such Indemnified
Liabilities resulting from such Person's gross negligence or willful misconduct;
provided, however, that no action taken in accordance with the directions of
- -------- -------
Majority Banks shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Bank shall reimburse Agent and Collateral Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Professional Costs)
incurred by Agent and Collateral Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or financial
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent or Collateral Agent is not reimbursed for such expenses
by or on behalf of Company. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of Agent
or Collateral Agent.
9.8 Agent in Individual Capacity. Bank of America and its Affiliates may
----------------------------
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with Company and its
Subsidiaries and Affiliates as though Bank of America were not Agent or
Collateral Agent hereunder and without notice to or consent of Banks. Banks
acknowledge that as of the date of execution of this Agreement, Bank of America
has outstanding unsecured loans to Company that will be refinanced from the
proceeds of loans made under the Bridge Credit Agreement. In addition, Banks
acknowledge that Bank of America has been appointed administrative agent and
collateral agent under the Bridge Credit Agreement, the Amended and Restated
1999 180 Day Credit Agreement, and the Amended and Restated 1997 364 Day Credit
Agreement and that the lenders party to those agreements have been granted a
Lien on the Collateral that is subordinated to the Lien granted to Banks
pursuant to the Intercreditor Agreement. Bank of America or its Affiliates may
receive information regarding Company and its Subsidiaries and Affiliates
(including information that may be subject to confidentiality obligations in
favor of Company, such Subsidiary or such Affiliate or information relating to
the Bridge Credit Agreement, the Amended and Restated 1999 180 Day Credit
Agreement or the Amended and Restated 1997 364 Day Credit Agreement) as a result
of the activities described above and Banks acknowledge that Agent or Collateral
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as
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though it were not Agent or Collateral Agent, and the terms "Bank" and "Banks"
shall include Bank of America in its individual capacity.
9.9 Successor Agent. Agent may, and at the request of Majority Banks
---------------
shall, resign as Agent upon 30 days' notice to Company and Banks. If Agent
resigns under this Agreement, Majority Banks shall appoint from among Banks a
successor agent for Banks which successor agent shall be consented to by Company
at all times other than during the existence of an Event of Default (which
approval of Company shall not be unreasonably withheld or delayed). If no
successor agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with Banks and Company, a successor
agent from among Banks. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and Banks shall perform all of the duties of Agent hereunder until such time, if
any, as Majority Banks appoint a successor agent as provided for above.
Notwithstanding the foregoing, Bank of America may not be removed as Agent at
the request of Majority Banks unless Bank of America shall also simultaneously
be replaced as "Collateral Agent" hereunder pursuant to documentation in form
and substance reasonably satisfactory to Bank of America.
9.10 Successor Collateral Agent. Collateral Agent may, and at the request
--------------------------
of Majority Banks shall, resign as Collateral Agent upon 30 days' notice to
Company and Banks. If Collateral Agent resigns under this Agreement, Majority
Banks shall appoint from among Banks a successor collateral agent for Banks
which successor collateral agent shall be consented to by Company at all times
other than during the existence of an Event of Default (which approval of
Company shall not be unreasonably withheld or delayed). If no successor
collateral agent is appointed prior to the effective date of the resignation of
Collateral Agent, Collateral Agent may appoint, after consulting with Banks and
Company, a successor collateral agent from among Banks. Upon the acceptance of
its appointment as successor collateral agent hereunder, such successor
collateral agent shall succeed to all the rights, powers and duties of the
retiring Collateral Agent and the term "Collateral Agent" shall mean such
successor collateral agent and the retiring Collateral Agent's appointment,
powers and duties as Collateral Agent shall be terminated. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions of
this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement. If no successor collateral agent has accepted appointment as
Collateral Agent by the date which is 30 days following a retiring Collateral
Agent's notice of resignation, the retiring Collateral Agent's resignation shall
nevertheless thereupon become effective and Banks shall perform all of the
duties of Collateral Agent hereunder until such time, if any, as Majority Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
Bank of America may not be removed as Collateral Agent at the request of
Majority Banks unless Bank of America shall also simultaneously be replaced as
"Agent" hereunder pursuant to documentation in form and substance reasonably
satisfactory to Bank of America.
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9.11 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of Agent, to deliver to Agent and Company:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 (or any successor form)
before the payment of any interest in the first calendar year and before
the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Bank,
two properly completed and executed copies of IRS Form 4224 (or any
successor form) before the payment of any interest is due in the first
taxable year of such Bank and in each succeeding taxable year of such Bank
during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 (or
any successor form) and such Bank sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Company to such Bank, such
Bank agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Company to such Bank. To the extent of
such percentage amount, Agent will treat such Bank's IRS Form 1001 (or any
successor form) as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 (or any successor form) with Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
of Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Bank an
amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.
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(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered or was not properly executed, or because such
Bank failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify Agent fully for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including Professional
Costs). The obligation of Banks under this subsection shall survive the payment
of all Obligations and the resignation or replacement of Agent.
9.12 Co-Agents; Managing Agents. None of the Banks identified on the
--------------------------
facing page or signature pages of this Agreement as a "Senior Managing Agent", a
"Managing Agent", or a "Co-Agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Banks as such. Without limiting the foregoing, none of Banks
so identified as a "Senior Managing Agent", a "Managing Agent", or a "Co-Agent"
shall have or be deemed to have any fiduciary relationship with any Bank. Each
Bank acknowledges that it has not relied, and will not rely, on any of the Banks
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
9.13 Collateral Documents, Guaranties and Intercreditor Agreement. Each
------------------------------------------------------------
Bank hereby further authorizes Collateral Agent, on behalf of and for the
benefit of Banks, to enter into each Collateral Document as secured party and
hereby authorizes Agent, on behalf of and for the benefit of Banks, to enter
into each Guaranty and the Intercreditor Agreement, and each Bank agrees to be
bound by the terms of each Collateral Document, each Guaranty and the
Intercreditor Agreement; provided, however, that neither Agent nor Collateral
-------- -------
Agent shall (a) enter into or consent to any material amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
Guaranty or (b) release any Collateral without the prior consent of Majority
Banks, Requisite Banks or all Banks, as provided in Section 10.21; provided,
--------
however, that, without further written consent or authorization from Banks,
- -------
Agent or Collateral Agent, as the case may be, may execute any documents or
instruments necessary to (i) release any Lien encumbering any item of Collateral
that is the subject of a Capital Lease, Equipment Financing Transaction, Real
Estate Financing Transaction, Permitted Receivables Purchase Facility or sale or
other disposition of assets permitted by Section 7.3, (ii) release any Guarantor
from a Guaranty if all of the Capital Stock of such Guarantor is sold to any
Person (other than an Affiliate of Company) pursuant to a sale or other
disposition permitted by Section 7.3, or (iii) subordinate the Liens of
Collateral Agent, on behalf of Banks, to any Lien permitted hereunder. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Company,
Agent, Collateral Agent and each Bank hereby agree that (A) no Bank shall have
any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce any Guaranty, it being understood and agreed
that all powers, rights and remedies under the Collateral Documents and the
Guaranties may be exercised solely by Agent or Collateral Agent for the benefit
of Banks in accordance with the terms thereof, and (B) in the event of a
foreclosure by Collateral Agent on any of the Collateral pursuant to a public or
private sale, Agent, Collateral Agent or any Bank may be the purchaser of any or
all of such Collateral at any such sale and Agent, as agent for and
representative of Banks (but not any Bank or Banks in its or their respective
individual capacities unless Majority Banks shall otherwise
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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 Obligations
as a credit on account of the purchase price for any collateral payable by Agent
at such sale.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Banks and the Company and acknowledged by the Agent, and
then such waiver, amendment or consent shall be effective only in the specific
instance and for the specific purpose for which given, except that written
agreement from all of the Banks is required for any waiver, amendment, or
consent which does any of the following:
(a) increases or extends the Commitment of any Bank or reinstates
any Commitment terminated pursuant to Section 8.2;
(b) postpones, extends or delays any date fixed for any payment of
principal, interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any Loan Document;
(c) reduces the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or under
any Loan Document or any mandatory reduction of the Aggregate Commitment
pursuant to Section 2.9;
(d) changes the Commitment Percentage or the aggregate unpaid
principal amount of the Loans which shall be required for the Banks or any of
them to take any action hereunder;
(e) changes the definition of Majority Banks or the number of
Banks required to take any action under this Agreement; or
(f) amends this Section 10.1 or Sections 2.14 or 2.15 or 2.16;
and, provided that no amendment, waiver or consent shall, unless in writing and
--------
signed by the Agent in addition to the Majority Banks or all the Banks, as the
case may be, affect the rights or duties of the Agent under this Agreement or
any other Loan Document.
10.2 Notices.
-------
(a) Unless otherwise specifically provided in this Agreement, all
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
--------
any matter transmitted by facsimile transmission shall be followed promptly by a
hard copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
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transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to Company or Agent, to such other
address as shall be designated by such party in a written notice to the other
parties, and as to each other party, at such other address as shall be
designated by such party in a written notice to Company and Agent.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery, except that notices
pursuant to Articles II or IX shall not be effective until actually received by
Agent.
(c) Company acknowledges and agrees that any agreement of Agent
and Banks in Article II to receive certain notices by telephone and facsimile is
solely for the convenience and at the request of Company. Agent and Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by Company to give such notice and Agent and Banks shall not have any
liability to Company or other Person on account of any action taken or not taken
by Agent and Banks in reliance upon such telephonic or facsimile notice. The
obligation of Company to repay the Loans shall not be affected in any way or to
any extent by any failure by Agent and Banks to receive written confirmation of
any telephonic or facsimile notice or the receipt by Agent and Banks of a
confirmation which is at variance with the terms understood by Agent and Banks
to be contained in the telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of Agent or any Bank, 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.
10.4 Costs and Expenses. Company agrees to:
------------------
(a) Whether or not the transactions contemplated hereby are
consummated, pay or reimburse Bank of America (including in its capacity as
Agent) promptly after demand, for all reasonable costs and expenses incurred by
Bank of America (including in its capacity as Agent) in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Professional Costs and
other professional fees incurred by Bank of America (including in its capacity
as Agent) with respect thereto;
(b) Subject to the limitations set forth therein, pay or reimburse
Agent promptly after demand, for all reasonable costs and expenses incurred by
Agent (including the fees, expenses and disbursements of any auditors,
accountants, advisors and agents employed or retained by Agent or its counsel)
in connection with obtaining and reviewing the information provided under
Section 6.1 or 6.7;
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(c) Pay or reimburse Agent, Collateral Agent, the Arranger and
each Bank within five Business Days after demand, for all costs and expenses
(including Professional Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding);
(d) Pay or reimburse Agent and Collateral Agent promptly after
demand, for all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Collateral Agent on behalf of Banks pursuant to any
Collateral Document, including filing and recording fees, expenses and taxes,
stamp or documentary taxes, search fees, title insurance premiums, and
reasonable fees, expenses and disbursements of counsel to Agent and Collateral
Agent and of counsel providing any opinions that Agent, Collateral Agent or
Majority Banks may request in respect of the Collateral Documents or the Liens
created pursuant thereto; and
(e) Pay or reimburse Collateral Agent promptly after demand, for
all reasonable costs and expenses incurred by Collateral Agent in connection
with the custody and preservation of the Collateral.
10.5 Company's Indemnification. Whether or not the transactions
-------------------------
contemplated hereby are consummated, Company shall indemnify, defend and hold
Agent-Related Persons, Collateral Agent-Related Persons and each Bank and each
of its respective officers, directors, employees, counsel, agents, attorneys-in-
fact and Affiliates (each, an "Indemnified Person") harmless from and against
------------------
any and all claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Professional Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of Agent or Collateral Agent or replacement of any
Bank) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement, or any document contemplated by or
referred to herein, or the transactions contemplated hereby or thereby, or any
action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that Company
----------------------- --------
shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that Company makes a payment to
------------------
Agent or Banks, or Agent or Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full
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force and effect as if such payment had not been made or such set-off had not
occurred, and (b) each Bank severally agrees to pay to Agent upon demand its pro
rata share of any amount so recovered from or repaid by Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
permitted (and those arising by operation of law) successors and assigns, except
that Company may not assign or transfer any rights or obligations under this
Agreement without the prior written consent of Agent and each Bank and no Bank
may assign or transfer any of its rights or obligations under this Agreement
except in accordance with Section 10.8 and by operation of law.
10.8 Assignments, Participations, etc.
---------------------------------
(a) Any Bank may, with the written consent of Agent (which consent
shall not be unreasonably withheld), at any time, assign and delegate to one or
more Eligible Assignees (provided that no written consent of Agent shall be
required in connection with (i) any assignment and delegation by a Bank to an
Affiliate of such Bank or (ii) to another Bank) (each an "Assignee") all, or any
--------
ratable part of all, of the Loans, and the other rights and obligations of such
Bank hereunder, in a minimum amount of $5,000,000; provided, however, that:
-------- -------
(A) a Bank may enter into an assignment and delegation
of less than $5,000,000 if such assignment and delegation consists
of such Bank's entire interest;
(B) the assignment shall provide that any claims made
by any Assignee under Sections 3.1, 3.2, 3.3, and 3.6 shall not
exceed the claims the assigning Bank could have made on the
interests assigned if the assigning Bank had retained such
interests; provided, however, that this subsection shall not apply
-------- -------
when the assignment is made by a Bank in favor of another Bank which
was a Bank on the Closing Date; and
(C) Company and Agent may continue to deal solely and
directly with such Bank in connection with the interest so assigned
to an Assignee until (1) written notice of such assignment, together
with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to Company and Agent
by such Bank and the Assignee; (2) such Bank and its Assignee shall
have delivered to Company and Agent an Assignment and Acceptance and
any Note or Notes subject to such assignment; and (3) the assignor
Bank or Assignee has paid Agent a processing fee of $3,500.
(b) From and after the date that Agent notifies the assignor Bank
that it has provided its consent to and received an executed Assignment and
Acceptance and payment of the processing fee of $3,500, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its
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rights (other than any rights of indemnity) and be released from its obligations
under the Loan Documents.
(c) Within five Business Days after its receipt of notice by Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee, Company shall execute and deliver to Agent, new Notes evidencing
such Assignee's assigned Loans and, if the assignor Bank has retained a portion
of its Loans, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its payment
under the Assignment and Acceptance, this Agreement, shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee. If an assignor Bank has not retained a portion of its Loans,
such Bank shall mark its Notes "superseded" and return such Notes to Agent for
delivery to Company.
(d) Any Bank may at any time sell to one or more Eligible
Assignees (a "Participant") participating interests in any Loans and the other
-----------
interests of that Bank (the "Originator") hereunder and under the other Loan
----------
Documents; provided, however, that (i) the Originator's obligations under this
-------- -------
Agreement shall remain unchanged, (ii) the Originator shall remain solely
responsible for the performance of such obligations, (iii) Company and Agent
shall continue to deal solely and directly with the Originator in connection
with the Originator's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant shall have rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent as described in Section 10.1 or 10.21. In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by Company hereunder
shall be determined as if such Originator had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement (and the Notes held
by it) in favor of any Federal Reserve Bank in accordance with Regulation A of
the Federal Reserve Board or U.S. Treasury Regulation 31 CFR ss.203.14, and may
assign all or any portion of its rights under or interests in this Agreement
(and the Notes held by it) to any Affiliate for purposes of creating such a
security interest or pledge, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
10.9 Designated Bidders. [Intentionally omitted]
------------------
10.10 Confidentiality. Each Bank agrees to take and to cause its
---------------
Affiliates, directors and employees to take normal and reasonable precautions
and exercise due care to maintain the
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confidentiality of all information provided to it by Company or any Subsidiary
of Company, or by Agent or Collateral Agent on Company's or such Subsidiary's
behalf or obtained by a Bank pursuant to such Bank's exercise of its rights
under Section 6.7, under this Agreement or any other Loan Document, and neither
it nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan Documents
or in connection with other business now or hereafter existing or contemplated
with Company or any Subsidiary of Company; except to the extent such information
(a) was or becomes generally available to the public other than as a result of
disclosure by the Bank or (b) was or becomes available on a non-confidential
basis from a source other than Company, provided that such source is not bound
--------
by a confidentiality agreement with Company known to the Bank; provided,
--------
however, that Agent, Collateral Agent, and any Bank may disclose such
- -------
information (i) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (ii) pursuant to subpoena or
other court process; (iii) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (iv) to the extent reasonably
required in connection with any litigation or proceeding to which Agent,
Collateral Agent, any Bank, or their respective Affiliates may be party; (v) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (vi) to such Bank's Affiliates or
any of their Subsidiaries or their Affiliates' directors, officers, employees,
auditors, counsel, advisors, or representatives whom it determines need to know
such information for the purposes set forth in this Section, provided that such
--------
Person agrees to keep such information confidential to the same extent required
by Banks hereunder; (vii) to any bank or financial institution or other entity
to which such Bank has assigned or desires to assign an interest or
participation in the Loan Documents or the Obligations, provided that such
--------
Person agrees to keep such information confidential to the same extent required
by Banks hereunder; (viii) to any Bank or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which Company or any Subsidiary of Company is party or is deemed party with such
Bank or such Affiliate; and (ix) to its Affiliates in connection with any such
Affiliate's business with Company.
10.11 Set-off. In addition to any rights and remedies of Banks provided by
-------
law, if an Event of Default exists (after the giving of any required notice and
the expiration of any grace period required to make the relevant event an Event
of Default), each Bank is authorized at any time and from time to time, without
prior notice to Company, any such notice being waived by Company to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owed by, such Bank or, in the case of Citicorp U.S.A.,
Inc., Citibank, N.A., to or for the credit or the account of Company against any
and all Obligations owing to such Bank or Citibank, N.A., now or hereafter
existing, irrespective of whether or not Agent or such Bank shall have made a
request for payment under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured and Citibank, N.A. is hereby
irrevocably authorized to permit such setoff and application. Each Bank
severally agrees promptly to notify Company and Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
-------- -------
notice shall not affect the validity of such set-off and application. The rights
of each Bank under this Section are in addition to the other rights and remedies
(including other rights of set-off) which the Bank may have.
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10.12 Notification of Addresses, Lending Offices, etc. Each Bank shall
------------------------------------------------
notify Agent and Company in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of each of its Lending
Offices, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as Agent shall reasonably
request.
10.13 Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties shall be lodged
with Company and Agent.
10.14 Severability. The illegality or unenforceability of any provision of
------------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.15 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of Company, Banks, Agent, Collateral
Agent, Agent-Related Persons and Collateral Agent-Related Persons and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
None of Agent, Collateral Agent, any Bank, any Agent-Related Persons and any
Collateral Agent-Related Persons shall have any obligation to any Person not a
party to this Agreement or other Loan Documents.
10.16 Change in Accounting Principles. If any change in GAAP occurs or
-------------------------------
takes effect after the Closing Date which would result in a change in any
quantity reported to Banks hereunder which provides the basis for any covenant,
performance obligation or standard of measurement used in this Agreement, the
parties hereto agree to enter into negotiations in order to amend such covenant,
performance obligation or standard of performance so as to reflect such change
with the result that the criteria for evaluating compliance with such covenant,
performance obligation or standard of performance shall be the same after the
change as if the change had not been made. Until the parties hereto agree to
such amendment, all covenants, performance obligations and standards of
performance shall be calculated without giving effect to the change in GAAP.
10.17 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES; PROVIDED THAT AGENT,
COLLATERAL AGENT, BANKS, AND COMPANY SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
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(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, COMPANY, AGENT, COLLATERAL AGENT, AND BANKS EACH CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. COMPANY, AGENT, COLLATERAL AGENT, AND BANKS EACH IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. COMPANY, AGENT, COLLATERAL AGENT, AND
BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
10.18 Interpretation. This Agreement is the result of negotiations between
--------------
and has been reviewed by counsel to Agent, Company and other parties, and is the
product of all parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against Company, Banks, or Agent merely because
of their involvement in the preparation of such documents and agreements.
10.19 Representation of Banks. Each Bank party to and as of the date of
-----------------------
this Agreement severally and only with respect to itself and to its status as a
Bank represents that it is entitled to receive interest payments from Company
free and clear of and without deduction for any U.S. taxes collected by way of
withholding that are in effect as of the date of this Agreement. Each Bank party
to and as of the date of this Agreement severally and only with respect to
itself represents that it is either (a) a corporation, company or association,
incorporated or organized in or under the laws of the U.S. or a state of the
U.S. (a "U.S. corporation"); (b) a non-U.S. corporation lending through its U.S.
branch, which will treat the interest income as effectively connected with its
U.S. trade or business; or (c) a non-U.S. corporation, resident in a country
that has a treaty with the U.S. that exempts interest payments by Company from
withholding taxes.
10.20 Waiver of Jury Trial. COMPANY, BANKS, AGENT AND COLLATERAL AGENT
--------------------
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, COLLATERAL AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. COMPANY, BANKS, COLLATERAL AGENT AND AGENT EACH AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH
88
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SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.21 Amendments and Waivers Regarding Collateral. Written agreement from
-------------------------------------------
Requisite Banks is required for any waiver, amendment, or consent which releases
any Lien granted in favor of Collateral Agent other than the release of (a) any
Lien encumbering any item of Collateral that is the subject of a Capital Lease,
Equipment Financing Transaction, Real Estate Financing Transaction, Permitted
Receivables Purchase Facility or sale or other disposition of assets permitted
by Section 7.3 or (b) any Guarantor from a Guaranty other than in connection
with a sale of all of the Capital Stock of such Guarantor to any Person (other
than an Affiliate of Company) pursuant to a sale or other disposition permitted
by Section 7.3; and written agreement from all Banks is required for any waiver,
amendment, or consent which releases any Lien granted in favor of Collateral
Agent with respect to all or substantially all of the Collateral.
ARTICLE XI
GENERAL RELEASE
---------------
11.1 Except with respect to the matters, rights and obligations specified
in Section 11.2, Company for itself and on behalf of its parent, subsidiary and
controlled affiliate corporations, past or present, and each of them, as well as
each of their respective directors, officers, agents, servants, representatives,
attorneys, administrators, executors, heirs, assigns, predecessors and
successors in interest, and each of them (collectively, the "Releasors") hereby
---------
release and forever discharge Agent, Collateral Agent and Banks and each of
their respective parents, subsidiaries and affiliates, past or present, and each
of them, as well as each of their respective directors, officers, agents,
servants, employees, shareholders, representatives, attorneys, administrators,
executors, heirs, assigns, predecessors and successors in interest, and all
other persons, firms or corporations with whom any of the former have been, are
now, or may hereafter be affiliated, and each of them (collectively, the
"Releasees"), from and against any and all claims, demands, liens, agreements,
---------
contracts, covenants, actions, suits, causes of action in law or equity,
obligations, controversies, debts, costs, expenses, damages, judgments, orders
and liabilities of whatever kind or nature in law, equity or otherwise, whether
known or unknown, fixed or contingent, suspected or unsuspected by the
Releasors, and whether concealed or hidden, which Releasors now own or hold or
have at any time heretofore owned or held, which are based upon or arise out of
or in connection with any matter, cause or thing existing at any time prior to
the date hereof or anything done, omitted or suffered to be done or omitted at
any time prior to the date hereof in connection with the Existing Credit
Agreement, this Agreement and the other Loan Documents (collectively the
"Released Matters").
----------------
11.2 Notwithstanding anything hereunder to the contrary, this Article XI
shall not release or alter any obligation arising subsequent to the date hereof
to comply with the terms and conditions of this Agreement and the other Loan
Documents. It is expressly understood and agreed that it is the intent of
Company to forever release certain claims against Agent, Collateral Agent and
Banks, including, but not limited to, any claims related to the actions and
omissions of
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Releasees prior to the date hereof, but that nothing herein shall affect the
obligations of the Releasees arising subsequent to the date hereof, including,
but not by way of limitation, compliance subsequent to the date hereof with all
terms and conditions of this Agreement and the other Loan Documents.
11.3 Without limiting the generality of the foregoing, Company for itself
and on behalf of the other Releasors expressly releases any and all past,
present and future claims in connection with the Released Matters, about which
the Releasors do not know or suspect to exist in their favor, whether through
ignorance, oversight, error, negligence or otherwise, and which, if known, would
materially affect Company's decision to enter into this release, and to this end
Company for itself, and on behalf of each of the other Releasors, waives all
rights under Section 1542 of the Civil Code of California, which states in full
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Company knowingly and willingly waives the provisions of Section 1542 and
acknowledges and agrees that this waiver is an essential and material term of
this release. Company has reviewed this release with Company's legal counsel,
and Company understands and acknowledges the significance and consequence of
this release and of the specific waiver of Section 1542 of the Civil Code of
California.
11.4 Company represents, warrants and agrees that in executing and
entering into this release, Company is not relying and has not relied upon any
representation, promise or statement made by anyone which is not recited,
contained or embodied in this Agreement or the other Loan Documents. Company
understands and expressly assumes the risk that any fact not recited, contained
or embodied therein may turn out hereafter to be other than, different from, or
contrary to the facts now known to Company or believed by Company to be true.
Nevertheless, Company intends by this release to release fully, finally and
forever all Released Matters and agrees that this release shall be effective in
all respects notwithstanding any such difference in facts, and shall not be
subject to termination, modification or rescission by reason of any such
difference in facts.
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EXHIBIT 10.14
Exhibit V
---------
[FORM OF] PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of
---------
January 31, 2000 and entered into by and among Levi Strauss & Co., a Delaware
corporation ("Company"), each of the undersigned direct and indirect
-------
Subsidiaries of Company (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively, "Subsidiary Grantors") and each
------------------ -------------------
Additional Grantor that may become a party hereto after the date hereof in
accordance with Section 20 hereof (Company, each Subsidiary Grantor, and each
Additional Grantor being a "Grantor" and collectively, "Grantors") and Bank of
------- --------
America, N.A. as Collateral Agent for and representative of (in such capacity
herein called "Secured Party") Agent and the several financial institutions
-------------
("Banks") from time to time party to the Credit Agreement referred to below.
-----
PRELIMINARY STATEMENTS
----------------------
A. Pursuant to the 1997 Second Amended and Restated Credit Agreement
dated as of January 31, 2000 (said 1997 Second Amended and Restated Credit
Agreement, as amended to the date hereof, and as it may hereafter be further
amended, modified, or supplemented from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined), by and among Company, the several financial
institutions from time to time party thereto (collectively, "Banks"); the
several financial institutions party thereto as Senior Managing Agents; the
several financial institutions party thereto as Managing Agents; the several
financial institutions party thereto as Co-Agents; Bank of America, N.A. as
Agent (in such capacity, "Agent"); and Bank of America, N.A. as Collateral Agent
-----
(in such capacity, "Collateral Agent"), Banks have made certain commitments,
subject to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company.
B. Subsidiary Grantors have executed and delivered that certain
Guaranty dated the date hereof (said Guaranty, as amended to the date hereof,
and as it may hereafter be further amended, modified, or supplemented from time
to time, being the "Guaranty") in favor of Secured Party for the benefit of
--------
Banks and Agent, pursuant to which each Subsidiary Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that 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 Banks to enter into the Credit Agreement, each Grantor hereby
agrees with Secured Party as follows:
Section 1. Grant of Security. Each Grantor hereby assigns to
-----------------
Secured Party, and hereby grants to Secured Party a security interest in, all of
such Grantor's right, title and
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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 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
---------
without limitation 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, general intangibles 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, general
intangibles or other obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, general intangibles and other 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"), together with (i) all
----------------
amounts on deposit from 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 listed on Schedule 1(d);
(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 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 owned on the date hereof and described on
Schedule 1(e)(i), 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
-------
Shares"), 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
V-2
<PAGE>
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Pledged Shares; provided, that if
--------
the issuer of any of such Pledged Shares is a controlled foreign
corporation (used hereinafter as such term is defined in Section 957(a) or
a successor provision of the Internal Revenue Code), the Pledged Shares
shall not include any shares of stock of such issuer in excess of the
number of shares of such issuer possessing up to but not exceeding 65% of
the voting power of all classes of Capital Stock entitled to vote of such
issuer, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged
Shares;
(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, including the indebtedness described on Schedule 1(e)(ii) and
issued by the obligors named therein, and the instruments evidencing such
indebtedness (the "Pledged Debt"), and all interest, cash, instruments and
------------
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Pledged Debt; and
(iii) all other investment property as that term is defined in
the Uniform Commercial Code ("UCC") of any relevant jurisdiction of such
---
Grantor;
(f) the "Intellectual Property 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, without limitation, the trademarks specifically
identified in Schedule 1(f)(i), as the same may be amended pursuant hereto
from time to time) (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, without
limitation, the registrations and applications specifically identified in
Schedule 1(f)(i), as the same may be amended pursuant hereto from time to
time) (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");
-------------------
(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, without limitation,
the patents and patent
V-3
<PAGE>
applications listed in Schedule 1(f)(ii), as the same may be amended
pursuant hereto from time to time), all rights corresponding thereto
(including, without limitation, the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to sue for
past, present and future infringements in the name of such Grantor or in
the name of Secured Party or Banks), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all
of the foregoing being collectively referred to as the "Patents"); 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, without
limitation, the registered works listed on Schedule 1(f)(iii), 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 listed
on Schedule 1(f)(iii), 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 to sue for past,
present and future infringements of the Copyrights and Copyright Rights;
(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 other general intangibles (including tax refunds, rights to payment or
performance, choses in action 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
V-4
<PAGE>
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 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 (i) 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 or any of its rights or interests in other property 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) or any Negative Pledge permitted
under the Credit Agreement on such rights or interests; 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 and (ii) any real property leasehold, unless
a Grantor has executed a leasehold mortgage or leasehold deed of trust covering
such real property leasehold.
Notwithstanding anything herein to the contrary, neither Company 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 or (iii) any
Pledged Debt of or issued by any Restricted Subsidiary.
Section 2. Security for Obligations.
------------------------
(a) 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 without limitation 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:
-------------------
(i) with respect to Company, all obligations and
liabilities of every nature of Company now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other
Loan Documents, and
(ii) 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;
V-5
<PAGE>
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
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 Secured
Party, Agent or any Bank as a preference, fraudulent transfer or otherwise, and
all obligations of every nature of Grantors now or hereafter existing under this
Agreement.
(b) Any and all security interests, liens, rights and interest of
Secured Party in and to any or all of the Collateral are subordinated to any and
all security interests, liens, rights and interest of the several financial
institutions party to the Bridge Credit Agreement from time to time in and to
any or all of the Collateral pursuant to the Intercreditor Agreement.
Section 3. Grantors Remain Liable.
----------------------
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 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) 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
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.
------------------------------
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 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 each Additional Grantor,
the date of the applicable counterpart entered into pursuant to Section 20
hereof (each, a "Counterpart") located at the places specified in Schedule
-----------
4(b), except for 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
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locations specified in Schedule 4(b),(iii) from a supplier or a Grantor to a
processor, or (iv) to customers of a Grantor.
(c) Office Locations. 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 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);
(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 listed in Schedule 4(d) annexed hereto.
(e) Delivery of Certain Collateral. Except as permitted by Section
------------------------------
6.11 of the Credit Agreement, all certificates or instruments (excluding checks)
evidencing, comprising or representing the Collateral (including, without
limitation, the Securities Collateral) have been delivered to Secured Party duly
endorsed or accompanied by duly executed instruments of transfer or assignment
in blank.
(f) Securities Collateral. (i) All of the Pledged Shares described on
---------------------
Schedule 1(e)(i) have been duly authorized and validly issued and are fully paid
and non-assessable; (ii) all of the Pledged Debt described on Schedule 1(e)(ii)
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) the Pledged Shares 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 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 Shares; (iv) the Pledged Debt 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) sets
forth all of the Pledged Shares owned by each Grantor on the date hereof; and
(vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt in existence on the
date hereof.
(g) Intellectual Property 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 in Schedule 1(f)(i);
(ii) a true and complete list of all Patents owned by such
Grantor, in whole or in part, that are material to such Grantor's business,
is set forth in Schedule 1(f)(ii);
V-7
<PAGE>
(iii) a true and complete list of all Copyright Registrations
and applications for Copyright Registrations owned by such Grantor, in
whole or in part, is set forth in Schedule 1(f)(iii);
(iv) after reasonable inquiry, such Grantor is not aware of any
pending or threatened claim by any third party that any of the Intellectual
Property Collateral owned, held or used by such Grantor is invalid or
unenforceable that is reasonably likely to have a Material Adverse Effect;
and
(v) no effective security interest or other Lien covering all
or any part of the Intellectual Property 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
----------
Secured Party for the ratable benefit of Banks and Agent hereunder constitute
valid security interests in the Collateral, securing the payment of the Secured
Obligations. Upon (i) the filing of UCC financing statements naming each Grantor
as "debtor", naming Secured Party as "secured party" and describing the
Collateral in the filing offices with respect to such Grantor set forth on
Schedule 4(h), (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 Secured Party, in each case duly endorsed or accompanied by duly
executed instruments of assignment or transfer in blank, (iii) in the case of
the Intellectual Property 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 Secured Party
-----
for the ratable benefit of Banks and Agent will constitute perfected security
interests therein, to the extent such security interests may be perfected by
filing in the United States or 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.
------------------
(a) Generally. Each Grantor agrees that from time to time, at the
---------
expense of 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 Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable 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 Secured Party,
mark conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the reasonable request of Secured Party, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security
V-8
<PAGE>
interest granted hereby, (ii) at the reasonable request of Secured Party,
deliver and pledge to 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
Secured Party, (iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
furnish to 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 Secured Party may reasonably request, all in reasonable
detail, (v) if requested by Co-Agents, 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 Company, deliver to 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 Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (viii) at Secured Party's request, appear in and defend any
action or proceeding that may affect such Grantor's title to or Secured Party's
security interest in all or any part of the Collateral. Each Grantor hereby
authorizes 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
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to 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 Shares
- ---------- -----------------
or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to Secured Party, the representations and warranties
contained in subsections (i)-(iv) of Section 4(g) 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 Secured
Party to attach each Pledge Supplement to this Agreement and agrees that all
Pledged Shares or Pledged Debt 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 Pledge Supplement with
- --------
respect to any additional Pledged Shares or Pledged Debt pledged pursuant to
this Agreement shall not impair the security interest of Secured Party therein
or otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
V-9
<PAGE>
(c) Intellectual Property Collateral. Without limiting the generality
--------------------------------
of the foregoing Section 5(a), if any Grantor shall hereafter obtain rights to
any new Intellectual Property Collateral or become entitled to the benefit of
(i) 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 (ii) any Copyright Registration, application for Copyright
Registration or renewals or extension of any Copyright, 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 Company, notify
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,
and of (i) any Trademark Registrations issued or application for a Trademark
Registration or application for a Patent made, and (ii) any Copyright
Registrations issued or applications for Copyright Registration made, in any
such case, after the date hereof. Within 45 days after the end of each fiscal
quarter of Company during which any Grantor files an application for any (1)
Trademark Registration; (2) Patent; and (3) Copyright Registration, each Grantor
shall execute and deliver to Secured Party and record in all places where a
Grant is recorded an IP Supplement, substantially in the form of Exhibit V (an
---------
"IP Supplement"), pursuant to which such Grantor shall grant to Secured Party a
-------------
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
--------
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Secured Party, such
Grantor shall give written notice to Secured Party on the day on which such
Grantor would otherwise be required to record the IP Supplement and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration or
Copyright Registration, as the case may be. Upon delivery to Secured Party of an
IP Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) 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 Intellectual Property Collateral or
any Intellectual Property Collateral included on Schedule A to such IP
Supplement. Each Grantor hereby authorizes 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 Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
--------
failure of any Grantor to execute an IP Supplement with respect to any
additional Intellectual Property Collateral pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
Section 6. Certain Covenants of 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;
V-10
<PAGE>
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days of such change;
(c) give 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;
(d) if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) except as otherwise not prohibited by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral.
Section 7. Special Covenants With Respect to Equipment and Inventory.
---------------------------------------------------------------------
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b), or upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable 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 permitted by Section 6.6 of 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. Each Grantor shall promptly furnish to Secured Party a statement respecting
any material loss or damage to 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,
and such Grantor's cost therefor;
(d) if any Inventory is in the possession or control of any of such
Grantor's agents or processors, within 30 days of the Closing Date (with respect
to existing agents or processors) and promptly after any such Inventory comes
into the possession or control of such Grantor's agents or processors (with
respect to future agents or processors), instruct such agent or processor to
hold all such Inventory for the account of Secured Party and subject to the
instructions of Secured Party, and use commercially reasonable efforts, but at
no out-of-pocket cost to such Grantor, to obtain waivers or bailee letters in
form and substance reasonably
V-11
<PAGE>
satisfactory to Collateral Agent from all public warehouses in which Inventory
is maintained and all such agents or processors; and
(e) each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit 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) or, upon
30 days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable 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
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 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 Secured Party, each Grantor shall deliver to Secured Party complete
and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than three (3) 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 Secured Party's direction, shall
take) such action as such Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that 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 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 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 Secured Party and, upon such notification and
at the expense of 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 Secured Party referred to in the proviso to the
preceding sentence, (i) all amounts and proceeds (including
V-12
<PAGE>
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
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to 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 16 hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Account, 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 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 Secured Party.
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 (i) not, except as otherwise not
---------
prohibited by the Credit Agreement, permit any issuer of Pledged Shares 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 Shares which is a
controlled foreign corporation is a controlled foreign corporation, 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 Shares not to issue any stock, other equity
interests or other securities in addition to or in substitution for the Pledged
Shares 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 Shares; (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 subsection (iv) to
- --------
the contrary, such Grantor shall only be required to pledge the outstanding
Capital Stock of a controlled foreign corporation possessing up to but not
exceeding 65% of the voting power of all classes of Capital Stock of such
controlled foreign corporation 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 Debt; provided, notwithstanding anything
--------
contained in this subsection (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
V-13
<PAGE>
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 subsection (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 Secured Party of any event of which such Grantor becomes
aware causing loss or depreciation in the value of the Securities Collateral
that has a Material Adverse Effect; and (viii), at the request of Secured Party,
promptly execute and deliver to Secured Party an agreement providing for the
control, as that term is defined in the UCC, by 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 Secured Party shall have notified
such Grantor that, in Secured Party's reasonable judgment, such action would
have a Material Adverse Effect and provided further, such Grantor shall give
----------------
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 Shares for or such Grantor's consent to the election of
directors or other members of a governing body of an issuer of Pledged Shares 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, and no notice of any such voting or consent need be given to 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 Secured
Party to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) 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 subsection (i) above and to receive the dividends, distributions,
principal or interest payments which it is authorized to receive and retain
pursuant to subsection (ii) above.
V-14
<PAGE>
Upon the occurrence and during the continuation of an Event of Default, (i)
upon written notice from 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 Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights; (ii) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (iii) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of subsection (ii)
of the immediately preceding paragraph or subsection (ii) above shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of such Grantor and shall forthwith be paid over to Secured Party as
Securities Collateral in the same form as so received (with any necessary
endorsements).
In order to permit 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 Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (ii) without limiting the effect of subsection (i)
above, each Grantor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares 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 Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares 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.
(d) Investment Property. Company shall not maintain any investment
------------------------
property with any financial or other institution unless such institution has
executed a control agreement in form and substance reasonably satisfactory to
Collateral Agent.
Section 10. Special Covenants With Respect to the Intellectual
---------------------------------------------------------------
Property Collateral.
- -------------------
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the
Intellectual Property 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
V-15
<PAGE>
assignment of, such Grantor's rights and interests in any property included
within the definitions of any Intellectual Property 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 Intellectual Property Collateral,
including, without limitation, 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 Intellectual Property Collateral, except where the failure to
give such notice would not have a Material Adverse Effect;
(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 Secured Party from time to time at Secured
Party's reasonable request statements and schedules further identifying and
describing any Intellectual Property 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 Intellectual Property 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
Secured Party's reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, 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 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 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 Intellectual Property
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to 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 16 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.
V-16
<PAGE>
(c) Each Grantor shall have the duty diligently, through counsel
reasonably acceptable to 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 Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), 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 Intellectual Property 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 Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by Grantors.
Subject to the foregoing, each Grantor shall give Secured Party written notice
of any abandonment of any Intellectual Property Collateral registered with a
Governmental Authority or any pending patent application or any Patent within 45
days after the end of each fiscal quarter of Company.
(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
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall, within 45 days after the end of each fiscal quarter
of Company, notify Secured Party of the institution of, or of any adverse
determination 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 Intellectual Property
Collateral. Each Grantor shall provide to Secured Party any information with
respect thereto requested by 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 Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral and any other
collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable 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 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 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
V-17
<PAGE>
requirement that any monetary payment whatsoever be made to such Grantor. In
addition, each Grantor hereby grants to 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
Intellectual Property 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. To the extent that
the Credit Agreement permits any Grantor to license the Intellectual Property
Collateral, 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 Intellectual Property Collateral permitted
hereunder in form and substance reasonably satisfactory to Secured Party
pursuant to which (i) 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 (ii) such licensee shall
acknowledge and agree that the Intellectual Property Collateral licensed to it
is subject to the security interest created in favor of Secured Party and the
other terms of this Agreement.
Section 11. Secured Party Appointed Attorney-in-Fact.
-----------------------------------------------------
Each Grantor hereby irrevocably appoints 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, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(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 Agent under the Credit Agreement;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(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 Sections 11(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
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) except as otherwise permitted by Section 6.5 of 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 Secured Party in its
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<PAGE>
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to 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
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and 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 12. Secured Party May Perform.
-------------------------
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Grantors under Section 17(b) hereof.
Section 13. Standard of Care.
----------------
The powers conferred on 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, 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. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property.
Section 14. Remedies.
--------
(a) Generally. If any Event of Default (as defined in the Credit
---------
Agreement) shall have occurred and be continuing, 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 Secured Party
forthwith, assemble all or part of the Collateral as directed by Secured Party
and make it available to Secured Party at a place to be designated by 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 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
V-19
<PAGE>
such Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding subsection (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 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 Secured Party may deem commercially reasonable, (vi) exercise
dominion and control over and refuse to permit further withdrawals from any
Deposit Account maintained with Secured Party or any Bank constituting a part of
the Collateral and (vii) without notice to any Grantor, transfer to or to
register in the name of Secured Party or any of its nominees any or all of the
Securities Collateral. Secured Party or any Bank may be the purchaser of any or
all of the Collateral at any such sale and Secured Party, as agent for and
representative of Banks (but not any Bank in its individual capacity unless
Majority Banks 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 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. Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed 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 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 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, Grantors shall be jointly and severally liable
for the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency. Each Grantor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to Secured
Party, that 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 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 regulations
promulgated thereunder, (the "Securities Act") and applicable state
--------------
securities laws, 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
V-20
<PAGE>
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
Secured Party by such Grantor pursuant hereto, each Grantor agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner and that 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 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 Shares to be sold hereunder from time to time to
furnish to Secured Party all such information as 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 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.
(ii) If Secured Party shall determine to exercise its right to
sell all or any of the Securities Collateral pursuant to this Section, each
Grantor agrees that, upon request of Secured Party (which request may be
made by 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 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 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 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 reasonable costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this Section.
V-21
<PAGE>
(iii) Without limiting the generality of Sections 10.4 and 10.5
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) Secured Party
and each Bank 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
Secured Party and such other Persons for any legal or other expenses
reasonably incurred by 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 Secured Party and such other Persons and counsel for
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 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 Secured Party or such
Persons within the meaning of the Securities Act.
Section 15. Additional Remedies for Intellectual Property Collateral.
--------------------------------------------------------
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Sections 10.4 and 10.5 of
the Credit Agreement and Section 17 hereof, as applicable, in connection with
the exercise of its rights under this Section, and, to the extent that Secured
Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Intellectual Property 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
Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property 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
V-22
<PAGE>
Obligations outstanding only to the extent that Secured Party (or any Bank)
receives cash proceeds in respect of the sale of, or other realization upon, the
Intellectual Property Collateral; and (iv) within five Business Days after
written notice from Secured Party, each Grantor shall make available to 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 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 Secured Party's behalf and
to be compensated by 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 Secured Party of any rights, title and interests in and to the
Intellectual Property 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, 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 Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
--------
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of 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
Secured Party and Liens expressly permitted by the Credit Agreement.
Section 16. Application of Proceeds.
-----------------------
Except as expressly provided elsewhere in this Agreement and in the
Intercreditor Agreement, all proceeds received by Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Grantors, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the exercise of any
right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) and, as to obligations arising
under the Credit Agreement, as provided in the Credit Agreement; and
V-23
<PAGE>
THIRD: To the payment to or upon the order of Company, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
Section 17. Indemnity and Expenses.
----------------------
(a) Grantors jointly and severally agree to indemnify Secured
Party and each Bank 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 without limitation enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Bank's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Subject to Section 6.7 of the Credit Agreement, Grantors
jointly and severally agree to pay to Secured Party upon demand (i) the amount
of any and all reasonable costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with the administration of this Agreement or the failure by
any Grantor to perform or observe any of the provisions hereof and (ii) the
amount of any and all costs and expenses, including the fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with the exercise or enforcement of any of the rights of Secured
Party hereunder.
(c) The obligations of Grantors in this Section 17 shall (i)
survive the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, 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 18. 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 Secured Obligations and the cancellation or termination of the
Commitments, (ii) be binding upon Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing subsection (iii), but
subject to the provisions of Sections 10.7 and 10.8 of the Credit Agreement, any
Bank 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 Banks herein or otherwise.
(b) Upon the payment in full of all Secured Obligations and the
cancellation or termination of the Commitments, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantors. Upon any such termination Secured Party will, at Grantors'
expense, execute and deliver to Grantors such documents as Grantors shall
reasonably request to evidence such termination. 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 Secured
V-24
<PAGE>
Party, such Grantor shall deliver an officers' certificate (i) stating that the
Collateral subject to such disposition is being sold, transferred or otherwise
disposed of in compliance with the terms of the Credit Agreement, and (ii)
specifying the Collateral being sold, transferred or otherwise disposed of in
the proposed transaction. Upon the receipt of such officers' certificate,
Secured Party shall, at such Grantor's expense, so long as Secured Party has no
reason to believe that the officers' certificate delivered by such Grantor with
respect to such sale is not true and correct, execute and deliver such releases
of its security interest in such Collateral which is to be so sold, transferred
or disposed of, as may be reasonably requested by such Grantor.
Section 19. Secured Party as Agent.
----------------------
(a) Secured Party has been appointed to act as Secured Party
hereunder by Banks. 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
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
--------
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 14 hereof in accordance with the instructions of Majority Banks.
(b) Secured Party shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute notice of resignation as Secured Party under this Agreement; removal
of Collateral Agent pursuant to Section 9.10 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor collateral agent pursuant to Section 9.10 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
Section 9.10 of the Credit Agreement by a successor collateral agent, that
successor collateral agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed 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 or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed collateral agent's resignation or
removal hereunder as 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 Secured Party hereunder.
Section 20. Additional Grantors.
-------------------
The initial Subsidiary Grantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto as additional Grantors (each an
V-25
<PAGE>
"Additional Grantor"), by executing a counterpart substantially in the form of
------------------
Exhibit VI to this Agreement. Upon delivery of any such counterpart to Secured
- ----------
Party, notice of which is hereby waived by 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 Agent not to cause any Subsidiary of Company 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 21. 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 Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided this Agreement may be modified by the execution of a counterpart by an
- --------
Additional Grantor in accordance with Section 20 hereof and 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 22. Notices.
-------
(a) Unless otherwise specifically provided in this Agreement,
all notices, requests and other communications provided for hereunder shall be
in writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided that
any matter transmitted by facsimile transmission (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
applicable signature page hereof, and (ii) shall be followed promptly by a hard
copy original thereof) and mailed, telegraphed, telexed, sent by facsimile
transmission, or delivered, to the address or number specified for notices on
the applicable signature page hereof; or, as to any Grantor or Collateral Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as to each other party, at such other address as shall
be designated by such party in a written notice to each Grantor and Collateral
Agent.
(b) All such notices and communications shall, when transmitted
by overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled,
be effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery.
Section 23. Failure or Indulgence Not Waiver; Remedies
------------------------------------------
Cumulative.
- ----------
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or
V-26
<PAGE>
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
Section 24. Severability.
------------
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 25. Headings.
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
Section 26. Governing Law; Terms; Rules of Construction.
-------------------------------------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. 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 Section 1.2 of the Credit Agreement shall be applicable to this
Agreement mutatis mutandis.
Section 27. Consent to Jurisdiction and Service of Process.
----------------------------------------------
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GRANTOR, SECURED PARTY, AGENT AND BANKS EACH CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH GRANTOR, SECURED PARTY, AGENT AND BANKS EACH IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GRANTOR, SECURED PARTY, AGENT
AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
V-27
<PAGE>
Section 28. Waiver of Jury Trial.
--------------------
EACH GRANTOR, BANKS, AGENT AND SECURED PARTY EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, COLLATERAL AGENT-
RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GRANTOR, BANKS, AGENT AND SECURED PARTY
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 29. Counterparts.
------------
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but 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.
[Remainder of page intentionally left blank]
V-28
<PAGE>
IN WITNESS WHEREOF, Grantors and 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 STRAUSS & CO.
By:________________________________________
Name:______________________________________
Title:_____________________________________
Each of the entities listed on Schedule A annexed
----------
hereto
By:________________________________________
on behalf of each of the entities listed on
Schedule A annexed hereto
----------
Name:______________________________________
Title:_____________________________________
BANK OF AMERICA, N.A., as Collateral
Agent, as Secured Party
By:________________________________________
Name:______________________________________
Title:_____________________________________
V-29
<PAGE>
Schedule A
----------
Name Notice Address for each Subsidiary
- ---- ----------------------------------
Grantor
-------
V-Sch. A-1
<PAGE>
Schedule 1(d) to
----------------
Pledge and Security Agreement
-----------------------------
Deposit Accounts
- ----------------
V-Sch. 1(d)-1
<PAGE>
Schedule 1(e)(i) to
-------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERCENTAGE OF
CLASS STOCK NUMBER OUTSTANDING
OF STOCK OR REGISTERED CERTIFICATE PAR OF SHARES
STOCK ISSUER EQUITY INTEREST OWNER NOS. VALUE SHARES PLEDGED
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
V-Sch. 1(e)(i)-1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERCENTAGE OF
CLASS STOCK NUMBER OUTSTANDING
OF STOCK OR REGISTERED CERTIFICATE PAR OF SHARES
STOCK ISSUER EQUITY INTEREST OWNER NOS. VALUE SHARES PLEDGED
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
V-Sch. 1(e)(i)-2
<PAGE>
Schedule 1(e)(ii) to
--------------------
Pledge and Security Agreement
-----------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT OF
DEBT ISSUER PAYEE INDEBTEDNESS
=================================================================================================
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
V-Sch. 1(e)(ii)-1
<PAGE>
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
---------------- ----------- ------ ----
V-Sch. 1(f)(i)-1
<PAGE>
Schedule 1(f)(ii)to
--------------------
Pledge and Security Agreement
-----------------------------
U.S. Patents Issued:
- -------------------
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
--------- ---------- --------- -------- -----
U.S. Patents Pending:
- --------------------
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- -------
Foreign Patents Issued:
- ----------------------
[Registered
Patent No. Issue Date Invention [Inventor] Owner]
--------- ---------- --------- -------- -----
V-Sch. 1(f)(ii)-1
<PAGE>
Foreign Patents Pending:
- -----------------------
Applicant's Date Application
Name Filed Number Invention [Inventor]
---- ----- ------ --------- ---------
V-Sch. 1(f)(ii)-2
<PAGE>
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 Registered Owner
- ------- ----- ---------------- ------------- ----------------
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 [Registered Owner]
- ------- ----- ---------------- ------------- ----------------
V-Sch. 1(f)(iii)-1
<PAGE>
Schedule 4(b) to
----------------
Pledge and Security Agreement
-----------------------------
Locations of Equipment and Inventory
------------------------------------
Name of Grantor Locations of Equipment and Inventory
- --------------- ------------------------------------
V-Sch. 4(b)-1
<PAGE>
Schedule 4(c) to
----------------
Pledge and Security Agreement
-----------------------------
Office Locations
----------------
Name of Grantor Office Locations
- --------------- ----------------
V-Sch. 4(c)-1
<PAGE>
Schedule 4(d) to
----------------
Pledge and Security Agreement
-----------------------------
Other Names
-----------
Name of Grantor Other Names
- --------------- -----------
V-Sch. 4(d)-1
<PAGE>
Schedule 4(h) to
----------------
Pledge and Security Agreement
-----------------------------
Filing Offices
--------------
Grantor Filing Offices
------- --------------
V-Sch. 4(h)-1
<PAGE>
Exhibit I to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
1997 Second Amended and Restated Credit Agreement dated as of January 31, 2000
(said 1997 Second Amended and Restated Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Senior Managing
Agents; the several financial institutions party thereto as Managing Agents; the
several financial institutions party thereto as Co-Agents; Bank of America, N.A.
as Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Agent, pursuant to which Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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) all rights, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all trademarks,
service marks, designs, logos, indicia, tradenames,
V-I-1
<PAGE>
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, without limitation,
the trademarks specifically identified in Schedule A) (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, without limitation, the registrations and
applications specifically identified in Schedule A) (the "Trademark
---------
Registrations"), all common law and other rights (but in no event any of
-------------
the obligations) 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"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 is intentionally left blank.]
V-I-2
<PAGE>
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 _______, 2000.
[NAME OF GRANTOR]
By:________________________
Name:______________________
Title:_____________________
V-I-3
<PAGE>
Schedule A to
-------------
Grant of Trademark Security Interest
------------------------------------
United States
Trademark Registration Registration
Registered Owner Description Number Date
- ---------------- ----------- ------ ----
V-Sch. A-1
<PAGE>
Exhibit II to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns and
-------
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, Levi Strauss & Co., a Delaware corporation, has entered into the
1997 Second Amended and Restated Credit Agreement dated as of January 31, 2000
(said 1997 Second Amended and Restated Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Senior Managing
Agents; the several financial institutions party thereto as Managing Agents; the
several financial institutions party thereto as Co-Agents; Bank of America, N.A.
as Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Agent, pursuant to which Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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"):
-----------------
(i) all rights, title and interest (including rights acquired pursuant to
a license or otherwise but only to the extent permitted by agreements
governing such license or other use) in and to all patents and patent
applications and rights and interests in patents and
V-II-1
<PAGE>
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,
without limitation, the patents and patent applications listed in Schedule
--------
A), all rights (but not obligations) corresponding thereto to sue for past,
-
present and future infringements and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all
of the foregoing being collectively referred to as the "Patents"); 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of 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 intentionally left blank.]
V-II-2
<PAGE>
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 ____________, 2000.
[NAME OF GRANTOR]
By:____________________
Name:
Title:
V-II-3
<PAGE>
Schedule A to
-------------
Grant of Patent Security Interest
---------------------------------
Patents Issued:
- --------------
Registered
Patent No. Issue Date Invention Inventor Owner
---------- ---------- --------- -------- -----
Patents Pending:
- ---------------
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
V-Sch. A-1
<PAGE>
Exhibit III to
--------------
Pledge and Security Agreement
-----------------------------
[FORM OF] 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, Levi Strauss & Co., a Delaware corporation, has entered into the
1997 Second Amended and Restated Credit Agreement dated as of January 31, 2000
(said 1997 Second Amended and Restated Credit Agreement, as amended to the date
hereof, and as it may hereafter be further amended, modified, or supplemented
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined) with the
several financial institutions from time to time party thereto (collectively,
"Banks"); the several financial institutions party thereto as Senior Managing
Agents; the several financial institutions party thereto as Managing Agents; the
several financial institutions party thereto as Co-Agents; Bank of America, N.A.
as Agent for Banks; and Bank of America, N.A. as Collateral Agent for Banks (in
such capacity, "Secured Party") pursuant to which Banks have made certain
-------------
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and
[WHEREAS, Grantor has executed and delivered that certain Guaranty dated as
of February 1, 2000 (said Guaranty, as it may hereafter be amended, modified, or
supplemented from time to time, being the "Guaranty") in favor of Secured Party
--------
for the benefit of Banks and Agent, pursuant to which Grantor has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents; and]
WHEREAS, pursuant to the terms of a Pledge and Security Agreement dated as
of January 31, 2000 (as amended, modified, or supplemented from time to time,
the "Pledge and Security Agreement"), among Grantor, Secured Party and the other
-----------------------------
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and 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 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 "Copyright Collateral"):
--------------------
(i) all rights, title and interest (including rights acquired pursuant to
a license or otherwise but only to the extent permitted by agreements
governing such license or other use) under copyright in various published
and unpublished works of authorship including,
V-III-1
<PAGE>
without limitation, computer programs, computer data bases, other computer
software layouts, trade dress, drawings, designs, writings, and formulas
(including, without limitation, the works listed on Schedule A, as the same
----------
may be amended pursuant hereto from time to time) (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 in the United States and any state thereof
and in foreign countries (including, without limitation, the registrations
listed on Schedule A, 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, without
----------------
limitation, 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 (but not the obligation) to renew and extend such Copyright
Registrations and Copyright Rights and to register works protectable by
copyright and the right (but not the obligation) to sue in the name of such
Grantor or in the name of Secured Party or Banks for past, present and
future infringements of the Copyrights and Copyright Rights; 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 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.
Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which 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 Grantor is a party or any Negative Pledge
permitted by the Credit Agreement on such rights or interests; provided, that
--------
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and 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.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Copyright
Collateral granted hereby are
V-III-2
<PAGE>
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 intentionally left blank.]
V-III-3
<PAGE>
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 ___________, 2000.
[NAME OF GRANTOR]
By: _____________________________
Name: ___________________________
Title: __________________________
V-III-4
<PAGE>
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
- ----- ------------- ------------------- -------------------
V-Sch. A-1
<PAGE>
Exhibit IV to
-------------
Pledge and Security Agreement
-----------------------------
[FORM OF] PLEDGE SUPPLEMENT
This Pledge Supplement, dated __________________, is delivered pursuant to
the Pledge and Security Agreement, dated January 31, 2000, between Levi Strauss
& Co., a Delaware corporation, the other Grantors named therein, and Bank of
America, N.A. (as it may be from time to time amended, modified, or
supplemented, the "Pledge and Security Agreement"). Capitalized terms used
-----------------------------
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Pledge and Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt] listed on
the schedule attached hereto shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] 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: ____________________________
Name: __________________________
Title: _________________________
V-IV-1
<PAGE>
Exhibit V to
------------
Pledge and Security Agreement
-----------------------------
[FORM OF] IP SUPPLEMENT
This IP SUPPLEMENT, dated _____________, is delivered pursuant to and
supplements (i) the Pledge and Security Agreement, dated as of January 31, 2000
(as it may be from time to time amended, modified, or supplemented, the "Pledge
------
and Security Agreement"), among Levi Strauss & Co., a Delaware corporation, the
- ----------------------
other Grantors named therein, and Bank of America, N.A., as Secured Party, and
(ii) the [Grant of Trademark Security Interest] [Grant of Patent Security
Interest] [Grant of Copyright Security Interest] dated as of ___________, 2000
(the "Grant") executed by Grantor. Capitalized terms used herein not otherwise
-----
defined herein shall have the meanings ascribed thereto in the Grant.
["Grantor"] grants to Secured Party a security interest in all of Grantor's
right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed 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-V-1
<PAGE>
Exhibit VI to
-------------
Pledge And Security Agreement
-----------------------------
[FORM OF] COUNTERPART
This COUNTERPART (this "Counterpart"), dated _______, is delivered pursuant
-----------
to Section 20 of the Pledge and Security Agreement referred to below. The
undersigned hereby agrees that this Counterpart may be attached to the Pledge
and Security Agreement, dated as of January 31, 2000 (as it may be from time to
time amended, modified, or supplemented, the "Pledge and Security Agreement";
-----------------------------
capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed therein), among Levi Strauss & Co., a Delaware corporation,
the other Grantors named therein, and Bank of America, N.A., as Secured Party.
The undersigned by executing and delivering this Counterpart hereby becomes a
Grantor under the Pledge and Security Agreement in accordance with Section 20
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;
(ii) agrees that all Collateral of the undersigned, including the
items of property described 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: ______________________
VIII-Sch. 1-1
<PAGE>
EXHIBIT 10.15
Exhibit VI
----------
[FORM OF] GUARANTY
This GUARANTY is entered into as of February 1, 2000 by the undersigned
(each a "Guarantor", and together with any future Subsidiaries executing this
---------
Guaranty, being collectively referred to herein as the "Guarantors") in favor of
----------
and for the benefit of Bank of America, N.A., as agent for and representative of
(in such capacity herein called "Guarantied Party") Collateral Agent and the
----------------
several financial institutions ("Banks") from time to time party to the Credit
-----
Agreement referred to below, and for the benefit of the other Beneficiaries (as
hereinafter defined).
PRELIMINARY STATEMENTS
----------------------
A. Levi Strauss & Co., a Delaware corporation ("Company") has entered
-------
into that certain 1997 Second Amended and Restated Credit Agreement dated as of
January 31, 2000 with Banks; the several financial institutions party thereto as
Senior Managing Agents; the several financial institutions party thereto as
Managing Agents; the several financial institutions party thereto as Co-Agents;
and Guarantied Party, as Agent and Collateral Agent for Banks (said 1997 Second
Amended and Restated Credit Agreement, as it may hereafter be amended, modified,
or supplemented from time to time, being the "Credit Agreement"; capitalized
----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined).
B. Guarantied Party, Banks and Collateral Agent are sometimes referred to
herein as "Beneficiaries".
-------------
C. A portion of the proceeds of the Loans may be advanced to Guarantors,
and thus the Guarantied Obligations (as hereinafter defined) are being incurred
for and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Company's obligations thereunder be guarantied by Guarantors.
E. Guarantors are willing irrevocably and unconditionally to guaranty
such obligations of Company.
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 Banks and Guarantied Party to enter into the Credit
Agreement, Guarantors hereby agree as follows:
1. Guaranty. (a) In order to induce Banks to extend credit to Company
--------
pursuant to the Credit Agreement, Guarantors jointly and severally irrevocably
and unconditionally guaranty, as primary obligors and not merely as sureties,
the due and punctual payment in full of all
VI-1
<PAGE>
Guarantied Obligations (as hereinafter defined) when the same shall become due,
whether at stated maturity, by acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term
"Guarantied Obligations" is used herein in its most comprehensive sense and
----------------------
includes any and all Obligations of Company, now or hereafter made, incurred or
created, whether absolute or contingent, liquidated or unliquidated, whether due
or not due, and however arising under or in connection with the Credit
Agreement, this Guaranty and the other Loan Documents, including those arising
under successive borrowing transactions under the Credit Agreement which shall
either continue the Obligations of Company or from time to time renew them after
they have been satisfied.
Each Guarantor acknowledges that a portion of the Loans may be advanced to
it, that Lender Letters of Credit may be issued for the benefit of its business
and that the Guarantied Obligations are being incurred for and will inure to its
benefit.
Any interest on any portion of the Guarantied Obligations that accrues
after the commencement of any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company (or, if interest on any portion of the Guarantied
Obligations ceases to accrue by operation of law by reason of the commencement
of said proceeding, such interest as would have accrued on such portion of the
Guarantied Obligations if said proceeding had not been commenced) shall be
included in the Guarantied Obligations because it is the intention of each
Guarantor and Guarantied Party that the Guarantied Obligations should be
determined without regard to any rule of law or order that may relieve Company
of any portion of such Guarantied Obligations.
In the event that all or any portion of the Guarantied Obligations is paid
by Company, the obligations of each Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) is rescinded or recovered directly
or indirectly from Guarantied Party or any other Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments that are so rescinded or
recovered shall constitute Guarantied Obligations.
Subject to the other provisions of this Section 1, upon the failure of
Company to pay any of the Guarantied Obligations when and as the same shall
become due, each Guarantor will upon demand pay, or cause to be paid, in cash,
to Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the aggregate of the unpaid Guarantied Obligations.
(b) Anything contained in this Guaranty to the contrary notwithstanding,
the obligations of each Guarantor under this Guaranty shall be limited to a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
----------
Transfer Laws"), in each case after giving effect to all other liabilities of
- -------------
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (i) in respect of intercompany indebtedness
VI-2
<PAGE>
to Company or other affiliates of Company to the extent that such indebtedness
would be discharged in an amount equal to the amount paid by such Guarantor
hereunder and (ii) under any guaranty which contains a limitation as to maximum
amount similar to that set forth in this Section 1(b), pursuant to which the
liability of such Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving effect as assets to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement, indemnification or
contribution of such Guarantor pursuant to applicable law or pursuant to the
terms of any agreement.
(c) Each Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Credit Agreement (the "Related Guaranties")
------------------
that contain a contribution provision similar to that set forth in this Section
1(c), together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
- ------------------------
arising under this Guaranty and the Related Guaranties. Accordingly, in the
event any payment or distribution is made on any date by a Guarantor under this
Guaranty or a guarantor under a Related Guaranty, each such Guarantor or such
other guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Guarantied Obligations paid to Beneficiaries.
2. Guaranty Absolute; Continuing Guaranty. The obligations of each
----------------------------------------
Guarantor hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees that: (a) this Guaranty is a guaranty
of payment when due and not of collectibility; (b) Guarantied Party may enforce
this Guaranty upon the occurrence of an Event of Default under the Credit
Agreement notwithstanding the existence of any dispute between Company and any
Beneficiary with respect to the existence of such event; (c) the obligations of
each Guarantor hereunder are independent of the obligations of Company under the
Loan Documents and the obligations of any other Guarantor and a separate action
or actions may be brought and prosecuted against each Guarantor whether or not
any action is brought against Company or any of such other Guarantors and
whether or not Company is joined in any such action or actions; and (d) a
payment of a portion, but not all, of the Guarantied Obligations by one or more
Guarantors shall in no way limit, affect, modify or abridge the liability of
such or any other Guarantor for any portion of the Guarantied Obligations that
has not been paid. This Guaranty is a continuing guaranty and shall be binding
upon each Guarantor and its successors and assigns, and each Guarantor
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guarantied Obligations.
3. Actions by Beneficiaries. Any Beneficiary may from time to time,
------------------------
without notice or demand and without affecting the validity or enforceability of
this Guaranty or giving rise to any limitation, impairment or discharge of any
Guarantor's liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement
VI-3
<PAGE>
relating thereto and/or subordinate the payment of the same to the payment of
any other obligations, (c) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Guaranty or the
Guarantied Obligations, (d) release, exchange, compromise, subordinate or
modify, with or without consideration, any security for payment of the
Guarantied Obligations, any other guaranties of the Guarantied Obligations, or
any other obligation of any Person with respect to the Guarantied Obligations,
(e) enforce and apply any security now or hereafter held by or for the benefit
of any Beneficiary in respect of this Guaranty or the Guarantied Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that Guarantied Party or the other Beneficiaries, or any of them, may
have against any such security, as Guarantied Party in its discretion may
determine consistent with the Credit Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and (f) exercise any other rights available to
Guarantied Party or the other Beneficiaries, or any of them, under the Loan
Documents.
4. No Discharge. This Guaranty and the obligations of Guarantors
------------
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations, (b) any waiver or modification
of, or any consent to departure from, any of the terms or provisions of the
Credit Agreement, any of the other Loan Documents or any agreement or instrument
executed pursuant thereto, or of any other guaranty or security for the
Guarantied Obligations, (c) the Guarantied Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (d) the application of payments received from any
source to the payment of indebtedness other than the Guarantied Obligations,
even though Guarantied Party or the other Beneficiaries, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations, (e) any failure to perfect or continue perfection of a security
interest in any collateral which secures any of the Guarantied Obligations, (f)
any defenses, set-offs or counterclaims which Company may assert against
Guarantied Party or any Beneficiary in respect of the Guarantied Obligations,
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury, and (g) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the risk of a
Guarantor as an obligor in respect of the Guarantied Obligations.
5. Waivers. Each Guarantor waives, for the benefit of Beneficiaries: (a)
-------
any right to require Guarantied Party or the other Beneficiaries, as a condition
of payment or performance by such Guarantor, to (i) proceed against Company, any
other guarantor (including any other Guarantor) of the Guarantied Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any other guarantor of the Guarantied Obligations or any other
VI-4
<PAGE>
Person, (iii) proceed against or have resort to any balance of any deposit
account or credit on the books of any Beneficiary in favor of Company or any
other Person, or (iv) pursue any other remedy in the power of any Beneficiary;
(b) any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Guarantied Obligations or any agreement or instrument relating thereto or
by reason of the cessation of the liability of Company from any cause other than
payment in full of the Guarantied Obligations; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon Guarantied Party's or any other
Beneficiary's errors or omissions in the administration of the Guarantied
Obligations, except behavior that amounts to gross negligence or willful
misconduct; (e) (i) any principles or provisions of law, statutory or otherwise,
that are or might be in conflict with the terms of this Guaranty and any legal
or equitable discharge of such Guarantor's obligations hereunder, (ii) the
benefit of any statute of limitations affecting such Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any Lien or any property subject
thereto; (f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Guaranty, notices of default under the Credit Agreement or any agreement
or instrument related thereto, notices of any renewal, extension or modification
of the Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
Sections 3 and 4 hereof and any right to consent to any thereof; and (g) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
As used in this paragraph, any reference to "the principal" includes
Company, and any reference to "the creditor" includes Guarantied Party and each
other Beneficiary. In accordance with Section 2856 of the California Civil Code
(a) each Guarantor waives any and all rights and defenses available to it by
reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code, including without limitation any and all rights or defenses such
Guarantor may have by reason of protection afforded to the principal with
respect to any of the Guarantied Obligations, or to any other guarantor of any
of the Guarantied Obligations with respect to any of such guarantor's
obligations under its guaranty, in either case pursuant to the antideficiency or
other laws of the State of California limiting or discharging the principal's
indebtedness or such guarantor's obligations, including without limitation
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure; and
(b) each Guarantor waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a Guarantied Obligation,
has destroyed such Guarantor's rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of any other
guarantor of any of the Guarantied Obligations, has destroyed such Guarantor's
rights of contribution against such other guarantor. No other provision of this
VI-5
<PAGE>
Guaranty shall be construed as limiting the generality of any of the covenants
and waivers set forth in this paragraph. As provided below, this Guaranty shall
be governed by, and shall be construed and enforced in accordance with, the
internal laws of the State of New York, without regard to conflicts of laws
principles. This paragraph is included solely out of an abundance of caution,
and shall not be construed to mean that any of the above-referenced provisions
of California law are in any way applicable to this Guaranty or to any of the
Guarantied Obligations.
6. Guarantors' Rights of Subrogation, Contribution, Etc.; Subordination of
-----------------------------------------------------------------------
Other Obligations. Until the Guarantied Obligations shall have been paid in
- -----------------
full and the Commitments shall have terminated and all Lender Letters of Credit
shall have expired or been cancelled, no Guarantor shall exercise any claim,
right or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against Company or their respective assets in connection with
this Guaranty or the performance by such Guarantor of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under
contract, by statute (including without limitation under California Civil Code
Section 2847, 2848 or 2849), under common law or otherwise and including without
limitation (a) any right of subrogation, reimbursement or indemnification that
such Guarantor now has or may hereafter have against Company, (b) any right to
enforce, or to participate in, any claim, right or remedy that any Beneficiary
now has or may hereafter have against Company, and (c) any benefit of, and any
right to participate in, any collateral or security now or hereafter held by any
Beneficiary. Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights Guarantied Party or the other Beneficiaries may have
against Company, to all right, title and interest Guarantied Party or the other
Beneficiaries may have in any such collateral or security, and to any right
Guarantied Party or the other Beneficiaries may have against such other
guarantor.
Any indebtedness of Company now or hereafter held by any Guarantor is
subordinated in right of payment to the Guarantied Obligations, and any such
indebtedness of Company to a Guarantor collected or received by such Guarantor
after an Event of Default has occurred and is continuing, and any amount paid to
a Guarantor on account of any subrogation, reimbursement, indemnification or
contribution rights referred to in the preceding paragraph when all Guarantied
Obligations have not been paid in full, shall be held in trust for Guarantied
Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied
Party for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations.
7. Expenses. Guarantors jointly and severally agree to pay, or cause to
--------
be paid, on demand, and to save Guarantied Party and the other Beneficiaries
harmless against liability for, any and all costs and expenses (including fees
and disbursements of counsel and allocated costs of internal counsel) incurred
or expended by Guarantied Party or any other Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.
VI-6
<PAGE>
8. Financial Condition of Company. No Beneficiary shall have any
------------------------------
obligation, and each Guarantor waives any duty on the part of any Beneficiary,
to disclose or discuss with such Guarantor its assessment, or such Guarantor's
assessment, of the financial condition of Company or any matter or fact relating
to the business, operations or condition of Company. Each Guarantor has
adequate means to obtain information from Company on a continuing basis
concerning the financial condition of Company and its ability to perform its
obligations under the Loan Documents, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations.
9. Representations and Warranties. Each Guarantor makes, for the benefit
------------------------------
of Beneficiaries, each of the representations and warranties made in the Credit
Agreement by Company as to such Guarantor, its assets, financial condition,
operations, organization, legal status, business and the Loan Documents to which
it is a party.
10. Covenants. Each Guarantor agrees that, so long as any part of the
---------
Guaranteed Obligations shall remain unpaid or any Bank shall have any
Commitment, such Guarantor will, unless Majority Banks shall otherwise consent
in writing, perform or observe, and cause its Subsidiaries to perform or
observe, all of the terms, covenants and agreements that the Loan Documents
state that Company is to cause a Guarantor and such Subsidiaries to perform or
observe.
11. Set Off. In addition to any other rights any Beneficiary may have
-------
under law or in equity, if any amount shall at any time be due and owing by a
Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized
at any time or from time to time, without notice (any such notice being
expressly waived), to set off and to appropriate and to apply any and all
deposits (general or special, including but not limited to indebtedness evidence
by certificates of deposit, whether matured or unmatured) and any other
indebtedness of such Beneficiary owing to a Guarantor and any other property of
such Guarantor held by a Beneficiary to or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to any Beneficiary under this Guaranty.
12. Discharge of Guaranty Upon Sale of Guarantor. If all of the stock of
--------------------------------------------
a Guarantor or any of its successors in interest under this Guaranty shall be
sold or otherwise disposed of (including by merger or consolidation) in a sale
in compliance with the terms of the Credit Agreement, the obligations of such
Guarantor or such successor in interest, as the case may be, hereunder shall
automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such sale; provided
--------
that, if the sale of such stock constitutes a Disposition as a condition
precedent to such discharge and release, Guarantied Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Guarantied Party of the Net Asset Disposition Proceeds (if any)
as required by the Credit Agreement.
13. Amendments and Waivers. No amendment, modification, termination or
----------------------
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom,
VI-7
<PAGE>
shall in any event be effective without the written concurrence of Guarantied
Party and, in the case of any such amendment or modification, Guarantors. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
14. Miscellaneous. It is not necessary for Beneficiaries to inquire into
-------------
the capacity or powers of any Guarantor or Company or the officers, directors or
any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiaries by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiaries by virtue of any statute or rule of law or in
any of the Loan Documents or any agreement between one or more Guarantors and
one or more Beneficiaries or between Company and one or more Beneficiaries. Any
forbearance or failure to exercise, and any delay by any Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS, GUARANTIED
PARTY AND THE OTHER BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Guaranty shall inure to the benefit of Beneficiaries and their
respective successors and assigns.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR, GUARANTIED PARTY, COLLATERAL AGENT AND BANKS EACH
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR, GUARANTIED
PARTY, COLLATERAL AGENT AND BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR
VI-8
<PAGE>
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW
EACH GUARANTOR, COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, COLLATERAL AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR,
COLLATERAL AGENT, BANKS AND GUARANTIED PARTY EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
15. Additional Guarantors. The initial Guarantor(s) hereunder shall be
---------------------
such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, Subsidiaries of
Company may become parties hereto, as additional Guarantors (each an "Additional
----------
Guarantor"), by executing a counterpart, a form of which is attached as
- ---------
Exhibit A, of this Guaranty. Upon delivery of any such counterpart to
Guarantied Party, notice of which is hereby waived by Guarantors, each such
Additional Guarantor shall be a Guarantor and shall be as fully a party hereto
as if such Additional Guarantor were an original signatory hereof. Each
Guarantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Guarantor
hereunder, nor by any election of the Guarantied Party not to cause any
Subsidiary of Company to become an Additional Guarantor hereunder. This Guaranty
shall be fully effective as to any Guarantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Guarantor hereunder.
16. Counterparts; Effectiveness. This Guaranty may be executed in any
---------------------------
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by the Guaranteed Party of written or
telephonic notification of such execution and authorization of delivery thereof.
VI-9
<PAGE>
17. Guarantied Party as Agent.
-------------------------
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Banks. Guarantied 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, solely in
accordance with this Guaranty and the Credit Agreement.
(b) Guarantied Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
Section 9.9 of the Credit Agreement shall also constitute notice of resignation
as Guarantied Party under this Guaranty; removal of Agent pursuant to Section
9.9 of the Credit Agreement shall also constitute removal as Guarantied Party
under this Guaranty; and appointment of a successor agent pursuant to Section
9.9 of the Credit Agreement shall also constitute appointment of a successor
Guarantied Party under this Guaranty. Upon the acceptance of any appointment as
agent under Section 9.9 of the Credit Agreement by a successor agent, that
successor agent shall thereupon succeed to become vested with all the rights,
powers, privileges and duties of the retiring or removed Guarantied party under
this Guaranty, and the retiring or removed Guarantied Party under this Guaranty
shall promptly (i) transfer to such successor Guarantied Party all sums held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Guarantied Party under this Guaranty, and (ii) take such other actions as may be
necessary or appropriate in connection with the assignment to such successor
Guarantied Party of the rights created hereunder, whereupon such retiring or
removed Guarantied Party shall be discharged from its duties and obligations
under this Guaranty. After any retiring or removed Guarantied Party's
resignation or removal hereunder as Guarantied Party, the provisions of this
Guaranty shall inure to its benefits as to any actions taken or omitted to be
taken by it under this Guaranty while it was Guarantied Party hereunder.
[The remainder of this page intentionally left blank.]
VI-10
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first written above.
BATTERY STREET ENTERPRISES, INC.
By:______________________
Name:____________________
Title:___________________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS FINANCIAL CENTER
CORPORATION
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS FUNDING, LLC
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
VI-11
<PAGE>
LEVI STRAUSS GLOBAL
OPERATIONS, INC.
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS INTERNATIONAL
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
LEVI STRAUSS LATIN AMERICA, INC.
By:______________________
Name:____________________
Title:___________________
Address: __________________________
__________________________
__________________________
LEVI'S ONLY STORES, INC.
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
VI-12
<PAGE>
NF INDUSTRIES, INC.
By:_____________________
Name:___________________
Title:__________________
Address: __________________________
__________________________
__________________________
ACKNOWLEDGED AND FOR PURPOSES
OF THE WAIVER OF JURY TRIAL SET
FORTH IN SECTION 14 ONLY, AGREED
AS OF THE DATE FIRST WRITTEN ABOVE
Bank of America, N.A., as Agent
By:_____________________________
Title: _________________________
VI-13
<PAGE>
Exhibit A to
------------
Guaranty
--------
[FORM OF] COUNTERPART FOR ADDITIONAL GUARANTORS
This COUNTERPART (this "Counterpart"), dated _______, _____, is delivered
-----------
pursuant to Section 15 of the Guaranty referred to below. The undersigned
hereby agrees that this Counterpart may be attached to the Guaranty, dated as of
February 1, 2000 (as it may be from time to time amended, modified, or
supplemented, the "Guaranty"; capitalized terms used herein not otherwise
--------
defined herein shall have the meanings specified therein), among the Guarantors
named therein and Bank of America, N.A., as Guarantied Party. The undersigned,
by executing and delivering this Counterpart, hereby becomes an Additional
Guarantor under the Guaranty in accordance with Section 15 thereof and agrees to
be bound by all of the terms thereof.
IN WITNESS WHEREOF, the undersigned has caused this Counterpart to be
duly executed and delivered by its officer thereunto duly authorized as of
______________, ____.
[NAME OF ADDITIONAL GUARANTOR]
By:_______________________________
Name:_____________________________
Title:____________________________
Address:__________________________
__________________________
__________________________
VIII-Sch. 1-1
<PAGE>
EXHIBIT 10.16
[___] FEBRUARY 2000
____________________________________________________________
RECEIVABLES PURCHASE AGREEMENT
____________________________________________________________
TULIP ASSET PURCHASE COMPANY B.V.
as Purchaser
[LEVI STRAUSS __________]
as Seller
and
LEVI STRAUSS & CO
as Parent
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. INTERPRETATION..................................................... 1
2. OFFER FOR RECEIVABLES.............................................. 13
3. ACCEPTANCE, PURCHASE AND ASSIGNMENT................................ 14
4. CALCULATION OF PURCHASE PRICE/DEFERRED PURCHASE PRICE PROVISIONS... 16
5. LIMITED GUARANTEE.................................................. 17
6. NOTICE TO DEBTORS.................................................. 19
7. DOWNGRADE TRIGGER.................................................. 19
8. FURTHER ASSURANCE.................................................. 20
9. INDEMNITY.......................................................... 21
10. PAYMENTS........................................................... 22
11. NETTING-OFF OF PAYMENTS............................................ 23
12. APPOINTMENT OF SERVICER............................................ 23
13. REPRESENTATIONS AND WARRANTIES..................................... 24
14. COVENANTS.......................................................... 26
15. TAXES AND INCREASED COSTS.......................................... 30
16. DEFAULT INTEREST AND INDEMNITY..................................... 31
17. FEES, COSTS AND EXPENSES........................................... 32
18. DEEMED COLLECTIONS................................................. 33
19. BENEFIT OF AGREEMENT............................................... 33
20. DISCLOSURE OF INFORMATION.......................................... 34
21. REMEDIES AND WAIVERS............................................... 35
22. PARTIAL INVALIDITY................................................. 35
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
23. NO LIABILITY AND NO PETITION....................................... 35
24. NOTICES AND AMENDMENTS............................................. 36
25. LAW................................................................ 38
26. JURISDICTION....................................................... 38
</TABLE>
-ii-
<PAGE>
THIS AGREEMENT is made the [ ] day of December 1999.
BETWEEN
(1) TULIP ASSET PURCHASE COMPANY B.V., a Dutch private company with limited
liability having its registered office at Gustav Mahlerlaan 10, 1082 PP
Amsterdam, The Netherlands (the "PURCHASER"); and
(2) [LEVI STRAUSS ____________], a company with its registered office at
[_______________], RC [___________] (the "SELLER").
(3) LEVI STRAUSS & CO. a Delaware corporation having its head office at 1155
Battery Street, San Francisco, CA 94120, USA (the "PARENT").
WHEREAS
(A) The Seller and the Purchaser agree, upon the terms and subject to the
conditions hereof, that the Seller may from time to time offer to sell and
to assign Eligible Receivables to the Purchaser and the Purchaser shall
accept any such offer upon the terms hereof.
(B) The Purchaser and the Servicer have agreed, upon the terms and subject to
the conditions of the Servicing Agreement, to appoint the Servicer to act
for the Purchaser in the performance of certain services in relation to the
Purchased Receivables.
NOW IT IS HEREBY AGREED as follows:
PART 1
INTERPRETATION
1. INTERPRETATION
1.1 In this Agreement and in the Recitals hereto, except so far as the context
otherwise requires:
"ACCOUNT BANK" means ABN AMRO Bank N.V. acting through its office at
Amsterdam and any person appointed as Account Bank under the Accounts
Administration Agreement;
"ACCOUNTS ADMINISTRATION AGREEMENT" means the accounts administration
agreement dated on or about the date hereof between ABN AMRO Bank N.V. as
Accounts Administrator, the Purchaser and the Issuer;
-1-
<PAGE>
"ACCOUNTS ADMINISTRATOR" means ABN AMRO Bank N.V. acting through its office
at Amsterdam and any person appointed as accounts administrator under the
Accounts Administration Agreement;
"ADVANCES" means all Advances and Same Day Advances pursuant to the
Liquidity Facility Agreement and all Drawings under the Standby Letter of
Credit Agreement (as in each case defined therein);
"ADVERSE CLAIM" means any charge, encumbrance, proprietary or security
interest, right of retention, lien or privilege / voorrecht, or other right
or claim in, over or on any person's assets or properties in favour of any
other person (but excluding the rights of the Debtor under any Contract in
respect of the use or possession of goods the subject of such Contract);
"AGGREGATE OUTSTANDING NOMINAL AMOUNT" means, with respect to all Purchased
Receivables, at any time the aggregate amount of the Outstanding Nominal
Amount of each Purchased Receivable;
"AGGREGATE RECEIVABLES INVESTMENT" means at any time the Aggregate
Outstanding Nominal Amount of Purchased Receivables purchased prior to the
relevant calculation date plus Receivables subject to an Offer and in
relation to which a Loan under the Funding Agreements has been entered into
minus the Outstanding Nominal Amount of each Purchased Receivable which is
a Defaulted Receivable and, for the purposes of Clause 3.4 and the
Termination Event numbered 13 in the Fourth Schedule only, the total being
converted into Dollars using a conversion rate equal to the weighted
average of the rates of conversion applicable to each Hedging Transaction
entered into by the Purchaser for delivery of currency against Dollars;
"AVERAGE COLLECTION PERIOD" means at any time a period of days equal to the
product of (a) one, or, if greater, a fraction the numerator of which shall
be the amount set forth in the most recent Monthly Report as the Nominal
Amount of all Receivables at the beginning of the period to which the
Monthly Report relates and the denominator of which shall be the
Collections as set forth in the most recent Monthly Report for the period
to which the Monthly Report relates, and (b) 30;
"COLLECTIONS" means, with respect to any Purchased Receivable, all cash
collections, finance, interest, late payment or similar charges and other
cash proceeds of such Receivable or other amounts received or recovered in
respect thereof, including, without limitation, any payments made on any
bill of exchange, promissory note or other negotiable instrument issued in
respect of such Receivable to any holder thereof (whether or not issued in
contravention of any provisions of this Agreement), all cash proceeds of
Related Security with respect to such Receivable and any Deemed Collections
of such Receivable, and all recoveries of value added tax from any relevant
tax authority relating to any Defaulted Receivable;
-2-
<PAGE>
"COLLECTION ACCOUNT" shall have the meaning given to it in the Servicing
Agreement;
"COLLECTION PAYMENT DATE" means the fifth business day following the end of
the immediately preceding Collection Period;
"COLLECTION PERIOD" means, in relation to a Collection Payment Date falling
during the year 2000, the monthly reporting period (as described below)
preceding that in which such Collection Payment Date falls, provided that
the first Collection Period shall commence on the first Purchase Date:
MONTHLY REPORTING PERIOD FOR THE YEAR 2000
2 January 2000 to 30 January 2000
30 January 2000 to 7 February 2000
27 February 2000 to 2 April 2000
2 April 2000 to 30 April 2000
30 April 2000 to 28 May 2000
28 May 2000 to 2 July 2000
2 July 2000 to 30 July 2000
30 July 2000 to 27 August 2000
27 August 2000 to 1 October 2000
1 October 2000 to 29 October 2000
29 October 2000 to 30 November 2000
and, in respect of Collection Payment Dates in subsequent years, the
relevant collection period shall be determined by reference to such monthly
reporting periods as shall be agreed from time to time between the Seller
and the Purchaser;
provided that in each case the first Collection Period shall commence on
the first Purchase Date.
"CONDITIONS PRECEDENT" means the conditions precedent to the valid delivery
of an Offer set out in the First Schedule;
"Contract" means each of the agreements between the Seller and a Debtor
which is subject to the General Terms and Conditions set out in the Fifth
Schedule or as otherwise approved
-3-
<PAGE>
by the Purchaser, pursuant to which a Debtor shall be obliged to pay for
goods purchased from or services provided by the Seller;
"CP PROGRAMME" means the commercial paper programme established by the
Issuer pursuant to the Dealer Agreements;
"CREDIT AND COLLECTION POLICIES" means the credit and collection policies
and practices from time to time applied by the Seller and notified in
writing to the Purchaser in relation to Receivables in accordance with the
laws of Belgium and any other jurisdiction in which the Seller originates
or administers Receivables;
"DEALER AGREEMENTS" means the dealer agreements relating to the CP
Programme dated on or after 1 December 1995 between the Issuer and the
Dealers (as defined therein);
"DEBTOR" means a person set out in the records of the Seller as being
obliged to make payments for the provision of goods or services evidenced
by a Contract for which an invoice has been issued (or, if different, the
person so obliged);
"DEBTOR LIMIT" means [3%] of the Programme Limit, except as otherwise
provided in the Seventh Schedule (as amended from time to time);
"DEEMED COLLECTION" has the meaning given to it in Clause 18 hereof;
"DEFAULTED RECEIVABLE" means any Receivable (other than a Disputed
Receivable or a Written-Off Receivable) which is not paid by the relevant
Debtor (including, without limitation, payments made by third parties on
behalf of the Debtor) to the Servicer by the end of the Collection Period
during which such Receivable becomes more than 90 days overdue for payment
from its Receivable Due Date or in respect of which the related Debtor is
insolvent or a declaration has been made by the Seller that such Receivable
is irrecoverable or legal proceedings have been commenced for its recovery
or which the Seller has transferred to the doubtful receivables account
provided that in respect of any Receivable which is credit-insured with an
insurance company acceptable to the Purchaser, only the uninsured portion
of such Receivable shall be deemed a Defaulted Receivable;
"DEFERRED PURCHASE PRICE" means that portion of the Purchase Price of a
tranche of Receivables being the subject of an Offer which is payable to
the Seller on a deferred basis pursuant to the terms of this Agreement;
"DELINQUENCY RATIO CURRENT MONTH" means, in respect of each Collection
Period, the average of the Outstanding Nominal Amount on the last business
days of such Collection Period and each of the two immediately preceding
Collection Periods of the Purchased Receivables which are Delinquent
Receivables or Defaulted Receivables (but are not Written-Off Receivables),
divided by the Outstanding Nominal Amount of Purchased Receivables
(excluding any Written-Off Receivables) on the last business day of such
Collection Period, expressed as a percentage, provided that all Purchased
Receivables
-4-
<PAGE>
which were not Eligible Receivables on their respective Purchase Date shall
be excluded from this calculation;
"DELINQUENCY RATIO ROLLING AVERAGE" means at any time the average of the
[six most recent Delinquency Ratios Current Month;]
"DELINQUENT RECEIVABLE" means any Receivable (other than a Disputed
Receivable) which is not paid to the Servicer by the 60th day following the
Receivable Due Date relating thereto provided that in respect of any
Receivable which is credit-insured with an insurance company acceptable to
the Purchaser, only the uninsured portion of such Receivable shall be
deemed a Delinquent Receivable;
"DILUTION" means any discount expense, rebate, refund, billing error
expense (including invoice substitution), credit against Purchased
Receivables and other adjustment or allowance in respect of Purchased
Receivables permitted or incurred by the Seller;
"DILUTION RATIO" means in respect of each Collection Period, the dollar
equivalent of the Dilutions which have occurred during such Collection
Period divided by the dollar equivalent of the sales which have occurred
during such Collection Period and expressed as a percentage;
"DISCOUNT" means, with respect to the calculation of the Purchase Price an
amount equal to the greater of (a) zero and (b) the amount calculated as
the Discount Protection Amount less the amount of any credit balance in the
Discount Reserve Ledger immediately prior to the credit of the Discount
resulting from this calculation;
"DISCOUNT PROTECTION AMOUNT" means, subject to Clause 7(i), with respect of
the calculation of the Purchase Price, the higher of (x) [__] and (y) the
amount derived from the following formula:
(A+B)*C+(D*E)
where:
A = the Dilution Ratio Current Month of the preceding month;
B = the Loss Ratio Current Month of the preceding month;
C = Stress Factor: 2.25;
D = USD LIBOR (three months) + 0.43%
E = 0.33 (average annual maturity of receivables)
"DISCOUNT RESERVE LEDGER" means a ledger of the Operating Account
maintained by or on behalf of the Purchaser which is credited with
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<PAGE>
(a) the aggregate amount of Discount taken on each Purchase;
(b) any interest earned on the Operating Account;
(c) any Collection received by the Purchaser in respect of a Purchased
Receivable which is a Defaulted Receivable previously debited to such
ledger; and
is debited with
(aa) the Outstanding Nominal Amount of every Defaulted Receivable;
(bb) the amount of each instalment of Deferred Purchase Price paid to the
Seller;
(cc) the payment of interest by the Purchaser under the Funding Agreements
relating to the funding of Purchases hereunder; and
(dd) the payment of fees, costs and expenses by the Purchaser in relation
to this Agreement, the Servicing Agreement or the Funding Agreements
relating to the funding of Purchases hereunder;
"DISPUTED RECEIVABLE" means any Receivable in respect of which payment is
disputed (in whole or in part, with or without justification) by the Debtor
owing such Receivable whether by reason of any matter concerning the goods
in respect of which the original invoice was issued or by reason of any
other matter whatsoever or in respect of which a set-off or counterclaim is
being claimed by such Debtor;
"DOWNGRADE TRIGGER" means the long-term senior unsecured debt of the Parent
(a) being rated BB- or less by Standard & Poor's or (b) being rated Ba3 or
less by Moody's, as the case may be;
"ELIGIBLE RECEIVABLE" means any Receivable satisfying the criteria
specified in the Second Schedule;
"EURO" means the currency introduced at the start of the third stage of
economic and monetary union pursuant to the Treaty establishing the
European Union;
"FACILITIES" means each of the Liquidity Facility Agreement and the Standby
Letter of Credit Agreement;
"FEE" means the fee calculated in accordance with Clause 17 hereof;
"FEE LETTER" means the fee letter from ABN AMRO Bank N.V. to the Seller
dated as of the date hereof specifying the fees payable by the Seller;
"FOREIGN LOANS" means all outstanding loans made to the Purchaser pursuant
to the Funding Agreement for the purpose of financing or refinancing any
purchase (or the
-6-
<PAGE>
funding of any purchase) of Foreign Receivables by the Purchaser or ABN
AMRO Bank N.V.;
"FOREIGN RECEIVABLES" means "Receivables" as defined under any Foreign RPA;
"FOREIGN RPA" means any receivables purchase agreement generally similar to
this Agreement and made or to be made between any affiliate of the Seller
and the Purchaser or ABN AMRO Bank N.V. providing for the purchase of
receivables by the Purchaser or ABN AMRO Bank N.V. (in the latter case,
with a view to the onward sale of such receivables to the Purchaser);
"FUNDING AGREEMENTS" means the loan agreement between the Purchaser and the
Issuer under which the Issuer may agree from time to time to advance moneys
to the Purchaser for the purchase of receivables (or the funding of the
purchase of receivables) and any other agreement whereby the Purchaser
acquires or may acquire funds for the purposes of purchasing Purchased
Receivables hereunder and/or purchasing (or funding the purchase of)
Foreign Receivables under any Foreign RPA, but shall exclude the
Facilities;
"HEDGING TRANSACTION" means Hedging Transaction entered into by the
Purchaser to hedge its exposure from the Purchaser Funding Agreement in
connection with the funding of the purchase of such Receivable for the
delivery to the Purchaser of US dollars against the delivery by the
Purchaser of Euro or any other legacy currency taking part in the Single
European currency;
"INVOICE DATE" in relation to any Receivable means the date of issue of the
related invoice and specified in the Offer relating to such Receivable;
"ISSUER" means Tulip Funding Corporation, a company incorporated with
limited liability, having its registered office at 15 East North Street,
City of Dover, Kent County, Delaware, United States;
"LIQUIDITY FACILITY AGREEMENT" means the liquidity facility agreement dated
on or about the date hereof between the Purchaser, ABN AMRO Bank N.V. and
the Banks (as defined therein) and any extension or renewal thereof;
"LOANS" means all outstanding loans or part thereof made to the Purchaser
pursuant to the Funding Agreement for the purpose of financing or
refinancing any purchase hereunder;
"LOSS RATIO CURRENT MONTH" means, in respect of each Collection Period, the
Outstanding Nominal Amount of those Purchased Receivables which have become
Defaulted Receivables during such Collection Period, divided by the
Outstanding Nominal Amount of Purchased Receivables (excluding any Written-
Off Receivables) on the last business day of such Collection Period,
expressed as a percentage;
"LOSS RATIO ROLLING AVERAGE" means at any time the average of the six most
recent Loss Ratios Current Month;
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<PAGE>
"MATURED VALUE" means, in respect of any Loan or Foreign Loan, the sum of
(a) the principal amount thereof, (b) all unpaid interest which is
scheduled to become due (whether or not then due) under such Loan and (c)
all unpaid fees and other amounts which are then known and scheduled to
become due (whether or not then due) on, or in connection with such Loan,
in each case payable to, or for the benefit of the Issuer; for the purposes
of calculating whether the Aggregate Receivables Investment denominated in
[Belgian francs] exceeds the Matured Value of the Loans, the Outstanding
Nominal Amount of each Receivable shall be converted into US dollars using
such rate of exchange as the Purchaser notifies the Seller was the rate of
exchange contracted in the Hedging Transaction entered into by the
Purchaser to hedge its exposure from the Funding Agreement in connection
with the funding of the purchase of such Receivable for the delivery to the
Purchaser of US dollars against the delivery by the Purchaser of [Belgian
francs];
"MONTHLY REPORT" means the monthly report delivered by the Servicer
pursuant to Clause 6.2 of the Servicing Agreement or by the Seller pursuant
to Clause 14.1(a)(ii) of this Agreement in the form set out in the Sixth
Schedule or as otherwise agreed from time to time between the Seller and
the Purchaser;
"MOODY'S" means Moody's Investors Service, Inc.;
"NOMINAL AMOUNT" means, with respect to any Receivable, the principal
amount of such Receivable as reflected in the books of the Seller;
"NOTE" means a commercial paper note issued by the Issuer for the purpose
of funding the Purchaser under the Funding Agreement and purchased by a
Dealer pursuant to the Dealer Agreements and includes the commercial paper
notes represented by a Note in global form;
"OFFER" means a written offer in substantially the form set out in Part 1
of the Third Schedule;
"OFFER DATE" means any date on which the Seller makes an Offer to the
Purchaser;
"OPERATING ACCOUNT" means the interest bearing account or accounts
designated as such in the Third Schedule of the Servicing Agreement and
operated by ABN AMRO Bank N.V. as Accounts Administrator in the name of the
Purchaser at the Account Bank utilised for the time being for the purposes
of the Servicing Agreement and the Accounts Administration Agreement or
such other account or accounts as may for the time being be in addition
thereto or substituted therefor in accordance with the provisions of the
Accounts Administration Agreement;
"OUTSTANDING NOMINAL AMOUNT" means, with respect to any Purchased
Receivable, at any time the Nominal Amount of such Purchased Receivable as
determined by the most recent Monthly Report less the amount of Collections
received by the Purchaser and applied to the Nominal Amount of such
Purchased Receivable Provided that Collections shall not be treated as
received by the Purchaser until credited to the Operating Account and
provided
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further that such Outstanding Nominal Amount shall be restored in the
amount and to the extent of any Collections so received and applied if at
any time the distribution of such Collections is rescinded or must
otherwise be returned for any reason;
"PROGRAMME LIMIT" means USD [200,000,000]; for the purposes of calculating
whether the Aggregate Receivables Investment denominated in [Euro] exceeds
the Programme Limit, the Outstanding Nominal Amount of each Receivable
shall be converted into US dollars using such rate of exchange as the
Purchaser notifies the Seller was the rate of exchange contracted in the
Hedging Transaction entered into by the Purchaser to hedge its exposure
from the purchase of such Receivable for the delivery to the Purchaser of
US dollars against the delivery by the Purchaser of [Euros];
"purchase" means an acquisition of a Receivable and the Related Security
hereunder pursuant to an Offer;
"Purchase Date" means, with respect to any Purchase, the date upon which
such Purchase is completed;
"PURCHASE PRICE" shall have the meaning given thereto in Clause 4.1;
"PURCHASE PRICE ADVANCE" MEANS that portion of the Purchase Price of a
tranche of Receivables the subject of an Offer, equal to the aggregate of
the Nominal Amount of each Receivable less the Discount calculated with
respect to the proposed Purchase, and payable on a Purchase Date;
"PURCHASED RECEIVABLES" means any Receivables assigned, sold or transferred
or purported to be assigned, sold or transferred to the Purchaser pursuant
hereto;
"Receivable" means any and all present and future indebtedness coming or
having come into existence prior to the termination hereof and owed or
purported to be owed to the Seller by a Debtor, and includes unless
otherwise specified herein, any Related Security and any Purchased
Receivable;
"RECEIVABLE DUE DATE" in relation to any Receivable means the original date
on which such Receivable is due and payable;
"RECORDS" means, in respect of any Receivable, all Contracts,
correspondence, notes of dealings and other documents, books, books of
account, registers, records and other information (including, without
limitation, computer programmes, tapes, discs, punch cards, data processing
software and related property and rights) maintained (and recreated in the
event of destruction of the originals thereof) with respect to such
Receivable and the related Debtor;
"RELATED SECURITY" means with respect to any Receivable:
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(a) all Adverse Claims of the Seller on any property from time to time, if
any, purporting to secure payment of such Receivable, whether pursuant
to the Contract related to such Receivable or otherwise, together with
all financing statements signed by a Debtor describing any collateral
security securing such Receivables;
(b) all guarantees, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such
Receivable or otherwise;
(c) all Records related to such Receivable; and
(d) all proceeds at any time howsoever arising out of the resale,
redemption or other disposal of (net of collection costs), or dealing
with, or judgments relating to, any of the foregoing, any debts
represented thereby, and all rights of action against any person in
connection therewith;
"SERVICER" means such person so designated from time to time in accordance
with the Servicing Agreement;
"SERVICES" means the services to be provided by the Servicer under the
Servicing Agreement;
"SERVICING AGREEMENT" means the servicing agreement dated on or about the
date hereof between the Purchaser and the Seller, in its capacity as
servicer;
"STANDARD & POOR'S" means Standard & Poor's, a division of The McGraw-Hill
Companies;
"STANDBY LETTER OF CREDIT AGREEMENT" means the standby letter of credit
agreement originally dated 1 December 1995 between ABN AMRO Bank N.V. as
L/C Bank and Tapco, and any renewal or extension thereof;
"TERMINATION DATE" means the date upon which a Termination Event occurs or,
if such date is not a business day, the next following business day;
"TERMINATION EVENT" means any of the events specified in the Fourth
Schedule; and
"WRITTEN-OFF RECEIVABLES" means any Receivable which has been written off
as irrecoverable for accounting purposes by the Seller in accordance with
the Seller's general accounting practices.
1.2 Any reference in this Agreement to:
"ADMINISTRATION", "BANKRUPTCY", "DISSOLUTION", "LIQUIDATION",
"RECEIVERSHIP" or "WINDING-UP" of any person shall be construed so as to
include any equivalent or analogous proceedings under the laws of the
jurisdiction in which such person is
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incorporated (or, if not a company or corporation, domiciled) or any
jurisdiction in which such person has its principal place of business.
an "AFFILIATE" of any company shall be construed as a reference to any
company which is a subsidiary of such former company, of which such former
company is a subsidiary, or which is a subsidiary of a holding company of
which such former company is also a subsidiary;
"BANK" or the "L/C BANK" shall be construed so as to include its respective
successors and assigns in accordance with their respective interests;
"BEF" or "BELGIAN FRANC" shall be construed as a reference to the lawful
currency for the time being of the Kingdom of Belgium, [ ] shall be
construed as a reference to the lawful currency for the time being of [ ]
and " "US$", "USD" or "DOLLAR" shall be construed as a reference to the
lawful currency for the time being of the United States of America;
"BUSINESS DAY" means any day (other than a Saturday or a Sunday) on which
banks are open for business in Amsterdam, [Brussels] or (where so specified
herein) in the place for payment of the relevant amount;
"CONTROL" shall have the meaning defined pursuant to [articles 2 and 3 of
the Belgian royal decree of 6 March 1990 on the consolidated accounts of
enterprises];
"CLAUSE", "PART", "RECITAL" or "SCHEDULE" is, subject to any contrary
indication, a reference to a clause or part hereof or a recital or schedule
hereto;
"ENCUMBRANCE" shall be construed as a reference to a mortgage, charge,
pledge, lien or other encumbrance securing any obligation of any person or
any other type of preferential arrangement (including, without limitation,
title transfer and retention arrangements) having a similar effect and for
the avoidance of doubt shall not include (i) a right of counterclaim or
(ii) a right of set-off arising by contract or operation of law not
constituting a mortgage or charge under applicable law;
"HOLDING COMPANY" of a company shall be construed as a reference to any
company of which the first-mentioned company is a subsidiary;
"PERSON" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or
more of the foregoing;
"STAMP DUTY" shall be construed as a reference to any stamp, registration
or other transaction or documentary tax (including, without limitation, any
penalty or interest payable in connection with any failure to pay or any
delay in paying out any of the same);
"SUBSIDIARY" shall have the meaning defined pursuant to [articles 2 and 3
of the Belgian royal decree of 6 March 1990 on the consolidated accounts of
enterprises];
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"TAX" shall be construed so as to include any tax, levy, impost, duty or
other charge of a similar nature (including, without limitation, any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same) arising under applicable law;
"VALUE ADDED TAX" shall be construed so as to include any value added tax
under any jurisdiction.
1.3 The headings in this Agreement shall not affect its interpretation.
1.4 Words denoting the singular number only shall include the plural number
also and vice versa; and words denoting persons only shall include firms
and corporations and vice versa.
1.5 References in this Agreement to any statutory provision shall be deemed
also to refer to any statutory or other modification, re-enactment or
replacement thereof or any statutory instrument, order or regulation made
thereunder or under any such re-enactment.
1.6 The Schedules shall form part of this Agreement.
1.7 Terms defined in the Servicing Agreement, Standby Letter of Credit
Agreement, Liquidity Facility Agreement and Accounts Administration
Agreement shall, unless otherwise defined herein or the context otherwise
requires, bear the same meaning herein.
1.8 Save where the contrary is indicated in this Agreement, any reference in
this Agreement to a time of day shall be construed as a reference to time
in Amsterdam.
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PART 2
SALES AND ASSIGNMENT OF RECEIVABLES
2. OFFER FOR RECEIVABLES
2.1 At any time after the Conditions Precedent have been fulfilled to the
satisfaction of, or waived by, the Purchaser but in any event before the
Termination Date, the Seller may offer to sell and to assign to the
Purchaser Eligible Receivables and their Related Security on any date by
delivering to the Purchaser an Offer meeting the requirements set forth
below.
2.2 Each Offer delivered pursuant to Clause 2.1 shall:-
(a) specify the aggregate Nominal Amount of such Receivables, and the
Purchase Price Advance and Discount in relation to such Offer;
(b) identify in relation to each such Receivable:
(i) the name and account number of the Debtor owing such Receivable
and its address;
(ii) the Invoice Date and invoice number;
(iii) the Receivable Due Date; and
(iv) the Nominal Amount of each such Receivable;
(c) specify the proposed Purchase Date for such Receivables, which shall
be a business day falling not less than three and not more than ten
business days after the date of the Purchaser's receipt of the Offer
and which shall also be a day on which banks are open for business in
New York City;
(d) specify the bank and account into which the Purchase Price Advance is
to be paid.
2.3 Delivery of an Offer pursuant to Clause 2.1 shall constitute (i) an
irrevocable offer by the Seller binding upon it to sell and to assign to
the Purchaser each of the Receivables designated in such Offer and the
Related Security and (ii) a representation by the Seller that in relation
to such Offer each of the statements set out in Clause 13 is true in all
material respects on and as of the date of the Offer Provided always that
the Purchaser may at any time require and the Seller shall thereupon
provide all information necessary
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to satisfy the Purchaser that such representations are materially true in
respect of each Receivable specified in the related Offer.
2.4 The Purchaser shall, at the Seller's request, notify the Seller on each
Offer Date and/or Purchase Date (a) for the purposes of calculating the
Discount Protection Amount of (i) the Aggregate Receivables Investment, and
(ii) the interest rate, and (b) of the amount of any credit balance in the
Discount Reserve Ledger.
3. ACCEPTANCE, PURCHASE AND ASSIGNMENT
3.1 Upon delivery of an Offer in accordance with Clause 2.1, the Purchaser
shall accept such Offer in respect of all Receivables the subject of such
Offer if:
(a) no Termination Event shall have occurred and be continuing as at the
proposed Purchase Date (including without limitation the Termination
Event numbered 13 in the Fourth Schedule);
(b) the Conditions Precedent have been fulfilled to the satisfaction of
the Purchaser or waived by it;
(c) the Offer meets the requirements of Clause 2.2;
(d) the representations and warranties set out in Clause 11 are true in
all material respects;
(e) the Purchase Price Advance has been correctly calculated;
(f) on the proposed Purchase Date, assuming the Offer is accepted, the sum
of the Matured Value of the Loans (after taking into account any
increase thereto required to fund the Purchase Price Advance in
respect of the Offer) and the Matured Value of the Foreign Loans will
not exceed the Programme Limit;
(g) the Liquidity Termination Date referred to in the Liquidity Facility
Agreement (as in force from time to time) shall not have arrived
subject to an extension of such Liquidity Termination Date;
(h) [all consents and approvals required under any credit insurance
policies for the sale and transfer of any credit-insured Receivables
included in the Offer have been obtained by the Seller from the
relevant insurance company];
by depositing not later than 2.15 p.m. (Amsterdam time), or any other time
as may be specified from time to time by the Purchaser in view of the then
prevailing systems and practices for the settlement of payments, to the
account specified in the Offer in immediately available funds on the
relevant Purchase Date, a sum equal to the Purchase Price Advance,
whereupon such Receivables and Related Security shall be sold and
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assigned to the Purchaser and title thereto shall pass from the Seller to
the Purchaser. Within one business day of receipt of the Purchase Price
Advance, the Seller shall provide a receipt to the Purchaser substantially
in the form set out in Part 2 of the Third Schedule.
Provided always that, if any of the conditions referred to above (save for
those conditions which refer to the valid title of the Seller and the
transferability of the relevant Receivable) are not met to any extent, then
(whether or not the Purchaser is aware of the breach of such conditions)
this shall affect neither the validity of the Purchaser's title to the
relevant Receivables nor any remedy the Purchaser may have for such breach
whether under this Agreement or at law.
3.2 If any Receivable or the Related Security is not transferred for any reason
the Seller shall be obliged to take all actions necessary for the transfer
of such Receivable or Related Security without undue delay and at its own
expense. The Seller shall indemnify the Purchaser against any loss or
expense incurred by the Purchaser as a result of the failure to transfer
the same, other than any loss or expense resulting from the negligence or
default on the part of the Purchaser in effecting such transfer.
3.3 The Seller shall indemnify the Purchaser against any loss or expense
incurred by the Purchaser as a result of any purported revocation of an
Offer or any failure by the Seller to complete the sale, purchase and
assignment of the Receivables specified in an Offer.
3.4 If, at any time on or before the close of business on any business day of
the Seller, the Aggregate Receivables Investment hereunder and under the
Foreign RPAs is less than the aggregate of the Matured Value of the Loans
outstanding from the Issuer to the Purchaser and all outstanding Advances
(where applicable converted to US dollars at the rate specified in the
relevant agreement), the Seller shall sell to the Purchaser an additional
amount of Eligible Receivables at such Purchase Price as is necessary to
reduce such deficiency to zero.
3.5 Without limiting the obligation of the Seller under Clause 3.4, if the
Seller is in breach of its obligations under Clause 3.4 the only remedy
available to the Purchaser shall be to declare the occurrence of a
Termination Event and the Purchaser shall have no right to any monetary
compensation or to seek to compel the Seller to effect any such additional
sales.
3.6 For the avoidance of doubt, the parties confirm their intention that any
Purchase under this Agreement shall constitute a true sale of the Purchased
Receivables, and not a security arrangement for any obligations of the
Seller. The Purchaser shall have full title and interest in and to the
Purchased Receivables, shall be free to further dispose of such Purchased
Receivables, and subject to the payment to the Seller of the purchase price
thereof in accordance with Clause 4 shall be fully entitled to receive and
retain for its own account any Collections in respect of such Purchased
Receivables. Should any court, however, rule that this Agreement (or any
Purchase under this Agreement)
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constitutes a security arrangement rather than a true sale, then this
Agreement (and any Purchase under the Agreement) shall be interpreted so as
to mean that the Seller has pledged the Purchased Receivables to the
Purchaser as security for all obligations of the Seller under this
Agreement (including any Purchase under this Agreement) and the Servicing
Agreement, and all provisions hereof and thereof shall be construed mutatis
mutandis.
4. CALCULATION OF PURCHASE PRICE/DEFERRED PURCHASE PRICE PROVISIONS
4.1 The Purchase Price of any Receivables to be sold and assigned to the
Purchaser on a Purchase Date shall comprise of (i) the Purchase Price
Advance relating thereto paid in accordance with Clause 3.1 hereof and save
as otherwise provided herein, calculated by the Seller (with calculations
in reasonable detail) as of the date of the related Offer in the manner set
out in this Agreement and (ii) the Deferred Purchase Price as provided in
Clause 4.2, calculated and payable in the manner described in Clauses 4.3
and 4.4.
4.2 Upon acceptance of any Offer pursuant to Clause 3.1, the Deferred Purchase
Price relating to the Receivables which were subject to such Offer shall
constitute a deferred purchase price credit granted to the Purchaser by the
Seller and shall, subject to the adjustments specified herein, be payable
to the Seller in accordance with the terms hereof.
4.3 On any Collection Payment Date prior to the Termination Date, the Purchaser
shall calculate the amount standing to the credit of the Discount Reserve
Ledger and the Discount Protection Amount (including for the purposes of
this calculation the effect of any sale of Receivables occurring on such
date and if there is no such sale, calculating a notional Discount
Protection Amount based on the existing Purchased Receivables). If the
amount standing to the credit of the Discount Reserve Ledger exceeds the
Discount Protection Amount then, if the Termination Date has not then
occurred, the Purchaser shall pay to the Seller by way of an instalment of
the Deferred Purchase Price an amount equal to such excess on such
Collection Payment Date (but only if and to the extent that there are funds
credited to the Operating Account which the Accounts Administrator is
entitled to apply in the order of priorities in Clause 8.4 of the Accounts
Administration Agreement). For the avoidance of doubt but without prejudice
to Clause 4.4 hereof, no instalment of Deferred Purchase Price shall be
payable on or following the Termination Date.
4.4 Once the outstanding amount of all Notes and Advances, the proceeds of
which have been used to fund Purchases hereunder, shall have been reduced
to zero the Purchaser shall pay to the Seller by way of further instalments
of Deferred Purchase Price, upon each following Collection Payment Date, an
amount equal to the Collection made during the preceding Collection Period
in respect of the Purchased Receivables less any amount
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which falls to be paid on such date out of the Collections in accordance
with Clause 8.4 of the Accounts Administration Agreement. For the avoidance
of doubt, the Purchased Receivables remain at all times the property of,
and vested in, the Purchaser.
4.5 No interest or other charges shall accrue or be payable by the Purchaser in
respect of any outstanding amount of any Deferred Purchase Price.
5. LIMITED GUARANTEE
5.1 The Seller guarantees the due and punctual payment by the Debtors of all
Purchased Receivables that will be outstanding on the Termination Date up
to an amount equal to 10% of the aggregate Outstanding Nominal Amount of
all Purchased Receivables as of the Termination Date (the "GUARANTEE CAP").
5.2 On each Collection Payment Date after the occurrence of a Termination
Event, the Seller shall pay to the Purchaser:
(a) on the first such Collection Payment Date, an amount equal to the
total Outstanding Nominal Amount of all Purchased Receivables which
are Defaulted Receivables on the Termination Date;
(b) on the second and third such Collection Payment Dates, an amount equal
to the total Outstanding Nominal Amount of all Purchased Receivables
which have become Defaulted Receivables since the preceding Collection
Payment Date; and
(c) on the fourth such Collection Payment Date, an amount equal to the
excess of the Guarantee Cap over the total amounts already paid under
paragraphs (a) and (b);
provided however that the Seller's obligations under this Clause 5.2:
(i) shall in no event exceed the Guarantee Cap; and
(ii) shall cease as soon as any instalment of Deferred Purchase Price
becomes payable to the Seller pursuant to Clause 4.4.
5.3 The payments made pursuant to Clause 5.2 shall be treated as an advance on
the Seller's obligation to pay over to the Purchaser, pursuant to Clause
4.4 of the Servicing Agreement (in its capacity as Servicer), the amount of
all Collections received by it. Such advances shall be regarded as relating
to the last Purchased Receivables to remain uncollected, and the guarantee
set out in Clause 5.1 implies that these advances shall be irrecoverable by
the Seller even if those last Purchased Receivables forever remain
uncollected.
5.4 Should the Collections made in respect of the Purchased Receivables
outstanding as of the Termination Date ultimately exceed their aggregate
Outstanding Nominal Amount as
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of the Termination Date minus the advances paid pursuant to Clause 5.2,
then the excess shall be regarded as having been paid over already by the
Seller to the Purchaser by way of these advances, and to that extent the
Seller shall be dispensed from further paying over to the Purchaser,
pursuant to Clause 4 of the Servicing Agreement (in its capacity as
Servicer), the amount of such Collections.
5.5 The Parent jointly and severally guarantees the obligations of the Seller
under Clause 5.2.
5.6 The liability of the Parent under this Clause 5 shall not be discharged or
impaired by:
(a) the winding-up, dissolution, administration or re-organisation of any
of the Servicer or the Seller or any other person or any change in
status, function, control or ownership;
(b) any obligations of the Seller or the Servicer under this Agreement or
the Servicing Agreement being or becoming illegal, invalid,
unenforceable or ineffective in any respect;
(c) time or other indulgence being granted or agreed to be granted to the
Seller, the Servicer in respect of its obligations hereunder or under
the Servicing Agreement;
(d) time or other indulgence being granted or agreed to be granted to any
Debtor;
(e) any amendment or any variation, waiver or release of, any obligation
of the Seller or the Servicer under this Agreement or the Servicing
Agreement;
(f) the existence or validity of any other security taken in relation to
any Purchased Receivable or the enforcement or failure to enforce any
such security;
(g) any amendment or variation to the terms of the Purchased Receivables
or any Related Security;
(h) any other act, event, neglect or omission which would or might
otherwise operate to impair or discharge the Parent's liability
hereunder.
5.7 The Parent agrees that, so long as any amount is or may be owed by the
Seller or the Servicer hereunder or under the Servicing Agreement, or the
Seller or the Servicer is under any actual or contingent obligation
hereunder, the Parent shall not exercise any rights which the Parent may at
any time have, by reason of performance by it of its obligations hereunder:
(a) to be indemnified by the Servicer or the Seller; and/or
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(b) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Purchaser hereunder.
The claims of the Parent against the Seller or the Servicer shall in any
event be subordinated to the rights of the Purchaser under this Agreement
or the Servicing Agreement.
6. NOTICE TO DEBTORS
The Purchaser acknowledges and agrees that unless and until (i) a
Termination Event has occurred, or (ii) the Purchaser reasonably considers
it necessary to protect its interest in the payments due in respect of the
Purchased Receivables and serves written notice on the Seller to such
effect (setting out its reasons therefor) and the Seller fails to rectify
the situation referred to in such notice within three business days, or if
the remedy consists of a payment, within five business days, it shall not
give a notice to any Debtor of the assignment to the Purchaser of the
Purchased Receivables; and the Seller acknowledges that upon the occurrence
of (i) or (ii) it may be required by the Purchaser (without prejudice to
the right of the Purchaser in respect of the same) to give notice at its
own costs to any Debtor of such assignment in which case the Seller shall
promptly notify the relevant Debtors of the Purchaser's interest in the
Purchased Receivables. Any such notice shall specify the bank account into
which all future payments in respect of Purchased Receivables shall be
made.
7. DOWNGRADE TRIGGER
Upon the occurrence of a Downgrade Trigger:
(i) The Discount Protection Amount shall mean, with respect of the
calculation of the Purchase Price, the higher of (x) [_] and (y) the
amount derived from the following formula:
(A+B)*C+(D*E)
where:
A = the Dilution Ratio Current Month of the preceding month;
B = the Loss Ratio Current Month of the preceding month;
C = Stress Factor: 2.25;
D = USD LIBOR (three months)+ 0.43%
E = 0.33 (average annual maturity of receivables);
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(ii) if the Seller is no longer the Servicer, the Seller shall, in
addition to its obligations under Clause 14.1 and in particular
Clause 14.1(a)(ii), furnish the Purchaser with bi-monthly reports
substantially in the form of the Sixth Schedule hereof, to be
submitted to the Purchaser (i) in accordance with clause 14.1(ii) on
the third business day before each Collection Payment Date, and (ii)
on twelfth day following the same Collection Payment Date.
(iii) All Collections in respect of Purchased Receivables shall be
transferred (for same day value) on a weekly basis (every [Levi's to
specify day of week suitable for each Seller] into the Operating
Account.
(iv) The Purchaser shall be entitled to notify the Seller of:
. a revised Loss Ratio Current Month;
. a revised Loss Ratio Rolling Average;
. a revised Delinquency Ratio Current Month;
. a revised Delinquency Ratio Rolling Average.
8. FURTHER ASSURANCE
The Seller agrees that from time to time, at its own expense, it will
promptly execute and deliver all instruments and documents and take all
action that the Purchaser may reasonably request in order to perfect or
protect the assignment of the Purchased Receivables or to enable the
Purchaser to exercise or enforce any of its rights under this Agreement.
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PART 3
INDEMNITY AND PAYMENTS
9. INDEMNITY
9.1 Without limiting any other rights which the Purchaser may have hereunder or
under applicable law, the Seller hereby agrees immediately to indemnify the
Purchaser and its respective officers, directors and agents or any
assignee, from and against any and all damages, losses, claims,
liabilities, costs and expenses, including, without limitation, reasonable
attorneys' fees (if any), and disbursements including any value added tax
thereon (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS") awarded against or incurred by any of them relating
to or resulting from:
(a) reliance on any representation or warranty made by the Seller (or any
officers of the Seller), under or in connection with this Agreement,
any Monthly Report or any other information or report delivered by the
Seller which shall have been false, incorrect or omitting of any
material fact at the time made or deemed made;
(b) the failure by the Seller (or any officer of the Seller) to comply
with any applicable law, rule or regulation with respect to any
Purchased Receivable, Related Security or the related Contract, or the
non-conformity of any Purchased Receivable, Related Security or the
related Contract with any such applicable law, rule or regulation;
(c) any dispute, claim, offset or defence (other than the effects of the
bankruptcy of the Debtor) of the Debtor to the payment of a Purchased
Receivable, including, without limitation, a defence based on such
Receivable or the related Contract or the Related Security not being a
legal, valid and binding obligation of such Debtor enforceable against
it in accordance with its terms, or any claim resulting from the
Receivables being governed by the general business terms of the
Debtor, or any other claim resulting from the sale of goods related to
such Receivable or the failure to perform any obligations related to
such goods or the failure to perform any obligations related to any
applicable laws, rules or regulations in respect thereof;
(d) any product liability claims or personal injury or property damage
suit or other similar or related claims or action of whatever sort
arising out of or in connection with the goods which are the subject
of any Purchased Receivable;
(e) any disclosure of information regarding the Debtors by the Seller to
the Purchaser or the supply of any Contracts, Records and all other
related documents to the Purchaser;
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(f) any claim arising from collection activities conducted by the Seller,
including, without limitation, any failure by the Seller, whether as
Seller or in its capacity as Servicer, to transfer any Collection to
the Operating Account; and
(g) any related indemnities given by the Purchaser in each of the
Facilities, to the extent that the same relate to the Purchased
Receivables or the transactions contemplated in this Agreement,
excluding, however, (i) Indemnified Amounts resulting solely from the
negligence or wilful misconduct on the part of the Purchaser or its agents
or (ii) Indemnified Amounts arising out of the failure of any Debtor to pay
amounts lawfully owed in respect of a Purchased Receivable.
9.2 Promptly after receipt by the Purchaser of notice of any claim or the
commencement of any action or proceedings with respect to which an
Indemnified Amount may become payable, the Purchaser will notify the Seller
in writing of such a claim or of the commencement of such action and the
Seller shall be entitled and obliged at its own expense to assume the
defence of such action or proceeding in the name of the Purchaser and the
Seller shall be entitled and obliged to take, in the name of the Purchaser,
such action as the Seller shall see fit to defend or avoid liability for
any such Indemnified Amount or to recover the same from any third party.
9.3 The Purchaser hereby agrees promptly to notify the Seller with reasonable
detail if it becomes aware of any circumstances which could reasonably be
expected to lead to a claim on the part of the Purchaser under Clause 9.1.
9.4 If at any time the Seller is obliged under the provisions of this Agreement
to indemnify or reimburse the Purchaser in respect of any sum under the
Liquidity Facility Agreement of Standby Letter of Credit Agreement, the
Seller agrees that losses or expenses incurred by any Bank or the Agent
referred to in the Liquidity Facility Agreement or the L/C Bank, as
applicable, shall be deemed to be the losses or expenses of the Purchaser
for this purpose.
10. PAYMENTS
10.1 On each date upon which this Agreement requires an amount to be paid by
either party hereunder, such party shall save as expressly provided herein
make the same available to the payee by payment in the relevant currency
and in immediately available, freely transferable, cleared funds to either
(i) such account and bank as the relevant payee shall have specified for
this purpose (where such payee is the Seller) or (ii) the Operating Account
(where such payee is the Purchaser).
10.2 All payments made by the Seller hereunder shall be made free and clear of
and without any deduction for or on account of any set-off or counterclaim.
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11. NETTING-OFF PAYMENTS
The Purchaser may, but need not, apply any sum at any time due from it
hereunder to the Seller in or towards satisfaction of any amount then due
from the Seller and, for this purpose, the Purchaser may apply the sum so
due from it in or towards the purchase of such amounts of such other
currencies as may be required to effect such application.
12. APPOINTMENT OF SERVICER
The servicing, administering and collection of the Purchased Receivables
shall be conducted by the Servicer, pursuant to the Servicing Agreement.
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PART 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
13. REPRESENTATIONS AND WARRANTIES
13.1 The Seller represents and warrants to the Purchaser that:
(a) Corporate Existence and Power
The Seller is a corporation duly organised, validly existing and in
good standing under the laws of [________] and has all corporate power
and all governmental licences, authorisations, consents and approvals
required to carry on its business in [________].
(b) Corporate and Governmental Authorisation; Contravention
The execution, delivery and performance by the Seller of this
Agreement and the transactions contemplated hereby are within its
corporate powers, have been duly authorised by all necessary corporate
action, require no action by or in respect of, or filing, recording or
enrolling with, any governmental body, agency court official or other
authority, and do not contravene, or constitute a default under, any
provision of applicable law or regulation or by-laws of the Seller or
of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Seller or result in the creation or
imposition of any Adverse Claim on the assets of the Seller (other
than in favour of the Purchaser pursuant to this Agreement).
(c) Binding Effect
This Agreement constitutes the legal, valid and binding obligation of
the Seller enforceable against the Seller in accordance with its
terms, subject to bankruptcy, insolvency, reorganisation, moratorium
or similar law or proceedings.
(d) No Proceedings
(i) Neither the Seller nor any of its affiliates has taken any
corporate action nor have any steps been taken or legal
proceedings been started or threatened against the relevant
company for its winding-up, bankruptcy, gerechtelijk akkoord /
concordat, liquidation, dissolution, reorganisation or annulment
as a legal entity or for the appointment of an gerechtelijke
bewindvoerder / administrateur judiciaire, commissaire special /
bijzondere bewindvoerder, sekwester / sequestre, receiver,
administrator, administrative receiver, trustee, liquidator,
sequestrator or similar officer of the relevant company or of any
or all of its assets or revenues;
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(ii) no action or administrative proceeding of or before any court
arbitrator or agency has been started or (to the best of the
knowledge and belief of the Seller) threatened (1) which could
reasonably be expected to have a material adverse effect on the
Seller's business or financial condition or on its ability to
perform its obligations under this Agreement or (2) as to which,
in its opinion, there is a material likelihood of an adverse
judgment which could reasonably be expected to have a material
adverse effect on its business or financial condition or on its
ability to perform its obligations under this Agreement; and
(iii) the Seller is not in a stoppage of payment situation; further,
the Seller is entering into this Agreement and makes each Offer
hereunder for the Seller's own commercial benefit in good faith.
(e) Accuracy of Information
All information heretofore furnished by the Seller to the Purchaser
for the purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information hereafter
furnished by the Seller to the Purchaser will be, true and accurate in
every material respect, on the date that such information is stated or
certified.
(f) Place of Business
The chief place of business and chief executive office of the Seller
are located at the address of the Seller referred to herein, the
offices where the Seller keeps all its Records, are located at the
address(es) described herein or such other locations notified to the
Purchaser in accordance with Clause 24 in jurisdictions where all
action required under this Agreement has been taken and completed.
(g) Good Title
Upon each Purchase Date hereunder the Purchaser shall acquire the
ownership of each Purchased Receivable assigned on such Purchase Date
and the Related Security with respect thereto, and to the best of the
Seller's knowledge and belief, free and clear of any Adverse Claim
(other than in favour of the Purchaser).
(h) Eligibility
To the best of the Seller's knowledge and belief, each Receivable the
subject of the related Offer is an Eligible Receivable in the Nominal
Amount specified in such Offer.
(i) Floating Charge
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There is no floating charge (pand op handelszaak / gage sur fonds de
commerce) or similar encumbrance under the law of any jurisdiction
over the businesses of the Seller, nor any undertaking or mandate with
a view to the creation of any such floating charge or similar
encumbrance.
13.2 The representations and warranties referred to in Clause 13.1 shall be
given by the Seller to the Purchaser (i) on the date hereof, (ii) on each date
on which an Offer is made pursuant to Clause 2.1, (iii) on each Purchase Date
and (iv) except for Clause 13.1(h) on each date on which any Purchased
Receivable is outstanding.
14. COVENANTS
14.1 At all times from the date hereof to the later of the Termination Date and
the date on which the Aggregate Receivables Investment is zero and no sums are
due and payable by the Seller to the Purchaser hereunder:
(a) Financial Reporting
The Seller will maintain for itself and each of its subsidiaries a
system of accounting established and administered in accordance with
generally accepted [Belgian] accounting laws and principles, and
furnish or notify to the Purchaser as the case may be:
(i) Annual Reporting
within nine calendar months after the close of each of its
fiscal years, an audit report certified by independent
certified public accountants (to the extent such audit report
is available), acceptable to the Purchaser, prepared in
accordance with [Belgian] accounting law and generally accepted
accounting principles for itself and its subsidiaries,
including balance sheets as of the end of such period, related
profit and loss statements;
(ii) Monthly Reporting
if the Seller is no longer acting as Servicer, not later than
the third business day before each Collection Payment Date, a
Monthly Report related to the relevant Collection Period;
(iii) Notice of Termination Event
by facsimile to be confirmed by letter as soon as possible and
in any event within five days after the occurrence of each
Termination Event, a statement of the Seller setting forth
details of such Termination Event and the action which the
Seller proposes to take with respect thereto;
(iv) Change in Credit and Collection Policies
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- prior to implementation, any change in or amendment to the
Credit and Collection Policies which the Seller does not
in his reasonable opinion consider to be material, and
- any material change in or amendment to the Credit and
Collection Policies for approval prior to implementation,
such approval not to be unreasonably withheld. If such
approval is not given by the Purchaser, no such change or
amendment of the Credit or Collection Policies will be
implemented; and
(v) Other Information
such other information (including non-financial information) as
the Purchaser may from time to time reasonably request.
(b) Conduct of Business
The Seller shall do all things necessary to remain duly organised,
validly existing and in good standing under the law of [Belgium] and
maintain all requisite authority to conduct its business in [Belgium].
(c) Compliance with Laws
The Seller shall comply in all respects which could be regarded as
material in the context of the transactions contemplated by this
Agreement, with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject.
(d) Furnishing of Information and Inspection of Records
The Seller shall have systems in place in relation to Receivables that
are capable of providing the information to which the Purchaser is
reasonably and properly entitled pursuant to this Agreement, use all
reasonable endeavours to maintain such systems in working order, and
permit the Purchaser, any firm of independent accountants and/or any
other representatives of the Purchaser upon ten days' prior written
notice (unless a Termination Event has occurred in which case no
notice is required) to enter during normal business hours under the
direct supervision of the Seller upon its premises to:
(i) inspect and satisfy itself or themselves that the systems are in
place, maintained in working order and are capable of providing
the information to which it or they are reasonably and properly
entitled pursuant to this Agreement; and
(ii) examine and make copies of and extracts from all Records;
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Provided that no Records, files or other information other than that
to which the Purchaser is entitled so to examine, copy or make
abstracts from shall be removed from the Seller's premises and such
Records, files or other information shall remain confidential and
shall not be used or disclosed or divulged to any person (except to
the extent and in the circumstances permitted by this Agreement and
the Servicing Agreement and in accordance with applicable law) without
the prior consent of the Seller, such consent not to be unreasonably
withheld.
(e) Keeping of Records
The Seller shall keep and maintain Records, on a Receivable by
Receivable basis, for the purposes of identifying, in particular, at
any time, any amount paid by and to each Debtor, any amount due by or
to a Debtor, the source of receipts which are paid into each
Collection Account and the Operating Account, and the balance from
time to time outstanding on each Collection Account with respect to
each Debtor. The Seller shall give the Purchaser notice of any
material change to its administrative and operating procedures in
relation to the keeping and maintaining of Records.
(f) Performance and Compliance with Purchased Receivables and Contracts
The Seller shall at its expense, in a timely manner fully perform and
comply in all material respects with all provisions, covenants and
other promises required to be observed by it under the Contracts and
Related Security documents related to the Purchased Receivables as if
interests in such Purchased Receivables had not been assigned and sold
hereunder.
(g) Credit and Collection Policies
The Seller shall comply in all material respects with the Credit and
Collection Policies in regard to each Purchased Receivable, any
Related Security and the related Contract as if interests in such
Purchased Receivables had not been assigned and sold hereunder.
(h) Accounts
The Seller shall ensure that each Collection Account will be open on
the date hereof with resolutions, instructions and signature
authorities applying thereto in the form required by the Purchaser.
The Seller undertakes that the resolutions and instructions relating
to the Collection Accounts will not be changed without prior written
notification to and consent of the Purchaser.
The Seller shall:
(i) procure that any payment which is not appropriated to a
particular Purchased Receivable by the Debtor, and which is
incapable of being so
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appropriated by the Seller shall be applied to Purchased
Receivables based upon the ratio that Purchased Receivables
from such Debtor bear to all Receivables from such Debtor; and
(ii) not create, or participate in the creation of, or permit to
exist, any Adverse Claim in relation to the Collection Accounts
other than as disclosed and existing as at the date of this
Agreement.
(iii) Insurance Approvals
The Seller shall ensure that, in respect of any Receivable
which is credit-insured, it shall comply with all requirements
of the relevant insurance policies relating thereto including,
for the avoidance of doubt, the obtaining of any consents or
approvals required under the policies in respect of the sale
and transfer of such Receivables by the Seller to the Purchaser
hereunder.
14.2 During the term of this Agreement, unless the Purchaser shall otherwise
consent in writing:
(a) Sales, Liens, etc
Except as otherwise provided herein, the Seller shall not sell, assign
or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to any goods the subject of any Purchased
Receivable or any Purchased Receivable or related Contract or Related
Security, or assign any right to receive income in respect thereof or
attempt, purport or agree to do any of the foregoing.
(b) Extension or Amendment of Receivables
Except as otherwise permitted hereunder or under the Servicing
Agreement, the Seller shall not extend, amend or otherwise modify the
terms of any Purchased Receivable, or amend, modify or waive any term
or condition of any Contract related thereto.
(c) Bills of exchange, etc
Except with the prior written consent of the Purchaser, the Seller
shall not draw any bill of exchange in connection with a Purchased
Receivable, nor demand or receive from any Debtor, or otherwise permit
the creation by any Debtor of, any promissory note in connection with
a Purchased Receivable.
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PART 5
Miscellaneous
15. Taxes and Increased Costs
15.1 The Seller shall pay all stamp duty, registration and other similar taxes
(but for the avoidance of doubt excluding the Purchaser's income taxes, if
applicable) to which this Agreement, the Accounts Administration Agreement,
any Funding Agreements or each of the Facilities or any judgment given in
connection herewith or therewith may at any time become subject subsequent
to the date of this Agreement and, from time to time on demand of the
Purchaser, immediately indemnify the Purchaser against any liabilities,
costs, claims and expenses resulting from any failure to pay or any delay
in paying any such tax, except those penalties and interest charges that
are due to the negligence or wilful misconduct of the Purchaser or its
agents provided that, in the case of any payment relating to the Standby
Letter of Credit Agreement, the Seller shall only be required to pay (a)
amounts payable solely in respect of, or as a result of the transaction
contemplated by this Agreement and the funding thereof and (b) such
proportion of any general cost equal to the proportion which the L/C
Portion relating to the transaction contemplated in this Agreement bears to
the then Available L/C Portion (both terms as defined in the Standby Letter
of Credit Agreement). The Purchaser shall, as soon as it becomes aware that
any such stamp duty, registration or other similar taxes may become due,
inform the Seller of the same. The Purchaser and the Seller shall cooperate
to the extent practicable, and the Purchaser shall endeavour to take such
measures as shall be practicable, with a view to lawfully avoiding any such
stamp duty, registration or other similar taxes and expenses.
15.2 All payments to be made by the Seller to the Purchaser hereunder shall be
made free and clear of and without deduction for or on account of tax
unless the Seller is required to make such a payment subject to the
deduction or withholding of tax, in which case the sum payable by the
Seller in respect of which such deduction or withholding is required to be
made shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, the Purchaser receives and retains
(free from any liability in respect of any such deduction or withholding) a
net sum equal to the sum which it would have received and so retained had
no such deduction or withholding been made or required to be made.
15.3 The Seller shall from time to time on demand of the Purchaser (i) reimburse
the Purchaser for all sums payable by the Purchaser under Clauses 13.1,
13.2 and 13.5 of the Standby Letter of Credit Agreement to any person in
respect of any increase for deduction or withholding for or on account of
tax imposed subsequent to the date of this Agreement and any amount payable
by the Purchaser to any person or the L/C Bank by way of indemnity against
a payment on account of tax imposed subsequent to the date of
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this Agreement on or in relation to any sum received or receivable under
the Standby Letter of Credit Agreement by such person or the L/C Bank, or
any liability in respect of any increased costs of the L/C Bank and in each
case, only on any amount paid which is referable to the funding by the
Purchaser of Purchased Receivables (ii) reimburse the Purchaser for all
sums payable by the Purchaser under Clauses 16.4, 19.4 and 19.5 of the
Liquidity Facility Agreement to any person in respect of any increase for
deduction or withholding for or on account of tax imposed subsequent to the
date of this Agreement or in relation to any sum received or receivable
under the Liquidity Facility Agreement by such person or the Agent, the
Banks or any liability in respect of any increased costs.
15.4 Any demand made by the Purchaser under Clause 15.1, 15.2 or 15.3 above
shall be accompanied by a statement, duly certified by an officer of the
Purchaser, giving reasonable particulars of the claim for reimbursement
which shall be relied upon and agreed as authoritative by the Seller.
15.5 The Purchaser hereby agrees promptly to notify the Seller if it becomes
aware of any circumstances which could reasonably be expected to lead to a
claim on the part of the Purchaser under this Clause 15.
16. Default Interest and Indemnity
16.1 If any sum due and payable by the Seller hereunder is not paid on the due
date therefor in accordance with the provisions of Clause 10 or if any sum
due and payable by the Seller under any judgment of any court in connection
herewith is not paid on the date of such judgment, the period beginning on
such due date or, as the case may be, the date of such judgment and ending
on the date upon which the obligation of such Seller to pay such sum (the
balance thereof for the time being unpaid being herein referred to as an
"unpaid sum") is discharged shall be divided into successive periods, each
of which (other than the first) shall start on the last day of the
preceding period and the duration of each of which shall be selected by the
Purchaser to match the interest period selected by the Purchaser.
16.2 During each such period relating thereto as is mentioned in Clause 16.1 an
unpaid sum shall, to the extent permitted by law and provided that the
Seller shall be in default, bear interest at the rate per annum which is
the sum of 2 per cent plus the rate at which ABN AMRO Bank N.V. was
offering to prime banks in the London (or, in respect of [Belgian francs,
Brussels]) Interbank Market deposits in the currency in which such unpaid
sum is denominated for the period for which such rate is to be determined
at 11.00 a.m. on the date upon which quotations would ordinarily be given
by prime banks in the London (or, in respect of [Belgian francs, Brussels])
Interbank Market for deposits in such currency for such period Provided
that, if, for any such period, ABN AMRO Bank N.V. was not offering deposits
in the currency in which such unpaid sum is denominated for the required
period, the rate of interest applicable to such unpaid sum shall be
determined by
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reference to the cost to the Purchaser of obtaining such deposits from such
sources as it may reasonably select.
16.3 Any interest which shall have accrued under Clause 16.2 in respect of an
unpaid sum shall be due and payable and shall be paid by the Seller at the
end of the period by reference to which it is calculated or on such other
dates as the Purchaser may specify by written notice to the Seller.
16.4 The Seller undertakes to indemnify the Purchaser against any loss or
expense, including reasonable legal fees, which it may sustain or incur as
a consequence of any default by the Seller in the performance of any of the
obligations expressed to be assumed by it in this Agreement, other than any
loss or expense resulting from the negligence or default on the part of the
Purchaser in connection with such performance.
16.5 The Purchaser hereby agrees to notify the Seller if it becomes aware of any
circumstances which could reasonably be expected to lead to a claim on the
part of the Purchaser under this Clause 16.
17. Fees, Costs and Expenses
17.1 In consideration of the obligations of the Purchaser incurred hereunder the
Seller shall pay to the Purchaser the fees specified in the Fee Letter.
17.2 Other Facilities, Fees etc.
The Seller shall, from time to time (i) on demand of the Purchaser
reimburse the Purchaser in an amount equal to the Liquidity Facility Fee
(relating to the funding of Purchases hereunder) payable by the Purchaser
to the Agent both for the Agent's account and for the account of the Banks
under the Liquidity Facility Agreement, (ii) on demand of the Purchaser
reimburse the Purchaser for all costs and expenses (including reasonable
legal fees) together with any value added tax thereon incurred or in
connection with the enforcement and/or preservation of any of the rights of
the Banks and the Agent (on its behalf and/or for the account of the Banks)
(each as defined in the Liquidity Facility Agreement) under the Liquidity
Facility Agreement, (iii) on demand of the Purchaser reimburse the
Purchaser in an amount equal to the L/C Fee payable by the Purchaser under
Clause 4.1 of the Standby Letter of Credit Agreement, (iv) on demand of the
Purchaser reimburse the Purchaser in an amount equal to the costs and
expenses payable by the Purchaser in respect of any exercise of its rights
under the Servicing Agreement, (v) on demand of the Purchaser reimburse the
Purchaser in an amount equal to the Accounts Administration Fee payable by
the Purchaser pursuant to Clause 10.2 of the Accounts Administration
Agreement and any charges of the Account Bank payable by the Purchaser
pursuant to Clause 3 of the Accounts Administration Agreement, (vi) on
demand of the Purchaser reimburse the Purchaser for all amounts payable by
the Purchaser to the Issuer pursuant to Clauses 7 and 8 of the Funding
Agreement, and (vii)
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on demand of the Purchaser reimburse the Purchaser the fees, costs and
expenses of the directors of the Purchaser and any holding company of the
Purchaser.
18. Deemed Collections
18.1 If on any day (i) a Purchased Receivable becomes a Disputed Receivable,
(ii) any representation or warranty in Clause 13 in respect of a Purchased
Receivable proves at any time to have been incorrect when made, or (iii)
any Purchased Receivable proves not to have been an Eligible Receivable at
the Purchase Date, then the Seller shall be deemed to have received on such
day a Collection (a "Deemed Collection") in an amount equal to the
Outstanding Nominal Amount of such Purchased Receivable.
18.2 If the Outstanding Nominal Amount of any Purchased Receivable is reduced by
reason of (i) any set-off or counterclaim or (ii) any discount or other
trade credit, or (iii) any credit note issued by the Seller to the Debtor,
then the Seller shall be treated as having received the amount of such
reduction on the date of such reduction for such Receivable in addition to
any other amounts which may be received or receivable on such Receivable
and such reduction thereof shall for the purposes of this Agreement be
treated as a Deemed Collection in an amount equal to the amount of such
reduction.
18.3 If any Receivable which is purported to be sold and assigned to the
Purchaser hereunder shall have been collected in whole or in part
(including a Deemed Collection pursuant to Clause 18.1 and 18.2) prior to
the Purchase Date, then the portion thereof which shall have been so
collected shall be treated for the purposes of this Agreement as a Deemed
Collection thereof received on the date of the Purchase Date.
18.4 If on any day the Seller is in receipt of a Deemed Collection the Seller
shall hold such amount for and to the order and benefit of the Purchaser
and shall pay such amount to the Operating Account on the next Collection
Payment Date, as if the same were a Collection.
18.5 Upon the receipt of the Deemed Collection referred to in items (i) to (iii)
of Clause 18.1, the Purchaser shall re-assign to the Seller (without
recourse or warranty on the part of the Purchaser and at the sole cost of
the Seller) the relevant Receivable and the Related Security, and any
Collections thereafter received in respect of such Receivable shall be the
sole property of the Seller.
19. Benefit of Agreement
19.1 This Agreement shall be binding upon and enure to the benefit of each party
hereto and its successors and persons deriving title hereunder.
19.2 The Seller shall not be entitled to assign or transfer all or any of its
rights, benefits and obligations hereunder.
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20. Disclosure of Information
Neither of the parties hereto shall, during the continuance of this
Agreement or after its termination, disclose to any person, firm or company
whatsoever (except with the authority of the other party hereto) any
information which that party has acquired under or in connection with this
Agreement other than:
(i) to employees, officers or agents of any of ABN AMRO Bank N.V.,
the Banks under the Facilities, the Issuer, Standard & Poor's,
Moody's and the Dealers under the Dealer Agreements (but not,
for the avoidance of doubt, holders of commercial paper issued
thereunder);
(ii) in connection with any proceedings arising out of or in
connection with this Agreement, any Funding Agreement, each of
the Facilities or the preservation or maintenance of its rights
thereunder, subject to prior notice to the Seller;
(iii) if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for
discovering documents or otherwise subject to prior notice to
the Seller;
(iv) pursuant to any law or regulation or requirement of any
governmental agency in accordance with which that party is
required or accustomed to act subject to prior notice to the
Seller;
(v) to any governmental, banking or taxation authority or competent
jurisdiction subject to prior notice to the Seller;
(vi) to its auditors or legal or other professional advisers;
Provided that the above restriction shall not apply to:
(a) employees or officers or agents of any of the parties referred to in
(i) above, any part of whose functions are or may be in any way
related to this Agreement;
(b) information already known to a recipient otherwise than in breach of
this Clause;
(c) information also received from another source on terms not requiring
it to be kept confidential; and
(d) information which is or becomes publicly available otherwise than in
breach of this Clause.
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21. Remedies and Waivers
21.1 No failure to exercise, nor any delay in exercising, on the part of any
party hereto, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
prevent any further or other exercise thereof or the exercise of any other
right or remedy.
21.2 The rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies provided by law.
22. Partial Invalidity
Without prejudice to any other provision hereof, if one or more provisions
hereof is or becomes invalid, illegal or unenforceable in any respect in
any jurisdiction or with respect to any party such invalidity, illegality
or unenforceability in such jurisdiction or with respect to such party or
parties shall not, to the fullest extent permitted by applicable law,
render invalid, illegal or unenforceable such provision or provisions in
any other jurisdiction or with respect to any other party or parties
hereto. Such invalid, illegal or unenforceable provision shall be replaced
by the parties with a provision which comes as close as reasonably possible
to the commercial intentions of the invalid, illegal or unenforceable
provision.
23. No Liability and No Petition
23.1 No recourse under any obligation, covenant, or agreement of the Purchaser
contained in this Agreement shall be had against any shareholder, officer
or director of either the Purchaser or the Issuer as such, by the
enforcement of any assessment or by any proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that this
Agreement is a corporate obligation of the Purchaser and no liability shall
attach to or be incurred by the shareholders, officers, agents or directors
of either the Purchaser or the Issuer as such, or any of them, under or by
reason of any of the obligations, covenants or agreements of such Purchaser
contained in this Agreement, or implied therefrom, and that any and all
personal liability for breaches by the Purchaser of any of such
obligations, covenants or agreements, either at law or by statute or
constitution, of every such shareholder, officer, agent or director is
hereby expressly waived by the Seller as a condition of and consideration
for the execution of this Agreement.
23.2 The Seller hereby undertakes to the Purchaser that, until one year and one
day has elapsed after the payment of all sums outstanding and owing under
the latest maturing note under the CP Programme, it will not petition or
commence proceedings for the administration or winding up (nor join any
person in a petition or proceedings for the administration or winding up)
of the Purchaser nor will it enforce any judgment against the Purchaser if
to do so would cause the financial situation of the Purchaser to become
such as to make it liable to insolvency proceedings. The Seller
acknowledges that its
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recourse against the Purchaser in respect of any matter provided in this
Agreement shall be limited at any time to the extent of the aggregate of
(a) the unpaid amount of any Purchase Price Advance payable hereunder, and
(b) the Deferred Purchase Price due, owing or payable to it at that time
(but only if and to the extent that there are funds credited to the
Operating Account which the Accounts Administrator is entitled to apply in
accordance with in the Accounts Administration Agreement).
23.3 The Seller may, subject to Clause 23.2, demand performance by the Purchaser
of its obligations hereunder and enforce these obligations, but waives the
right to demand rescission of any Purchase. The Seller waives any unpaid
seller's lien that it may have under article 20, 5 of the Mortgage Law or
otherwise.
24. Notices and Amendments
24.1 Each communication to be made hereunder shall, (except expressly permitted
otherwise) be made in writing but, unless otherwise stated, may be made by
facsimile or letter.
24.2 Any communication or document to be made or delivered by any one person to
another pursuant to this Agreement shall (unless that other person has by
fifteen days' written notice to the other specified another address) be
made or delivered to that other person at the address identified with its
signature below and shall be deemed to have been made or delivered (in the
case of any communication made by facsimile) when despatched or (in the
case of any communication made by letter) when left at that address. Any
communication sent by facsimile shall be promptly confirmed by letter but
the non-delivery or non-receipt of any such letter shall not affect the
validity of the original facsimile communication.
24.3 Each communication and document made or delivered hereunder shall be in
English.
24.4 Any notice given to the Purchaser hereunder shall be copied to such other
person as the Purchaser may instruct from time to time.
24.5 The Purchaser may act in accordance with any communication which may from
time to time be, or purport to be, given on behalf of any one or more of
those persons whom the Purchaser can reasonably believe on a summary
examination of the relevant documents to be the authorised officers of the
Seller, without further enquiry by the Purchaser (as the case may be) as to
the authority or identity of the person making or purporting to make such
communication and regardless of the circumstances prevailing at the time of
such communication. The Purchaser may treat any such communication as fully
authorised by and binding upon the Seller and may (but need not) take such
steps in connection with or in reliance upon such communication as the
Purchaser may in good faith consider appropriate.
24.6 This Agreement may be executed in one or more counterparts.
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<PAGE>
24.7 No variation of this Agreement (including this Clause 24.7) shall be
effective unless it is in writing and signed by (or by some person duly
authorised by) each of the parties and unless each of the Rating Agencies
has confirmed in writing that the rating of the indebtedness for borrowed
money issued or sold by the Issuer will not be downgraded, withdrawn or
suspended as a result of such variation.
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<PAGE>
PART 6
LAW AND JURISDICTION
25. LAW
This Agreement shall be governed by and construed in accordance with the
laws of [________].
26. JURISDICTION
Any dispute in connection with this Agreement shall be subject to the
jurisdiction of the courts of [________].
Signed in two originals the day and year first before written. The pages of
this Agreement and the Servicing Agreement executed on the date hereof were
initialled for the purposes of authentication by ________________________ on
behalf of the Purchaser and ________________________ on behalf of the Seller.
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<PAGE>
THE PURCHASER
TULIP ASSET PURCHASE COMPANY B.V.
_______________________
By:
Gustav Mahlerlaan 10,
POBox 283,
1082 PP Amsterdam
The Netherlands
Telefax:+ 31 20 628 4666
Attention: Tuncay Sevincer / Frank Boesveldt
THE SELLER
_______________________ _______________________
By: By:
Address: Address:
Fax: Fax:
Telephone: Telephone:
Attention: Attention:
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<PAGE>
THE PARENT
LEVIS STRAUSS & Co
_______________________ _______________________
By: By:
Address: Address:
Fax: Fax:
Telephone: Telephone:
Attention: Attention:
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<PAGE>
THE FIRST SCHEDULE
CONDITIONS PRECEDENT
1. Copies of a resolution of the Seller's board of directors, and any other
necessary corporate documents, approving this Agreement, the Servicing
Agreement and the other documents to be delivered by it and the
transactions contemplated hereunder.
2. Certified copies of the statutes of the Seller.
3. A certificate of the Seller certifying (a) the names and signatures of the
officers authorised on behalf of the Seller to execute this Agreement, the
Servicing Agreement and any other documents to be delivered by it
hereunder, on which certificate the Purchaser may conclusively rely until
such time as the Purchaser shall receive from the Seller a revised
certificate meeting the requirements of this paragraph 3 and (b) the
authenticity of the by-laws of the Seller.
4. A legal opinion from Clifford Chance [Brussels] in form and substance
satisfactory to the Purchaser.
5. Copy of the latest financial statements of the Seller. These financial
statements shall be audited to the extent that such audited statements are
available.
6. Copy of the Servicing Agreement as executed.
7. Copy of the Monthly Report for the calendar month immediately preceding the
date hereof.
8. Copy of any other statements or contracts the Purchaser deems necessary
with regard to receivables offered.
9. Confirmation from the Rating Agencies in the customary form satisfactory to
the Purchaser as regards (a) the rating of the transaction and (b) the
rating of the Notes.
10. Evidence that the conditions precedent provided for under each Foreign RPA
entered into on or about the date hereof have been satisfied.
11. Confirmation from the Purchaser of receipt of the structuring fee (in
respect of first Purchase Date only).
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<PAGE>
THE SECOND SCHEDULE
ELIGIBLE RECEIVABLES AND ELIGIBLE DEBTORS
"ELIGIBLE RECEIVABLES" means Receivables which at their proposed Purchase Date:
1. were originated pursuant to a Contract in the Seller's ordinary course of
business, in accordance with the approved Credit and Collection Policies of
the Seller;
2. are owed by an Eligible Debtor, as defined hereunder in this Second
Schedule;
3. constitute legally valid and enforceable obligations of the related Debtors
enforceable against such Debtors in accordance with the terms of such
Receivables subject to no right of rescission, set-off, withholding,
suspension, counterclaim or other defence other than those provided for
under mandatory rules of applicable law;
4. can be easily segregated and identified for ownership and Related Security
purposes on any day;
5. arise from the sale of goods or the provision of services by the Seller and
are such that the delivery of the goods or the provision of services giving
rise to the Receivables have been completed and such goods or services have
been accepted by the related Debtor;
6. are not Delinquent Receivables and are neither Defaulted, or Disputed
Receivables and there has been no breach of any obligation (other than a
payment obligation) by any party to any Contract;
7. are obligations which can be transferred by way of sale and assignment, and
of which the transfer by way of sale and assignment is not subject to any
contractual or legal restriction;
8. are obligations in respect of which no bill of exchange, promissory note or
other negotiable instrument has been issued;
9. are owned by the Seller and are free and clear of any Adverse Claims;
10. are evidenced by an invoice issued to the relevant Debtor which will be
sufficient to prove a claim therefor against the related Debtor in relevant
courts, which complies with the relevant VAT and other taxation
requirements, and which shows the amount and percentage of VAT applied if
any;
11. do not carry interest and are not subject to withholding taxes;
12. have been created in compliance with all applicable laws and all required
consents, approvals and authorisations have been obtained in respect
thereof;
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<PAGE>
13. if purchased, are such that the Nominal Amount of such Receivables,
together with the Aggregate Outstanding Nominal Amount of any other
outstanding Purchased Receivables from the same Debtor and affiliates of
the same Debtor, are not in excess of the Debtor Limit (but any such
Receivables shall be ineligible only to the extent of such excess); if
several Receivables owing from the same Debtor and, as the case may be, its
affiliates are included in any Offer and, pursuant to this paragraph, part
of them only may constitute Eligible Receivables, then eligibility shall be
granted in priority to:
(a) the Receivables with an earlier invoice date;
(b) in the case of Receivables with the same invoice date, those with a
later due date;
(c) in the case of Receivables with the same invoice date and due date,
those with the higher invoice amount; and
(d) in the case of Receivables with the same invoice date, due date and
invoice amount, those with the lower invoice serial number;
14. are not Receivables due from a Debtor against or by whom an application for
the institution of bankruptcy, concordat judiciaire / gerechtelijk akkord,
composition or any other insolvency procedure has been or will have been
made within the meaning of any applicable insolvency law;
15. are Receivables in respect of which the Purchaser has not notified the
Seller that the Purchaser has determined that such Receivables or class of
Receivables is not reasonably acceptable for Purchase hereunder;
16. are Receivables due from a Debtor which the Purchaser has not notified the
Seller that Receivables from such Debtor are not Eligible Receivables (and
the Purchaser shall not be entitled to give such notification without
reasons or on the basis of abusive and clearly unreasonable grounds);
17. are payable by Debtors which are not the Debtors of any Defaulted
Receivable and are not, and have not been within the period of three years
ending on the proposed Purchase Date, the Debtors of any Receivable payable
to the Seller, which Receivable would be a Defaulted Receivable had it then
been owned by the Seller and included in the relevant Offer;
18. are Receivables the Nominal Amount of which remains a debt, has not been
paid and has not been discharged by set-off or otherwise;
19. are Receivables the sale of which in the manner herein contemplated will
not be recharacterised as any other type of transaction and will be
effective to pass to the Purchaser full and unencumbered title thereto and
the benefit thereof to the Purchaser and
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<PAGE>
no further act, condition or thing will be required to be done in
connection therewith to enable the Purchaser to require payment of any such
Receivable or the enforcement of any such right in any court other than the
giving of notice to the Debtor of the assignment of such Receivable by the
Seller to the Purchaser;
20. are Receivables the sale and/or assignment of which will not violate any
law or any agreement by which the Seller may be bound and upon such sale
and assignment such Receivables will not be available to the creditors of
the Seller on its liquidation;
21. had an original term of no more than [ ] days, and are denominated and
payable in any of the following currencies:
[BEF Belgian franc]
[EUR Euro, if and when introduced];
[ ]
22. are Receivables governed by [________] law, owing from Debtors established
in [________] in relation to their [________] establishment, and the terms
and conditions of which do not provide for the jurisdiction of any court or
arbitration tribunal outside [________];
23. are not subject to, and did not arise in connection with a contract which
is subject to, the [consumer credit law of 12 June 1991];
24. are not subject to, and did not arise in connection with a contract which
is subject to, public procurement (openbare aanbestedingen / marches
publics) laws and regulations;
25. did not originate from the resale of products which had been acquired by
the Seller subject to a reservation of title, unless the reservation of
title has lapsed already due to the payment of the original acquisition
price;
26. do not represent claims in connection with the execution by the Seller of a
contract which is partly subcontracted to a third party; and
27. do not arise under or in relation to Contracts which constitute leasing,
hire, hire purchase or contract hire transactions.
* * *
An "ELIGIBLE DEBTOR" at any relevant time:
1. is a Debtor which is approved as such by the Purchaser (which approval
shall not be unreasonably withheld);
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<PAGE>
2. is a customer of the Seller granted credit in accordance with the Seller's
normal procedures and billed by the Seller on a regular basis;
3. at the time of the assignment of the Receivables to the Purchaser, has not
entered into a voluntary arrangement with its creditors, been declared
bankrupt, been defendant in an action for its bankruptcy which remains
undismissed for a period of thirty days, has not taken any corporate action
nor had legal proceedings commenced against it for its gerechtelijk
akkoord/ concordat, dissolution, liquidation, been subject to the
appointment of a gerechtelijke bewindvoerder / administrateur judiciaire,
sekwester / sequestre or similar officer, been in a situation of stoppage
of payments (staking van betalingen / cessation de paiements), or been
subject to any event similar to any of the above under the laws of any
jurisdiction;
4. is not an affiliate of the Seller;
5. is not, except with the Purchaser's prior consent, a country, state, local
government, municipality, public body, government entity, state owned
corporation or other public sector body; and
6. is not an individual and does not have the benefit of consumer credit
legislation.
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<PAGE>
THE THIRD SCHEDULE
PART 1
FORM OF OFFER
To: Tulip Asset Purchase Company B.V.
From: [ ]
Dated: [ ]
Dear Sirs,
1. We refer to a receivables purchase agreement (such receivables
purchase agreement, as from time to time amended, supplemented or
novated being herein called the "RECEIVABLES PURCHASE AGREEMENT")
dated on or about [____________] and originally made between
yourselves as Purchaser, Levi Strauss & CO as Parent and ourselves as
Seller.
2. Terms defined in the Receivables Purchase Agreement shall bear the
same meaning herein.
3. We hereby offer to sell, to assign and to transfer to you, pursuant to
the Receivables Purchase Agreement, the Receivables listed in the
Schedule hereto and the Related Security at a Purchase Price
calculated in accordance with the Receivables Purchase Agreement and
notify you that:
(a) (i) the aggregate Nominal Amount of all the offered
Receivables, calculated as at the date hereof, is [ ];
(ii) the Purchase Price Advance in respect of all the offered
Receivables, calculated as at the date hereof, is [ ]; and
(iii) the Discount in respect of all the offered Receivables,
calculated as at the date hereof, is [ ];
(b) the proposed Purchase Date is [ ];
(c) the Purchase Price Advance is to be paid into account no.
[specify number] in the name of [specify account name] at
[specify bank name and address].
This Offer constitutes an irrevocable offer by us binding upon us to assign and
to sell to you the ownership interest in the Receivables and Related Security
referred to in this Offer.
Yours faithfully,
-46-
<PAGE>
..................................
for and on behalf of
[ ]
-47-
<PAGE>
PART 2
FORM OF RECEIPT
To: Tulip Asset Purchase Company B.V.
From: [ ] as Seller
Dated: [ ]
Dear Sirs,
1. We refer to a receivables purchase agreement (such receivables
purchase agreement, as from time to time amended, supplemented or
novated being herein called the "RECEIVABLES PURCHASE AGREEMENT")
dated on or about [____________] and originally made between
yourselves as Purchaser, Levi Strauss & CO as Parent and ourselves as
Seller.
2. Terms defined in the Receivables Purchase Agreement shall bear the
same meaning herein. This Receipt is given pursuant to Clause 3.1 of
the Receivables Purchase Agreement.
3. We hereby acknowledge receipt of the Purchase Price Advance on the
[specify date] in respect of the Receivables identified in the offer
dated [ ], calculated in accordance with the Receivables Purchase
Agreement.
Yours faithfully,
........................
for and on behalf of
[ ]
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<PAGE>
THE FOURTH SCHEDULE
TERMINATION EVENTS
1. The Seller and/or the Servicer, so long as the Seller is Servicer, fails to
make payment under this Agreement and/or the Servicing Agreement on the
date such payment is due and payable as specified in such Agreement, or
upon demand where no date is specified, subject to a three day grace period
after notification.
2. The Seller and/or the Servicer, so long as the Seller is Servicer, fails to
perform any of their other obligations under this Agreement and/or the
Servicing Agreement, subject to a three day grace period after
notification.
3. Any representation or warranty in this Agreement or in any report or any
information provided by the Seller is materially false or incorrect.
4. The Seller enters into a voluntary arrangement with its creditors, is
declared bankrupt, is defendant in an action for its bankruptcy which
remains undismissed for a period of thirty days, takes any corporate action
or has legal proceedings commenced against it for its gerechtelijk akkoord
/ concordat, dissolution, liquidation, or a gerechtelijk bestuurder /
administrateur judiciaire, sekwester / sequestre or similar officer is
appointed in relation to the Seller, or any stoppage of payments (staking
van betalingen/ cessation de paiements) occurs.
5. Any material adverse change occurs in the financial position or the
collection procedures of the Seller.
6. There is a default by the Seller or any seller under any Foreign RPA in
respect of any of their payment obligations to third parties in aggregate
in excess of USD 25,000,000 or its equivalent at any time.
7. Subject to the provisions of clause 7, the Loss Ratio Current Month
reported in any Monthly Report exceeds [______]%.
8. Subject to the provions of clause 7, the Loss Ratio Rolling Average in any
Monthly Report exceeds [______]%.
9. Subject to the provions of clause 7, the Delinquency Ratio Current Month in
any Monthly Report exceeds [______]%.
10. Subject to the provions of clause 7, the Delinquency Ratio Rolling Average
in any Monthly Report exceeds [______]%.
11. Subject to the provions of clause 7, the Dilution Ratio in any Monthly
Report exceeds [___]%.
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<PAGE>
12. The credit rating of the Parent which is a dependent rating for the
transaction is down-graded below the level necessary to maintain the rating
of the CP Programme.
13. The credit rating of the CP Programme is down-graded by any rating agency
or a rating agency determines that a failure to declare a Termination Event
would result in the credit rating of the CP Programme being downgraded.
14. The Purchaser notifies the Seller that it has received notification from
the provider(s) of credit facilities pursuant to the Liquidity Facility
Agreement and/or the Standby Letter of Credit Agreement to the effect that
the cost to them of providing or maintaining such facilities has increased
by reason of (i) any change in law or its interpretation or administration
and/or (ii) compliance with any request from or requirement of any central
bank, fiscal or monetary or other authority, in either case occurring
subsequent to the date of this Agreement and being outside the control of
the Purchaser and the relevant credit facility provider(s), unless the
Seller agrees to pay such increased cost.
15. The Aggregate Receivables Investment hereunder and under the Foreign RPAs
becomes, and remains for three business days, less than the aggregate of
the Matured Value of the Loans outstanding from the Issuer to the Purchaser
and all outstanding Advances (where applicable converted to US dollars at
the rate specified in the relevant agreement).
16. Any Foreign RPA is terminated by way of Termination Event (as defined in
the Foreign RPA).
17. The Seller ceases to be under control of the Parent.
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<PAGE>
THE FIFTH SCHEDULE
GENERAL TERMS AND CONDITIONS
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<PAGE>
THE SIXTH SCHEDULE
FORM OF MONTHLY REPORT
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<PAGE>
THE SEVENTH SCHEDULE
DEBTOR LIMITS
-53-
<PAGE>
EXHIBIT 10.17
[___] JANUARY 2000
____________________________________________________________
SERVICING AGREEMENT
____________________________________________________________
TULIP ASSET PURCHASE COMPANY B.V.
AS PURCHASER
[LEVI STRAUSS _______]
AS SERVICER
AND
LEVI STRAUSS & CO
AS PARENT
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. DEFINITIONS........................................................... 1
2. APPOINTMENT OF SERVICER............................................... 3
3. THE SERVICES.......................................................... 4
4. COLLECTIONS AND THE ACCOUNTS.......................................... 5
5. COSTS, EXPENSES AND REMUNERATION...................................... 6
6. INFORMATION........................................................... 7
7. COVENANTS OF THE SERVICER............................................. 7
8. SERVICER'S INDEMNITY.................................................. 9
9. SERVICES NON-EXCLUSIVE................................................ 9
10. TERMINATION........................................................... 10
11. CHANGE OF SERVICER.................................................... 11
12. FURTHER ASSURANCE..................................................... 11
13. DISCLOSURE OF INFORMATION............................................. 13
14. NOTICES AND COUNTERPARTS.............................................. 14
15. VARIATION............................................................. 14
16. ASSIGNMENT............................................................ 14
17. PARTIAL INVALIDITY.................................................... 14
18. NO LIABILITY AND NO PETITION.......................................... 14
19. GOVERNING LAW......................................................... 15
20. JURISDICTION.......................................................... 15
</TABLE>
THE SCHEDULES
The First Schedule : Form of Monthly Report
The Second Schedule : The Collection Accounts
The Third Schedule: : The Operating Accounts
<PAGE>
THIS SERVICING AGREEMENT is made the [ ] day of December 1999
BETWEEN
(1) TULIP ASSET PURCHASE COMPANY B.V., a Dutch private company with limited
liability having its registered office at Gustav Mahlerlaan 10, 1082 PP
Amsterdam, The Netherlands (the "PURCHASER");
(2) [LEVI STRAUSS _________], a [________] company having its registered office
at [________________________] RC [____] (the "SERVICER", which expression
shall include any person appointed as servicer for the Purchaser for the
purpose of and in accordance with this Agreement), and
(3) LEVI STRAUSS & CO. a Delaware corporation having its head office at 1155
Battery Street, San Fransisco, CA 94120, USA (the "PARENT").
WHEREAS:
(A) The Seller and the Purchaser have agreed, upon the terms and subject to the
conditions of the Receivables Purchase Agreement referred to below, that
the Seller may from time to time offer to sell and to assign Eligible
Receivables to the Purchaser and the Purchaser shall accept any such offer
upon the terms thereof.
(B) The Servicer is willing to act for the Purchaser in the performance of
certain services in relation to the Purchased Receivables upon the terms
and subject to the conditions contained in this Agreement.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement and in the Recitals hereto, except so far as the context
otherwise requires:
"ACCOUNT BANK" means ABN AMRO Bank N.V. acting through its office at
Amsterdam and any person appointed as Account Bank under the Accounts
Administration Agreement;
"ACCOUNTS ADMINISTRATION AGREEMENT" means the accounts administration
agreement dated on or about the date hereof between ABN AMRO Bank N.V., the
Purchaser and the Issuer;
"ACCOUNTS ADMINISTRATOR" means ABN AMRO Bank N.V. acting through its office
at Amsterdam and any person appointed as accounts administrator under the
Accounts Administration Agreement;
"ADVANCE" means all Advances and Same Day Advances pursuant to the
Liquidity Facility Agreement and all Drawings under the Standby Letter of
Credit (as in each case defined therein);
-1-
<PAGE>
"COLLECTION ACCOUNT" means each of the accounts set out in the Second
Schedule with the Collection Account Banks utilised for the time being by
the Seller and/or the Servicer in relation to Collections on the Purchased
Receivables or such other account or accounts as may for the time being be
in addition thereto or substituted therefor;
"COLLECTION ACCOUNT BANKS" means each of the banks set out in the Second
Schedule or such other banks as may for the time being be nominated by the
Seller and/or the Servicer in addition thereto or substituted therefor;
"CP PROGRAMME" means the commercial paper programme established by the
Issuer pursuant to the Dealer Agreements;
"DEALER AGREEMENTS" means the dealer agreements relating to the CP
Programme dated on or after 1 December 1995 between the Issuer and the
Dealers (as defined therein);
"DISCOUNT PROTECTION AMOUNT" shall have the same meaning as in the
Receivables Purchase Agreement;
"DISCOUNT RESERVE LEDGER" shall have the same meaning as in the Receivables
Purchase Agreement;
"ENCUMBRANCE" means (a) any mortgage, charge, pledge, lien or other
encumbrance securing any obligation of any person, or (b) any type of
preferential arrangement (including any title transfer and retention
arrangement) the effect of which is to give a creditor a preferential
position in relation to any asset.
"ISSUER" means Tulip Financing Corporation a company incorporated with
limited liability and having its registered office at 15 East North Street,
City of Dover, Kent County, Delaware, United States;
"MONTHLY REPORT" means the monthly report delivered by the Servicer
pursuant to Clause 6.2 in the form set out in the First Schedule or as
otherwise agreed from time to time between the Servicer and the Purchaser;
"NOTE" means a commercial paper note issued by the Issuer for the purpose
of funding the Purchaser under the Funding Agreement and purchased by a
Dealer pursuant to the Dealer Agreements and includes the commercial paper
notes represented by a Note in global form;
"OPERATING ACCOUNT" means the interest bearing accounts designated as such
in the Third Schedule and operated by ABN AMRO Bank N.V. as Accounts
Administrator in the name of the Purchaser at the Account Bank utilised for
the time being for the purposes of the Servicing Agreement and the Accounts
Administration Agreement or such other account or accounts as may for the
time being be in addition thereto or substituted therefor in accordance
with the provisions of the Accounts Administration Agreement;
-2-
<PAGE>
"PURCHASED RECEIVABLES" means any Receivables assigned, sold or transferred
or purported to be assigned, sold or transferred to the Purchaser pursuant
to the Receivables Purchase Agreement;
"RECEIVABLES PURCHASE AGREEMENT" means the receivables purchase agreement
dated on or about the date hereof between the Purchaser and the Seller;
"RECORD" means, in respect of any Receivable, all Contracts,
correspondence, notes of dealings and other documents, books, books of
account, registers, records and other information (including, without
limitation, computer programmes, tapes, discs, punch cards, data processing
software and related property and rights) maintained (and recreated in the
event of destruction of the originals thereof) with respect to such
Receivable and the related Debtor;
"SELLER" means [Levi Strauss __________];
"SERVICES" means the services to be provided by the Servicer hereunder;
"TERMINATION DATE" means the date upon which a Termination Event occurs or,
if such date is not a business day, the next following business day; and
"TERMINATION EVENT" shall have the same meaning as in the Receivables
Purchase Agreement.
1.2 Any reference in this Agreement to a "BUSINESS DAY" means any day (other
than a Saturday or a Sunday) on which banks are open for business in
[Amsterdam or ________].
1.3 The headings in this Agreement shall not affect its interpretation.
1.4 Words denoting the singular number only shall include the plural number
also and vice versa; and words denoting persons only shall include firms
and corporations and vice versa.
1.5 References in this Agreement to any statutory provision shall be deemed
also to refer to any statutory or other modification, re-enactment or
replacement thereof or any statutory instrument, order or regulation made
thereunder or under any such re-enactment.
1.6 The Schedules shall form part of this Agreement.
1.7 Terms defined in the Receivables Purchase Agreement shall unless otherwise
defined herein or the context otherwise requires, bear the same meanings
herein.
1.8 Save where the contrary is indicated in this Agreement, any reference in
this Agreement to a time of day shall be construed as a reference to time
in Amsterdam.
2. APPOINTMENT OF SERVICER
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<PAGE>
2.1 Subject to Clause 3, until termination pursuant to Clause 10, the Purchaser
hereby appoints [____________] to be the Servicer in its name and on its
behalf to service, collect and administer all Purchased Receivables and
perform all related functions in the same manner as it services Receivables
other than the Purchased Receivables, and the Servicer hereby accepts such
appointment by the Purchaser on the terms and subject to the conditions of
this Agreement.
2.2 During the continuance of its appointment hereunder, the Servicer shall,
subject to the terms and conditions of this Agreement have the full power,
authority and right to do or cause to be done any and all things which the
Servicer reasonably considers necessary, convenient or incidental to the
administration of the Purchased Receivables or the exercise of the rights,
powers, duties and discretions referred to in Clause 2.1 and the
performance of its other duties and obligations under this Agreement.
3. THE SERVICES
3.1 Without prejudice to the generality of Clause 2, the duties of the Servicer
shall include the provision of the Services and the specific duties set out
in this Agreement.
3.2 The Servicer shall:
(a) give directions with respect to each Collection Account in respect of
the transfers and payments to be made hereunder;
(b) endeavour at its own expense to recover amounts due from Debtors in
accordance with the Credit and Collection Policies and in particular
(but without prejudice to the generality of the foregoing) exercise
all enforcement measures concerning amounts due from Debtors. For this
purpose the Servicer is hereby authorised to sue Debtors in any court
in [________] or in any other competent jurisdiction for the account
of the Purchaser, the Purchaser being obliged where necessary to
assist the Servicer in exercising all rights and remedies under and in
connection with the relevant Purchased Receivables;
(c) keep Records, books of account and documents relating to Purchased
Receivables and any receivables otherwise made or serviced by the
Servicer such that the Purchased Receivables can separately be
identified;
(d) keep records for all taxation purposes, including for the purposes of
value added tax;
(e) hold all Records relating to the Purchased Receivables in its
possession to the order and the benefit of the Purchaser;
(f) assist the Purchaser in discharging any Related Security in respect of
any Purchased Receivables which have been repaid; and
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(g) assist the Purchaser's auditors and provide information to them upon
request.
3.3 The Servicer shall not sub-contract or delegate the performance of any of
its obligations under this Agreement without the approval of the Purchaser,
such approval not to be unreasonably withheld.
3.4 The Servicer shall, where its obligations hereunder have been sub-
contracted in accordance with Clause 3.3 above, remain fully liable to the
Purchaser to the same extent and under the same terms as if the Servicer
itself was servicing the Receivables.
4. COLLECTIONS AND THE ACCOUNTS
4.1 The Servicer hereby covenants with the Purchaser that (i) on the date
hereof the Collection Accounts and the Collection Account Banks are those
(and only those) set out in the Second Schedule and (ii) thereafter the
Servicer shall not alter or permit any alteration to be made to the
contents of the Second Schedule or to the resolutions and instructions
relating to the Collection Accounts without the prior written notification
to the Purchaser.
4.2 (a) The Servicer shall use all reasonable endeavours to make all
Collections or to ensure payment of all sums, due under or in
connection with the Purchased Receivables and Related Security on
behalf of the Purchaser and will on behalf of the Purchaser enforce
all covenants and obligations of Debtors due to the Purchaser in the
same manner as it does in relation to its Receivables generally and,
where applicable, in accordance with the Credit and Collection
Policies.
(b) The Servicer covenants with the Purchaser that it will comply with the
Credit and Collection Policies in regard to each Purchased Receivable,
any Related Security and the related Contract. If the Servicer shall
propose to modify the Credit and Collection Policies in connection
with the Purchased Receivables, it shall give prior written notice of
such modification to the Purchaser and, if such modification is
considered by the Servicer, in its reasonable opinion, to be material,
such modification shall only take effect with the prior written
consent of the Purchaser, which shall not be unreasonably withheld.
4.3 The Servicer shall procure that, in relation to each Purchased Receivable,
all Collections in respect of Purchased Receivables shall be made into the
Collection Accounts forthwith upon receipt by the Servicer of the amount in
question (and to the extent practicable on the same day as such receipt).
In respect of any Collections received by any sub-contractor appointed in
accordance with Clause 3.3, the Servicer shall be deemed to receive such
Collections as soon as the same have been paid to such sub-contractor.
4.4 The Servicer shall procure that, subject always to the provisions of Clause
7 of the Receivables Purchase Agreement:
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(a) prior to the giving of notice to the Servicer pursuant to Clause 10.1,
on each Collection Payment Date all Collections in respect of
Purchased Receivables received during the immediately preceding
Collection Period shall be transferred (for same day value) into the
Operating Account; and
(b) after the giving of notice to the Servicer pursuant to Clause 10.1,
all Collections in respect of Purchased Receivables shall be
transferred (for same day value) on a daily basis into the Operating
Account.
4.5 The Servicer hereby covenants and declares that, pending such transfer to
the Operating Account, all sums paid into or otherwise standing to the
credit of the Collection Accounts in relation to Purchased Receivables
shall be held by it to the order and the benefit of the Purchaser and that
it will give directions to the Collection Account Banks in relation to such
sums on and subject to the terms of this Agreement (including, but not
limited to, Clause 4) and comply with its duties and obligations hereunder.
4.6 The Servicer shall keep and maintain Records, on a Receivable by Receivable
basis, for the purposes of identifying, in particular, at any time amounts
paid by and to each Debtor, any amount due by or to a Debtor, the source of
receipts which are paid into each Collection Account and the Operating
Account, and the balance from time to time outstanding on each Collection
Account with respect to each Debtor. The Servicer shall give the Purchaser
notice of any material change to its administrative and operating
procedures in relation to the keeping and maintaining of Records and any
such material change shall only take effect with the prior written consent
of the Purchaser, which shall not be unreasonably withheld.
4.7 If the Servicer receives any money whatsoever arising from the Purchased
Receivables, or otherwise, which money belongs to the Purchaser or is to be
paid to the Purchaser or into the Operating Account, pursuant to this
Agreement or otherwise, it will hold such money to the order and the
benefit of the Purchaser and will forthwith upon receipt thereof whether by
the Servicer itself or any sub-contractor pay or hold the same in
accordance with the relevant terms of this Agreement or as otherwise
directed by the Purchaser.
5. COSTS, EXPENSES AND REMUNERATION
5.1 The Servicer undertakes on behalf of the Purchaser, that it shall incur,
for its own account, any costs, expenses and charges in connection with the
enforcement of any Receivable and/or the Purchaser's rights and remedies in
relation thereto and it is agreed that the Servicer shall have no recourse
or claim for indemnification or payment against the Purchaser in respect of
such costs, expenses and charges.
5.2 The Servicer is not entitled to any remuneration or indemnity in respect of
the performance of its duties under this Agreement save as expressly
provided herein. The Servicer acknowledges that the undertakings of the
Purchaser under the
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Receivables Purchase Agreement constitute adequate consideration for its
own undertakings hereunder.
6. INFORMATION
6.1 The Servicer shall keep safe and shall use all reasonable endeavours to
maintain Records and shall maintain either in computer readable form or in
legible writing Records in relation to each Purchased Receivable. The
Servicer shall keep Records in relation to the Purchased Receivables in a
manner such that it is easily distinguishable from Records in relation to
other receivables of which the Servicer is originator, owner or servicer.
6.2 The Servicer shall prepare the Monthly Report for the Purchaser in respect
of the Purchased Receivables and shall deliver the same to the Purchaser
not later than the third business day before each Collection Payment Date,
provided that upon the occurrence of a Downgrade Trigger the Servicer shall
deliver two Monthly Reports to the Purchaser (i) not later than the third
business day before each Collection Payment Date, and (ii) on the twelfth
day following the Collection Payment Date.
6.3 The Servicer shall prepare and deliver to the Purchaser such further
information and/or reports, whether in writing or otherwise, as the
Purchaser may reasonably require from time to time. All reports or
certificates delivered by the Servicer under this Clause 6 shall be signed
by an authorised signatory of the Servicer.
7. COVENANTS OF THE SERVICER
7.1 The Servicer hereby covenants with the Purchaser that it will:
(a) give the time and attention of a proper merchant and will exercise the
due care of a proper merchant in the performance of the Services with
respect to the Purchased Receivables;
(b) ensure that the procedures that are applied by the Servicer in
connection with the recovery of Collections and the management of the
Purchased Receivables are the same as those applied by the Servicer in
connection with receivables beneficially owned by the Seller;
(c) consider the interests of the Purchaser the L/C Bank and the Agent in
its relations with Debtors and in its exercise of any discretion
arising from its performance of the Services;
(d) obtain and keep in force all licences, approvals, authorisations and
consents which may be necessary or desirable in connection with the
performance of the Services;
(e) at its expense and in a timely manner fully perform and comply with
all provisions, covenants and other promises required to be observed
by it under
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<PAGE>
the Contracts and Related Security documents related to the Purchased
Receivables;
(f) comply with all legal requirements in relation to all Purchased
Receivables;
(g) not terminate, amend or revoke this Agreement without the prior
consent of the Purchaser the L/C Bank and the Agent;
(h) not, without the prior consent of the Purchaser, change the Receivable
Due Date relevant to a Purchased Receivable, if such change would
impair the collectability of such Purchased Receivable;
(i) not create or permit to subsist any Encumbrance over all or any of the
Collection Accounts;
(j) not sell, assign or otherwise dispose of, or create or permit to exist
any Adverse Claim upon or with respect to any goods the subject of any
Purchased Receivable or any Purchased Receivable or Related Contract
or Related Security, or upon or with respect to any Collection
Account, or assign any right to receive income in respect thereof or
attempt, purport or agree to do any of the foregoing; and
(k) except as otherwise permitted under this Agreement or under the
Receivables Purchase Agreement, not without the prior consent of the
Purchaser (which shall not be unreasonable withheld) extend, amend or
otherwise modify the terms of any Purchased Receivable or amend,
modify or waive any term or condition of any Contract related thereto,
Provided always that the Servicer shall have no power to enter into any new
contracts on behalf of the Purchaser nor to act as any form of branch,
agency or representative of the Purchaser nor to direct, administer or
manage any aspect of the Purchaser's business (without prejudice to the
specific activities expressly contemplated in this Agreement). Equally the
Servicer shall be liable only to perform the Services herein specified; the
Purchaser shall have no right to direct the Servicer.
7.2 The covenants of the Servicer shall remain in force until this Agreement is
terminated, but without prejudice to any right or remedy of the Purchaser
arising from breach of any such covenant prior to the date of termination
of this Agreement.
7.3 The Servicer shall have systems in place in relation to the Purchased
Receivables that are capable of providing the information to which the
Purchaser is reasonably and properly entitled pursuant to this Agreement
and shall use all reasonable endeavours to maintain such systems in working
order.
7.4 The Servicer hereby agrees that the Purchaser, any firm of independent
auditors retained by the Purchaser and/or any other representatives of the
Purchaser shall be authorised to conduct at the expenses of the Servicer an
annual site visit of the
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premises of the Servicer, the first such visit taking place one year
following the date of this Agreement, in order to:
(a) inspect and satisfy itself or themselves that the systems are in
place, maintained in working order and are capable of providing the
information to which it or they are reasonably and properly entitled
pursuant to this Agreement or the Receivables Purchase Agreement; and
(b) examine and make copies of and abstracts from all Records;
Provided that no Records, files or other information other than to that
which the Purchaser is entitled so to examine, copy or make abstracts from
shall be removed from the Servicer's premises and such Records, files or
other information shall remain confidential and shall not be used or
disclosed or divulged to any person (except to the extent and in the
circumstances permitted by this Agreement and the Receivables Purchase
Agreement and in accordance with applicable law) without the prior consent
of the Servicer, such consent not to be unreasonably withheld.
7.5 Notwithstanding the foregoing, the Servicer at the request of the
Purchaser, shall allow reasonable access during normal business hours to
any representative of the Purchaser and allow such representative to
perform the duties specified in Clause 7.4 (a) and (b) hereof.
8. SERVICER'S INDEMNITY
8.1 The Servicer shall indemnify the Purchaser and its respective directors,
officers and employees against all liabilities, losses, damages, actions,
proceedings and claims (and costs, demands and expenses including
reasonable legal expenses incidental thereto) which may be brought against,
suffered or incurred by the Purchaser, and/or such directors, officers and
employees by reason of any wrongful or negligent act, default or omission
by the Servicer or any director, officer, employee or agent of the Servicer
(including, for the avoidance of doubt, any sub-contractor of the Servicer)
in the performance of its duties hereunder.
8.2 The Servicer shall have no liability for any obligation of a Debtor under
any Purchased Receivables and nothing herein shall constitute a guarantee,
or similar obligation, by the Servicer of any Purchased Receivables or any
Debtor.
8.3 The Servicer shall have no liability for the obligations of the Purchaser
and nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of the Purchaser in respect of any obligations thereof.
9. SERVICES NON-EXCLUSIVE
Nothing in this Agreement shall prevent the Servicer from rendering
services similar to those provided for in this Agreement to other persons,
firms or companies carrying on business similar to or in competition with
the business of the Purchaser.
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10. TERMINATION
10.1 If any of the following events shall occur:
(i) the Servicer and/or the Seller, so long as the Seller is Servicer,
fails to make payment under this Agreement and/or the Receivables
Purchase Agreement on the date such payment is due and payable as
specified in such Agreement, or upon demand where no date is
specified, subject to a three day grace period after notification;
(ii) the Servicer and/or the Seller, so long as the Seller is Servicer,
fails to perform any of its other obligations under this Agreement
and/or the Receivables Purchase Agreement, subject to a three day
grace period after notification;
(iii) any representation or warranty in this Agreement or in any report or
any information provided by the Servicer is materially false or
incorrect;
(iv) the Servicer and/or the Seller enters into a voluntary arrangement
with its creditors, is declared bankrupt, is defendant in an action
for its bankruptcy which remains undismissed for a period of thirty
days, takes any corporate action or legal proceedings are started
against it for its gerechtelijk akkoord / concordat, dissolution or
liquidation, or a gerechtelijke bewindvoerder / administrateur
judiciaire, sekwester / sequestre or similar officer is appointed in
relation to the Servicer and/or the Seller, or any stoppage of
payments (staking van betalingen / cessation de paiements) occurs;
(v) any material adverse change occurs in the financial position or the
collection procedures of the Servicer; or
(vi) there is a default by the Seller or any of the Sellers under the
Foreign RPAs in respect of any of their payment obligations to third
parties in aggregate in excess of [USD 25,000,000] or its equivalent
at any time;
(vii) there is a change of control of the Servicer,
then the Purchaser may, without prejudice to its other rights, by notice in
writing to the Servicer terminate the appointment of the Servicer under
this Agreement.
10.2 On and after termination of the appointment of the Servicer under this
Agreement pursuant to Clause 10.1, all rights, obligations (other than
liability for breaches of this Agreement by the Servicer or liability in
tort on the part of the Servicer prior to such termination and the
Servicer's obligations under Clauses 10.3, 12 and 13 and the Servicer's
liability under Clause 8.1 with respect to the performance of its duties
hereunder), authority and power of the Servicer under this Agreement shall
be terminated and of no further effect.
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10.3 Upon termination of the appointment of the Servicer under this Agreement
pursuant to Clause 10.1, the Servicer shall forthwith deliver to the
Accounts Administrator or as it shall direct the Records in its possession
or under its control relating to the affairs of or belonging to the
Purchaser and the Purchased Receivables and any Related Security and any
other security therefor and any moneys then held by the Servicer on behalf
of the Purchaser and shall take such further action as the Purchaser may
reasonably direct, including (but without limitation), if so requested,
granting or assigning or sub-licensing such licences in respect of
intellectual property of the Servicer as may be necessary to enable the
Services to be performed by a substitute servicer.
10.4 The appointment of the Servicer under this Agreement shall terminate (but
without affecting any accrued rights and liabilities hereunder) at such
time as (i) the Purchaser has no further interest in any of the Purchased
Receivables and no further commitment under the Receivables Purchase
Agreement and (ii) the Servicer is notified by the Purchaser that such is
the case.
10.5 Following termination of the appointment of the Servicer the Servicer shall
be entitled to receive, on the date such amounts would have fallen to be
paid but for such termination, all fees and other moneys, if any, accrued
up to the date of termination but shall not be entitled to any other or
further compensation otherwise than pursuant to Clause 5.
11. CHANGE OF SERVICER
If notice is given to terminate the appointment of the existing Servicer in
accordance with this Agreement and to appoint a new Servicer, the existing
Servicer and the Purchaser shall execute such documents and take such
actions as such new Servicer and the Purchaser may require for the purpose
of vesting in such new Servicer the rights and obligations of the existing
Servicer under this Agreement and releasing the existing Servicer from its
future obligations under this Agreement.
12. GUARANTEE
12.1 The Parent irrevocably and unconditionally guarantees to the Purchaser the
due and punctual observance and performance of all terms, conditions and
covenants on the part of the Servicer contained in this Agreement and
agrees to pay from time to time on first demand any and every sum or sums
of money which the Servicer is at any time liable to pay to the Purchaser
under or pursuant to this Agreement and which has become due and payable
but has not been paid at the time such demand is made.
12.2 The Parent irrevocably and unconditionally agrees as a primary and
independent obligation to indemnify the Purchaser from time to time on
demand from and against any loss incurred by the Purchaser as a result of
any of the obligations of the Servicer under or pursuant to this Agreement
being or becoming void, voidable, unenforceable or ineffective as against
the Servicer for any reaon whatsoever, whether or not known
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to the Purchaser or any other person, the amount of such loss being the
amount which the Purchaser would otherwise have been entitled to recover
from the Servicer.
12.3 The obligations of the Parent herein contained shall constitute and be
continuing obligations notwithstanding any settlement of account or other
matter or thing whatsoever and shall not be considered satisfied by any
intermediate payment or satisfaction of all or any of the obligations of
the Servicer under this Agreement and shall continue in full force and
effect until final payment in full of all amounts owing by the Servicer
hereunder total satisfaction of all the actual and contingent obligations
of the Servier hereunder.
12.4 The obligations of the Parent herein contained shall not be discharged,
impaired or otherwise affected by:
(i) the winding-up, dissolution, administration or re-organisation of the
Servicer or any other person or any change in its status, function,
control or ownership;
(ii) any of the obligations of the Servicer or any other person hereunder
being or becoming illegal, invalid, unenforceable or ineffective in
any respect;
(iii) time or other indulgence being granted or agreed to be granted to the
Servicer or any other person in respect of its obligations hereunder;
(iv) any amendment to, or any variation, waiver or release of, any
obligations of the Servicer or any other person hereunder;
(v) any failure to take, or fully to take, any security contemplated
hereby or otherwise agreed to be taken in respect of the obligations
of the Servicer hereunder;
(vi) any other act, event or omission which, but for this Clause 12.4,
might operate to discharge, impair or otherwise affect any of the
obligations of the Parent herein contained or any other rights, power
or remedies conferred upon the Purchaser by the Agreement.
12.5 The Parent agrees that, so long as any amounts are or may be owed by the
Servicer hereunder or the Servicer is under any actual or contingent
obligations hereunder, the Parent shall not exercise any rights which the
Parent may at any time have, by reason of the performance by it of its
obligations hereunder:
(i) to be indemnified by the Servicer; or
(ii) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Purchaser hereunder.
13. FURTHER ASSURANCE
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The parties hereto agree that they will co-operate fully to take all such
further actions and execute any further documents as may be necessary or
desirable to give full effect to the arrangements contemplated by this
Agreement.
14. DISCLOSURE OF INFORMATION
None of the parties hereto shall, during the continuance of this Agreement
or after its termination, disclose to any person, firm or company
whatsoever (except with the authority of the other parties hereto) any
information which that party has acquired under or in connection with this
Agreement other than:
(a) to employees, officers or agents of any of ABN AMRO Bank N.V., the
Banks under the Liquidity Facility Agreement, the Facilities, the
Issuer, Standard & Poor's, Moody's, and the Dealers under the Dealer
Agreements (but not, for the avoidance of doubt, holders of
commercial paper issued thereunder);
(b) in connection with any proceedings arising out of or in connection
with this Agreement, any Funding Agreement, either of the Facilities
or the preservation or maintenance of its rights thereunder, subject
to prior notice to the Servicer;
(c) if required to do so by an order of a court of competent jurisdiction
whether in pursuance of any procedure for discovering documents or
otherwise subject to prior notice to the Servicer;
(d) pursuant to any law or regulation or requirement of any governmental
agency in accordance with which that party is required or accustomed
to act subject to prior notice to the Servicer;
(e) to any governmental, banking or taxation authority or competent
jurisdiction subject to prior notice to the Servicer; or
(f) to its auditors or legal or other professional advisers,
Provided that the above restriction shall not apply to:
(i) employees or officers or agents of the parties referred to in (a)
above any part of whose functions are or may be in any way related to
this Agreement;
(ii) information already known to a recipient otherwise than in breach of
this Clause;
(iii) information also received from another source on terms not requiring
it to be kept confidential; and
(iv) information which is or becomes publicly available otherwise than in
breach of this Clause.
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15. NOTICES AND COUNTERPARTS
15.1 Each communication to be made hereunder shall (except expressly permitted
otherwise) be made in writing but, unless otherwise stated, may be made by
facsimile or letter.
15.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has by
fifteen days' written notice to the other specified another address) be
made or delivered to that other person at the address identified with its
signature below and shall be deemed to have been made or delivered (in the
case of any communication made by facsimile) when despatched or (in the
case of any communication made by letter) when left at that address. Any
communication sent by facsimile shall be promptly confirmed by letter but
the non-delivery or non-receipt of any such letter shall not affect the
validity of the original facsimile communication.
15.3 Each communication and document made or delivered pursuant to this
Agreement shall be in English.
15.4 This Agreement may be executed in one or more counterparts.
16. VARIATION
No variation of this Agreement (including this Clause 15) shall be
effective unless it is in writing and signed by (or by some person duly
authorised by) each of the parties and unless each of the Rating Agencies
has confirmed in writing that the rating of the indebtedness for borrowed
money issued or sold by the Issuer will not be downgraded, withdrawn or
suspended as a result of such variation.
17. ASSIGNMENT
The Servicer may not assign its rights or transfer its obligations under
this Agreement.
18. PARTIAL INVALIDITY
Without prejudice to any other provision hereof, if one or more provisions
hereof is or becomes invalid, illegal or unenforceable in any respect in
any jurisdiction or with respect to any party such invalidity, illegality
or unenforceability in such jurisdiction or with respect to such party or
parties shall not, to the fullest extent permitted by applicable law,
render invalid, illegal or unenforceable such provision or provisions in
any other jurisdiction or with respect to any other party or parties
hereto. Such invalid, illegal or unenforceable provision shall be replaced
by the parties with a provision which comes as close as reasonably possible
to the commercial intentions of the invalid, illegal or unenforceable
provision.
19. NO LIABILITY AND NO PETITION
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19.1 No recourse under any obligation, covenant, or agreement of the Purchaser
contained in this Agreement shall be had against any shareholder, officer
or director of the Purchaser as such, by the enforcement of any assessment
or by any proceeding, by virtue of any statute or otherwise; it being
expressly agreed and understood that this Agreement is a corporate
obligation of the Purchaser and no personal liability shall attach to or be
incurred by the shareholders, officers, agents or directors of the
Purchaser as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of such Purchaser contained in this
Agreement, or implied therefrom, and that any and all personal liability
for breaches by the Purchaser of any of such obligations, covenants or
agreements, either at law or by statute or constitution, of every such
shareholder, officer, agent or director is hereby expressly waived by the
Servicer as a condition of and consideration for the execution of this
Agreement.
19.2 The Servicer hereby undertakes to the Purchaser that, until one year and
one day has elapsed after the payment of all sums outstanding and owing
under the latest maturing note under the CP Programme, it will not petition
or commence proceedings for the administration or winding up (nor join any
person in a petition or proceedings for the administration or winding up)
of the Purchaser nor will it enforce any judgement against the Purchaser if
to do so would cause the Purchaser's financial situation to become such as
to make it liable to insolvency proceedings. The Servicer acknowledges that
its recourse against the Purchaser in respect of any matter provided in
this Agreement shall be limited at any time to the extent of the aggregate
of (a) the unpaid amount of any Purchase Price Advance payable under the
Receivables Purchase Agreement, and (b) the Deferred Purchase Price due,
owing or payable to it thereunder at that time (but only if and to the
extent that there are funds credited to the Operating Account which the
Accounts Administrator is entitled in accordance with the terms of the
Accounts Administration Agreement).
20. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
law of [________], and insofar as is necessary in relation to the powers
and authority granted to the Servicer pursuant to Clause to sue Debtors in
the courts of any jurisdiction, by the law of such jurisdiction.
21. JURISDICTION
Any dispute in connection with this Agreement shall be subject to the
jurisdiction of the courts of Brussels.
Signed in two originals the day and year first before written.
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SIGNATURES
TULIP ASSET PURCHASE COMPANY B.V.
By:
Address:
Fax:
Attention:
[LEVI STRAUSS __________________]
By:
Address:
Fax:
Attention:
LEVI STRAUSS & Co
By:
Address:
Fax:
Attention:
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THE FIRST SCHEDULE
[FORM OF MONTHLY REPORT]
See overleaf
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THE SECOND SCHEDULE
THE COLLECTION ACCOUNTS
ACCOUNT N(DEGREES). ACCOUNT NAME NAME AND ADDRESS OF
COLLECTION ACCOUNT BANK
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THE THIRD SCHEDULE
OPERATING ACCOUNTS
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EXHIBIT 10.18
SUPPLY AGREEMENT
----------------
THIS IS A SUPPLY AGREEMENT dated as of the 30th day of March, 1992
(the "Agreement"), between CONE MILLS CORPORATION, a North Carolina corporation
("Cone"), and LEVI STRAUSS & CO., a Delaware corporation ("LS&CO.").
WHEREAS, Cone is a major supplier of LS&CO. and LS&CO. is Cone's
largest customer; and
WHEREAS, Cone and LS&CO. have maintained, for more than 75 years, a
unique, cooperative supplier/customer relationship for the development of Cone
XXX denim fabrics used in the LS&CO. 501(R) family of jeans, a relationship
premised in part on management compatibility and continuity; and
WHEREAS, Cone and LS&CO. desire to solidify their relationship and
assure its continuity;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is acknowledged, it is agreed:
1. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the definitions indicated:
1.1 "Change in Control" means the occurrence of any of the following
events:
(a) the individuals who at the date of this Agreement comprise
the members of the Cone Board of Directors (together with
any new director whose election by the Board of Directors or
whose nomination for election by the company's shareholders
was approved by a majority of the directors then still in
office who were directors at the date of this Agreement or
who were nominated by them) shall cease for any reason to
comprise at least a majority of the members of the Board of
Directors;
(b) Cone consolidates with or merges into any other corporation
or any corporation consolidates with or merges into Cone, or
Cone becomes a subsidiary of another corporation, if, after
giving effect to the transaction, the holders of Cone's
voting securities immediately before the
<PAGE>
effective date of the transaction hold less than 50% of the
voting securities of the surviving or parent corporation; or
(c) any person (other than any person who is a director or
stockholder of Cone at the date of this Agreement, Cone, a
subsidiary of Cone or a Cone employee benefit plan,
including any trustee of such a plan acting as trustee)
shall purchase or otherwise acquire or hold beneficial
ownership of securities of Cone and, as a result of those
purchases and acquisitions, directly or indirectly
beneficially owns in the aggregate securities of Cone
representing 50% or more of Cone's then outstanding voting
securities (it being understood that the terms "person" and
"beneficial ownership" used in this paragraph 1.1(c) have
the meanings given them in Sections 13 (d) and 14 and Rule
13d 3, respectively, of and under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")).
1.2 "Contract Price" means, at any point in time, the average market
price per yard then being paid by LS&CO. in the ordinary course
of business (excluding special arrangements not in effect on the
date of this Agreement and not generally prevailing in the
market) for indigo denim of comparable weight and color purchased
for all jeans applications excluding the 501(R) jeans family,
plus a percentage premium which has been paid for 501(R) jeans
fabric over and above the average price for the aforementioned
fabrics for the immediately preceding sixteen (16) calendar
quarters.
1.3 "Order Documentation" means the purchase orders, confirmations of
sales, invoices and other documents currently used by Cone and
LS&CO. in documenting orders by, and shipments to, LS&CO., of XXX
Denim, the forms of which are attached as Exhibit A to this
--------
Agreement.
1.4 "White Oak Plant" means Cone's facility known as the White Oak
Plant located on Fairview Street in Greensboro, North Carolina,
including the real property, machinery and equipment and
furnishings and fixtures and service functions located at such
facility.
1.5 "Vendor Certification Requirements" means the quality, service
and fabric construction qualifications established in writing by
LS&CO. for its vendors from time to time.
2
<PAGE>
1.6 "XXX Denim" means any and all denim fabric of the construction
and physical characteristics which has been approved by LS&CO. in
its Vendor Certification Program for use, or is in fact used, in
the 501(R) family of jeans.
2. Requirements Agreement
----------------------
2.1 Generally: LS&CO. agrees to purchase from Cone, and Cone agrees
to manufacture and sell to LS&CO., all XXX Denim that may be
required by LS&CO. in its business. Cone shall not sell, or
otherwise make XXX Denim available, to any person other than
LS&CO., and LS&CO. shall not purchase, or otherwise obtain XXX
Denim from, any other source than Cone, during the term of the
obligations created by this Section 2; that is, this is an
"exclusive" agreement on the part of both LS&CO. and Cone.
2.2 Ordering and Pricing: Cone shall deliver XXX Denim to LS&CO. in
accordance with specific orders placed by LS&CO. Cone and LS&CO.
shall document those orders and deliveries by use of, and their
terms (including, without limitation, those relating to
warranties, remedies and shipment terms and except as otherwise
set forth in this Agreement) shall be governed by, the Order
Documentation. Cone and LS&CO. shall determine the price for a
specific delivery at or before the time LS&CO. places the order
for that delivery, it being understood that Cone and LS&CO.
intend to be bound in respect of and to conclude these specific
sales even though the price for specific sales is not settled as
of the date of this Agreement.
2.3 Term: The obligations of Cone and LS&CO. under this Section 2
shall continue until the termination of those obligations in
accordance with Section 3 or 5 of this Agreement. A Change in
Control shall not of itself impair, limit or affect or limit
those obligations, in any respect, unless and until LS&CO.
provides to Cone the written notice contemplated by Section 3.2
of this Agreement.
3. Change in Control
-----------------
3.1 Generally: For a period of one year from and after a Change in
Control, LS&CO. may elect to terminate the requirements
obligation established by Section 2 of this Agreement and
implement an alternative, "wind-down" arrangement on the terms
and conditions set forth in this Section 3, it being understood
that
3
<PAGE>
this one-year period may, at LS&CO.'s option, be treated as not
"running" until LS&CO. receives notice from Cone of a Change in
Control as contemplated by Section 11 of this Agreement.
3.2 Commencement and Term: The termination of Section 2 and the
alternative arrangement established by this Section 3 shall
become effective on the date Cone receives a written notice to
that effect from LS&CO., and shall, unless terminated in
accordance with Section 5 of this Agreement, remain in effect for
a period of three years after that notice is received by Cone.
3.3 Quantity: Cone shall be obligated to manufacture and sell to
LS&CO. up to thirty million (30,000,000) yards of XXX Denim
during each calendar quarter during the effective period
described in Section 3.2, it being understood that this amount
shall be prorated for any partial quarters. LS&CO. shall be
obligated to purchase from Cone only those amounts of XXX Denim
it orders, but shall have no "requirements" or minimum purchase
obligation.
3.4 Ordering: Cone shall deliver XXX Denim to LS&CO. in accordance
with specific orders placed by LS&CO. Cone and LS&CO. shall
document those orders and deliveries by use of, and their terms
including, without limitation, those relating to warranties,
remedies and shipment terms and except as otherwise set forth in
this Agreement) shall be governed by, the Order Documentation.
3.5 Price: The price per yard for XXX Denim sold under this Section
3 will be the Contract Price as of the order date, calculated and
effective. in accordance with the normal practice of the parties
as it exists on the date of this Agreement. In addition, LS&CO.
shall pay Cone an amount equal to 1.5% of the total purchase
price of purchases by LS&CO. of XXX Denim for any calendar
quarter in which LS&CO. purchases less than 15 million
(15,000,000) yards of XXX Denim.
3.6 Exclusivity: During the effective period described in Section
3.2 of this Agreement, and so long as LS&CO. purchases ten
million (10,000,000) yards of XXX Denim per calendar quarter
under this Section 3, Cone will sell XXX Denim exclusively to
LS&CO.
3.7 Later Change in Control: A decision by LS&CO. not to elect to
implement the alternative arrangement contemplated by this
Section 3 within one year after a Change in Control shall not
limit
4
<PAGE>
or otherwise affect its ability to so elect-following a later
Change in Control.
4. Lease Option
------------
4.1 Generally: Subject to the provisions of Section 4.4 and Section
5 of this Agreement, in the event that Cone fails to supply XXX
Denim to LS&CO. in accordance with the provisions of Section 3 of
this Agreement, LS&CO. may, at its option, lease, obtain
possession of, operate and retain the output of the White Oak
Plant, on the terms and conditions contained in this Section 4
and in a lease agreement substantially in the form attached to
this Agreement as Exhibit B. The term of the lease shall commence
--------
75 days after LS&CO. provides to Cone the option exercise notice
contemplated by Section 4.2 of this Agreement, and shall expire
on the fourth anniversary of the Change in Control giving rise to
the establishment of the arrangement contemplated by Section 3 of
this Agreement (the "Applicable Change in Control").
4.2 Term and Exercise of Option: The term of the option shall begin
on the date of delivery by LS&CO. to Cone of the notice
contemplated by Section 3.2 of this Agreement and shall expire
upon the earlier of: (a) three years after that notice is
received by Cone or (b) on the fourth anniversary of the
Applicable Change in Control. If and after the option becomes
exercisable as contemplated by Section 4.1 of this Agreement,
LS&CO. may exercise it by delivering to Cone a written notice to
that effect. Cone and LS&CO. agree to execute the lease agreement
upon exercise by LS&CO. of its option.
4.3 Cooperation: Cone shall cooperate with LS&CO. and take such
further actions as may be reasonably appropriate in order to
enable LS&CO. to obtain XXX Denim through exercising its option,
including, without limitation, maintaining the White Oak Plant in
good repair and proper order, facilitating transition
relationships with Cone's suppliers and other customers, and,
after the Applicable Change in Control, permitting LS&CO. and its
contractors, agents, employees, and permitted assigns to enter on
and to inspect the property, and to conduct such engineering,
mechanical, environmental, and other investigations as they may
reasonably desire, all to be performed at LS&CO.'s expense. Cone
and LS&CO. shall annually review changes and proposed changes by
Cone in the manufacturing capabilities of the White Oak Plant
and, should Cone, in accordance with its management and financial
policies and practices, shift XXX Denim manufacturing
5
<PAGE>
capacities such that LS&CO. could not obtain XXX Denim by
operating the White Oak Plant as contemplated by Section 4.1 of
this Agreement, LS&CO. and Cone shall negotiate in good faith to
adjust, in an equitable manner, the provisions of this Section 4
in order to provide LS&CO. with the ability to obtain XXX Denim
by operating and retaining the output of such other facilities.
Cone represents and warrants to LS&CO. that it is seized of the
White Oak Plant in fee simple.
4.4 Effectiveness: Notwithstanding its provisions or any other
provisions of this Agreement, this Section 4 shall not become
effective until Cone obtains an appropriate waiver under, or a
termination or appropriate amendment of, its Credit Agreement,
dated as of April 17, 1989, among Cone, the lenders named therein
and Morgan Guaranty Trust Company of New York, as Agent, Cone
having advised LS&CO. that the Credit Agreement may restrict its
ability to enter into the arrangement contemplated by this
Section 4. Cone has further advised LS&CO. that it intends to and
believes it will be able to obtain such a waiver, amendment or
termination by December 31, 1992. Cone shall regularly inform
LS&CO. about its efforts to obtain the consent, amendment or
termination. Cone agrees to use its best efforts to obtain the
consent, and further agrees that, subject to the next sentence of
this Section 4.4, it shall not, during the term of this
Agreement, enter into credit or other agreements that prohibit or
limit its ability to enter into and perform the arrangement
contemplated by this Section 4. Cone and LS&CO. further agree,
however, that: (a) this Section 4.4 shall not prevent Cone from
granting mortgages, deeds of trust or security interests in its
properties and (b) that the provisions of this Section 4 shall be
subject to and subordinate to any such mortgages, deeds of trust
and security interests but that the effectiveness of any such
subordination shall be subject to receipt by LS&CO. of
appropriate non-disturbance agreements or assurances from the
beneficiary of those security instruments, all as contemplated by
Section 19 of the form of lease agreement attached to this
Agreement as Exhibit B.
---------
5. Termination
-----------
5.1 Generally: This Agreement shall terminate upon the earlier of:
(a) March 30, 1997, if LS&CO. does not deliver to Cone the notice
contemplated by Section 3.2 of this Agreement, and as that
expiration date may be extended as described in this Section 5.1;
(b) if LS&CO. delivers to Cone the notice contemplated by Section
3.2 of this Agreement, three years after the delivery of that
6
<PAGE>
notice; or (c) its termination in accordance with Sections 5.2 or
5.3 of this Agreement. Unless this Agreement has or is to be
terminated as described in clauses (b) and (c) of the preceding
sentence, the term (that is, the expiration date) of this
Agreement shall, upon March 30 of each year, be automatically
extended by one year, unless Cone or LS&CO. provides written
notice to the other, during the month of February of that year,
of its desire not to extend the term (for example, if such notice
of non-extension is not given in February 1993, the term of this
Agreement shall automatically be extended to March 30, 1998). If
notice of non-extension is given, the term of the Agreement shall
expire on the then effective expiration date.
5.2 Certain Events: Either party, at its option and without
prejudice to any other remedy to which it may be entitled either
at law or in equity, may immediately terminate this Agreement by
written notice to the other party on the occurrence of any of the
following events: (i) the other party shall file a petition in
bankruptcy or shall be adjudged a bankrupt; (ii) the other party
shall file a petition in reorganization under the provisions of
Federal or State bankruptcy laws; (iii) the other party shall
become or be declared insolvent; (iv) a receiver of all or
substantially all of the property of the other party shall be
appointed and not removed within thirty days; (v) the other party
shall make a general assignment for the benefit of its creditors;
or (vi) there shall be a material breach by the other party of
any provision of this Agreement or a substantial failure by the
other party to perform one or more of its obligations under this
Agreement, which shall not have been cured within fifteen (15)
days after written notice specifying the nature of such breach or
failure.
5.3 Termination by LS&CO.: LS&CO. may, upon thirty (30) days written
notice to Cone, terminate its obligations under Section 2 for any
reason or for no reason, but that act shall have the effect of
terminating the entire Agreement including, without limitation,
its Sections 3 and 4.
5.4 Effect of Termination: It is understood and agreed that, with
respect to any termination of this Agreement, Cone and LS&CO.
shall be bound to perform their obligations in respect of orders
for XXX Denim outstanding as of the date of notice of termination
or, in the case of termination by passage of time in accordance
with clause (a) of Section 5.1, the date of termination.
7
<PAGE>
6. Not Partners. This Agreement does not constitute either party as
------------
an agent, partner, joint venturer or legal representative of the other for any
purpose whatsoever, it being understood between the parties that each is to act
as an independent party and is in no way authorized to make any agreement,
contract, or representation on behalf of the other, or to create any obligation,
express or implied, on behalf of the other.
7. Notices and Correspondence. All notices which are required or
--------------------------
permitted to be given pursuant to the terms of this Agreement must be in writing
and will be deemed to have been duly given and made only if: served by personal
delivery to the party for whom it is intended; delivered to an air courier
guaranteeing overnight delivery; or deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail, bearing
the address of such party as shown below. All such notices shall be deemed to
have been duly given as follows: at the time delivered by hand, if personally
delivered; three (3) business days after being deposited in the mail, postage
prepaid, if mailed; and on the next business day if timely delivered to an air
courier guaranteeing overnight delivery. The addresses for the purpose of this
paragraph 7 shall be those set forth below. These addresses may be changed by
giving written notice of such change in the manner provided in this Section 7
for giving notice.
To Cone:
Cone Mills Corporation
1201 Maple Street
Greensboro, North Carolina 27405
Attn: President
with copy to:
Cone Mills Corporation
1201 Maple Street
Greensboro, North Carolina 27405
Attn: General Counsel
To LS&CO.:
Levi Strauss & Co.
Levi's Plaza
1155 Battery Street/LS-7
San Francisco,. California 94111
Attn: President
8
<PAGE>
with copy to:
Levi Strauss & Co.
Levi's Plaza
1155 Battery Street/LS-7
San Francisco, California 94111
Attn: General Counsel
8. Assignment; Binding Effect. Neither Cone nor LS&CO. may assign
--------------------------
its rights or delegate its duties without the written consent of the other
party, and any attempted assignment shall be void and unenforceable. This
Agreement shall be binding upon the successors (including, without limitation,
successors by merger, consolidation, sale of assets or otherwise by operation of
law) and permitted assigns of LS&CO. and Cone.
9. Entire Agreement: Amendment. This Agreement, together with the
---------------------------
Order Documentation and the schedule of LS&CO.'s requirements in prior years for
XXX Denim previously prepared by the parties, contains all of the terms and
conditions agreed upon by Cone and LS&CO. relating to their subject matter, and
represents the final, complete and exclusive statement of the parties with
respect to that subject matter, and supersedes all prior agreements,
correspondence and communications (oral or written) with respect thereto between
the parties. If there is any inconsistency between this Agreement and any of the
order Documentation, this Agreement shall control. Neither this Agreement nor
the Order Documentation may be amended or modified except by an instrument in
writing signed by both parties.
10. Severability. The provisions of this Agreement and the Order
------------
Documentation shall be applied and interpreted in a manner consistent with each
other so as to carry out the purposes and intent of the parties, but if for any
reason any of the provisions is unenforceable or invalid, such provision shall
be deemed severed from this Agreement or the Order Documentation, as the case
may be, and the remaining provisions shall be carried out with the same force
and effect as if the severed provision provisions had not been a part of this
Agreement or the Order Documentation, as the case may be.
11. Information About Control. Cone shall promptly provide written
-------------------------
notice to LS&CO. of the occurrence of any Change in Control and, in all events,
shall promptly provide LS&CO. with copies of: (i) all proxy statements,
registration statements, annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports of Form 8-K and other documents it files with the
Securities and Exchange Commission and (ii) all statements on Schedules 13D, 13G
or 14D-1 under the Exchange Act, or notices under the Hart-Scott-Rodino
Antitrust Improvements Act of 1974, or acquiring person statements under The
North Carolina Control Share Acquisition Act, or
9
<PAGE>
notices or statements called for by a "shareholder rights" or similar plan, it
receives from a third party.
12. Further Assurances. Cone and LS&CO. agree to sign such other
------------------
documents (including, without limitation, the signing by Cone, after the
Applicable Change in Control and upon request of LS&CO., a memorandum of option,
for recording with the appropriate local real estate recorder), and to take such
other actions as may be appropriate in order to effect the transactions and
implement the relationships contemplated by this Agreement. For example, in view
of the importance to their relationship of management compatibility and
continuity, LS&CO. shall notify Cone of any changes in control of LS&CO., it
being understood that a change in control of LS&CO. does not affect in any way
either party's rights or obligations under this Agreement.
13. Remedial Matters. It is expressly understood and agreed that the
----------------
provisions of this Agreement (including, without limitation, its Section 4) are
in addition to, and not in place or exclusive of, any rights and remedies Cone
or LS&CO. may have under applicable law, including those under the Uniform
Commercial Code or the common law. It is further understood and agreed that
damages would not adequately compensate LS&CO. were Cone to breach its
obligations to supply XXX Denim to LS&CO. under this Agreement, that XXX Denim
and the relationship of LS&CO. and Cone is unique and, therefore, that LS&CO.
shall be entitled to a decree of specific performance should Cone breach those
obligations.
14. Force Majeure. Cone shall not be liable for any delay in its
-------------
performance under this Agreement due to causes beyond its control, including,
without limitation, acts of God, riot, war, embargoes, acts of civil or military
authorities, fire, flood, inclement weather, accidents, quarantine restrictions,
strikes, delays in transportation, shortages of transportation, shortages of
material or labor or any other cause beyond its control.
15. Governing Law. The validity, interpretation, and performance of
-------------
this Agreement shall in all respects be governed by and construed according to
the laws of the state of California including, without limitation, Sections
2305(1)(b)(in respect of Section 2.2 of this Agreement) and 2306 (in respect of
Sections 2 and 3 of this Agreement) of, and the other provisions of, the
California Uniform Commercial Code.
16. Dispute Resolution. Cone and LS&CO. agree that fast and
------------------
equitable Settlement of disputes arising under or in connection with this
Agreement is to their mutual advantage and is in the best interests of
maintaining the business relationships underlying this Agreement. To that end,
Cone and LS&CO. agree to use their best efforts (including, without limitation,
the participation of senior management) to resolve all differences of opinion
and to settle all disputes through cooperation and consultation.
10
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17. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date and year first above
written.
CONE MILLS CORPORATION
By: ________________________
Title: _________________
LEVI STRAUSS & CO.
By: _________________________
Title:___________________
Exhibits:
Exhibit A Order Documentation
Exhibit B Form of Lease Agreement
11
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FIRST AMENDMENT TO SUPPLY AGREEMENT
-----------------------------------
THIS IS A FIRST AMENDMENT TO SUPPLY AGREEMENT dated as of April 15,
1992 (the "First Amendment"), between CONE MILLS CORPORATION, a North Carolina
corporation ("Cone"), and LEVI STRAUSS & CO., a Delaware corporation ("LS&CO.").
B A C K G R O U N D
-------------------
Cone and LS&CO. are parties to a Supply Agreement, dated as of March
30, 1992 (the "Agreement"). They wish to amend the Agreement in the manner
described in this First Amendment. This First Amendment is intended to be and is
an "instrument in writing signed by both parties" as contemplated by Section 9
(captioned "Entire Agreement; Amendment") of the Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Amendment to Section 1 3
------------------------
Section 1.3 of the Agreement is amended in its entirety as follows:
"Order Documentation" means the purchase orders, confirmations of
sales, invoices, releases, electronic data interchange protocols and
communications and other documents and communications customarily used
by Cone and LS&CO. in documenting orders by, and shipments to, LS&CO.,
of XXX Denim.
2. Amendment to Section 9
----------------------
Section 9 of the Agreement is amending by amending its last sentence
in its entirety as follows:
This Agreement may not be amended or modified except by an instrument
in writing signed by both parties. The Order Documentation may not be
amended or modified except as approved by both parties, it being
understood that Cone and LS&CO. have and continue to work
cooperatively in adapting new technologies and practices in order to
improve the efficiency of ordering and shipment of XXX Denim.
12
<PAGE>
3. Conforming Changes
------------------
The signature page of the Agreement is amended by deleting the phrase
"Exhibit A Order Documentation" appearing below the signatures, it being
understood that the Agreement now has only one exhibit, the form of lease
agreement identified as "Exhibit B."
4. No Other Modifications
----------------------
Except as expressly described in this First Amendment, Cone and LS&CO.
do not intend to and are not modifying any other provisions of the Agreement,
and the Agreement, as amended by this First Amendment, remains in full force and
effect
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed by their duly authorized officers as of the date and year first above
written.
CONE MILLS CORPORATION
By: ________________________
Title: _________________
LEVI STRAUSS & CO.
By: ________________________
Title: _________________
13
<PAGE>
EXHIBIT 10.19
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS ASSOCIATES, INC.
As Amended and Restated
Effective November 27, 1989
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES................................................ 1
1.1 Introduction................................................................................... 1
1.2 Persons to Whom Plan Applies................................................................... 1
SECTION 2 DEFINITIONS.................................................................................. 3
2.1 "Act".......................................................................................... 3
2.2 "Actuary"...................................................................................... 3
2.3 "Administrative Committee"..................................................................... 3
2.4 "Affiliated Company"........................................................................... 3
2.5 "Alternate Payee".............................................................................. 3
2.6 "Annuity Contract"............................................................................. 3
2.7 "Annuity Starting Date"........................................................................ 3
2.8 "Beneficiary".................................................................................. 4
2.9 "Benefit Service".............................................................................. 4
2.10 "Board of Directors"........................................................................... 4
2.11 "Break in Service"............................................................................. 4
2.12 "Casual Employee".............................................................................. 5
2.13 "Code"......................................................................................... 5
2.14 "Committee".................................................................................... 5
2.15 "Common-Law Spouse"............................................................................ 5
2.16 "Company"...................................................................................... 5
2.17 "Compensation"................................................................................. 5
2.18 "Deferred Retirement Benefit".................................................................. 7
2.19 "Deferred Retirement Date" or "Deferred Retirement"............................................ 7
2.20 "Disability Retirement Service"................................................................ 7
2.21 "Domestic Partner"............................................................................. 7
2.22 "Domestic Relations Order"..................................................................... 7
2.23 "Early Retirement Benefit"..................................................................... 7
2.24 "Early Retirement Date" or "Early Retirement".................................................. 7
2.25 "Effective Date"............................................................................... 7
2.26 "Employee"..................................................................................... 7
2.27 "Equivalent Actuarial Value"................................................................... 9
2.28 "Final Average Compensation"................................................................... 9
2.29 "High-3 Year Average Compensation"............................................................. 9
2.30 "Highly Compensated Employee".................................................................. 11
2.31 "Highly Compensated Former Employee"........................................................... 12
2.32 "Home Office Salary Grade"..................................................................... 13
2.33 "Hour of Service".............................................................................. 13
2.34 "Investment Committee"......................................................................... 13
2.35 "Investment Manager"........................................................................... 13
2.36 "IRS".......................................................................................... 13
2.37 "Labor Department"............................................................................. 13
</TABLE>
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<TABLE>
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2.38 "Legally Married"............................................................................... 13
2.39 "LS&CO."........................................................................................ 13
2.40 "Member"........................................................................................ 13
2.41 "Membership Date"............................................................................... 13
2.42 "Misconduct".................................................................................... 13
2.43 "Normal Retirement Age"......................................................................... 14
2.44 "Normal Retirement Benefit"..................................................................... 14
2.45 "Normal Retirement Date" or "Normal Retirement"................................................. 14
2.46 "Participating Company"......................................................................... 14
2.47 "PBGC".......................................................................................... 14
2.48 "Plan".......................................................................................... 14
2.49 "Plan Year"..................................................................................... 14
2.50 "Qualified Domestic Relations Order"............................................................ 14
2.51 "Qualified Joint and Survivor Annuity".......................................................... 14
2.52 "Regulations"................................................................................... 14
2.53 "Rehire Anniversary Year"....................................................................... 15
2.54 "Required Beginning Date"....................................................................... 15
2.55 "Retiree Coordinator"........................................................................... 15
2.56 "Retirement Benefit."........................................................................... 15
2.57 "Retirement Date"............................................................................... 15
2.58 "Service"....................................................................................... 15
2.59 "Social Security Benefit"....................................................................... 17
2.60 "Social Security Retirement Age"................................................................ 17
2.61 "Straight Life Annuity"......................................................................... 17
2.62 "Surviving Spouse".............................................................................. 18
2.63 "Survivor Annuity".............................................................................. 18
2.64 "Terminated Plan"............................................................................... 18
2.65 "Totally and Permanently Disabled" or "Total and Permanent Disability".......................... 18
2.66 "Trust Agreement"............................................................................... 18
2.67 "Trust Fund".................................................................................... 18
2.68 "Trustee"....................................................................................... 18
2.69 "Unmarried Partner"............................................................................. 18
2.70 "Vested Retirement Benefit"..................................................................... 19
2.71 "Vested Retirement Benefit Payment Date"........................................................ 19
2.72 "Year of Service"............................................................................... 19
SECTION 3 MEMBERSHIP AND TRANSFERS...................................................................... 20
3.1 Commencement of Membership...................................................................... 20
3.2 Termination of Membership....................................................................... 20
3.3 Rehired Members................................................................................. 20
3.4 Rehired Employees............................................................................... 21
SECTION 4 RETIREMENT DATE............................................................................... 22
4.1 Normal Retirement Date.......................................................................... 22
4.2 Early Retirement Date........................................................................... 22
4.3 Deferred Retirement Date........................................................................ 22
4.4 Postponement of Retirement Benefits............................................................. 22
</TABLE>
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<TABLE>
<S> <C>
SECTION 5 RETIREMENT BENEFIT............................................................................ 23
5.1 Basic Retirement Benefit........................................................................ 23
5.2 Coordination of Retirement Benefits............................................................. 23
5.3 Reduction of Retirement Benefit................................................................. 23
5.4 Retirement Benefit of Certain Reemployed Members................................................ 23
SECTION 6 NORMAL RETIREMENT BENEFIT..................................................................... 24
6.1 Payment of Benefits............................................................................. 24
6.2 Termination of Employment after Normal Retirement Age........................................... 24
SECTION 7 EARLY RETIREMENT BENEFIT...................................................................... 25
7.1 Payment of Early Retirement Benefit............................................................. 25
7.2 Postponement of Early Retirement Benefit........................................................ 25
SECTION 8 TERMINATION OF SERVICE BEFORE RETIREMENT...................................................... 27
8.1 Payment of Vested-Retirement Benefits........................................................... 27
8.2 Early Payment of Vested Retirement Benefits..................................................... 27
8.3 Death Before the Payment of Vested Retirement Benefits.......................................... 27
8.4 Limitation On Vested Retirement Benefit Eligibility............................................. 28
SECTION 9 DISABILITY BEFORE RETIREMENT.................................................................. 29
9.1 Eligibility for Disability Service.............................................................. 29
9.2 Forfeiture of Disability Service................................................................ 29
SECTION 10 DEATH BENEFITS............................................................................... 31
10.1 Survivor Annuity................................................................................ 31
10.2 Amount of Survivor Annuity...................................................................... 31
10.3 Entitlement to Death Benefit.................................................................... 32
SECTION 11 METHOD OF PAYMENT............................................................................ 33
11.1 Normal Form of Benefit for Married Members...................................................... 33
11.2 Normal Form of Benefit for Single Members....................................................... 33
11.3 Optional Forms Of Benefit....................................................................... 33
11.4 Limitation on Optional Forms of Benefit......................................................... 34
11.5 Mandatory Cash Out of Benefits Less than $3,500................................................. 34
11.6 Reduction of Benefits........................................................................... 35
SECTION 12 BENEFIT ELECTIONS............................................................................ 36
12.1 Election of Optional Forms of Benefits.......................................................... 36
12.2 Written Explanation and Election Form........................................................... 36
12.3 Applicable Election Period and Form of Election................................................. 37
12.4 Special Circumstances Governing Elections....................................................... 38
SECTION 13 PAYMENT AND SUSPENSION OF BENEFITS........................................................... 40
13.1 Payment of Benefits............................................................................. 40
13.2 Suspension of Benefits.......................................................................... 40
</TABLE>
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SECTION 14 MAXIMUM AMOUNT OF RETIREMENT BENEFIT......................................................... 43
14.1 Scope of Limitations on Benefits................................................................ 43
14.2 Basic Limitations on Benefits................................................................... 43
14.3 Adjustments to Limitations...................................................................... 43
14.4 Minimum Benefit................................................................................. 44
14.5 TRA 86 Protected Benefits....................................................................... 44
14.6 Multiple Plans.................................................................................. 44
14.7 Special Limitations on Benefits................................................................. 45
SECTION 15 BENEFICIARIES................................................................................ 46
SECTION 16 FUNDING AND CONTRIBUTIONS.................................................................... 47
16.1 Contributions................................................................................... 47
16.2 Actuarial Assumptions........................................................................... 47
16.3 Trust Fund...................................................................................... 47
16.4 Expenses of the Plan............................................................................ 47
SECTION 17 ADMINISTRATION OF THE PLAN................................................................... 49
17.1 Administrative Committee........................................................................ 49
17.2 Control and Management of Plan Assets........................................................... 49
17.3 Trustees and Investment Managers................................................................ 49
17.4 Committee Membership............................................................................ 50
17.5 Reports to Board of Directors................................................................... 50
17.6 Employment of Advisers.......................................................................... 50
17.7 Limitations on Committee Actions................................................................ 51
17.8 Committee Meetings.............................................................................. 51
17.9 Accounting and Disbursement of Plan Assets...................................................... 51
SECTION 18 CLAIMS AND REVIEW PROCEDURES................................................................. 52
18.1 Applications for Benefits....................................................................... 52
18.2 Denial of Applications.......................................................................... 52
18.3 Requests for Review............................................................................. 52
18.4 Decisions on Review............................................................................. 52
18.5 Exhaustion of Administrative Remedies........................................................... 53
SECTION 19 TERMINATION OF EMPLOYER PARTICIPATION........................................................ 54
19.1 Termination by Participating Company............................................................ 54
19.2 Effect of Termination........................................................................... 54
19.3 IRS Termination Procedure....................................................................... 54
19.4 PBGC Termination Procedure...................................................................... 55
19.5 Termination of the Plan......................................................................... 55
SECTION 20 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST....................................... 56
20.1 Right to Amend.................................................................................. 56
20.2 Plan Merger or Consolidation.................................................................... 56
20.3 Termination of the Plan......................................................................... 56
</TABLE>
iv
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20.4 Partial Termination of the Plan................................................................................... 56
20.5 Manner of Distribution............................................................................................ 57
SECTION 21 INALIENABILITY OF BENEFITS..................................................................................... 58
21.1 No Assignment Permitted........................................................................................... 58
21.2 Return of Contributions........................................................................................... 58
21.3 Qualified Domestic Relations Orders............................................................................... 58
SECTION 22 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF BATTERY STREET ENTERPRISES, INC. OR ANY OF ITS SUBSIDIARIES........ 61
SECTION 23 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF OBERMAN MANUFACTURING COMPANY, TOP-NOTCH MANUFACTURING COMPANY,
INCORPORATED AND MILLER BELTS LTD., INC................................................................................... 62
SECTION 24 SPECIAL SERVICE AND BENEFIT PROVISIONS FOR CERTAIN FORMER EMPLOYEES OF ASIAN PACIFIC INDUSTRIES, INC........... 63
SECTION 25 ACTUARIAL EQUIVALENCE FACTORS.................................................................................. 64
SECTION 26 TOP HEAVY BENEFITS............................................................................................. 66
SECTION 27 GENERAL LIMITATIONS AND PROVISIONS............................................................................. 69
27.1 No Employment Right.............................................................................................. 69
27.2 Payments from the Trust Fund..................................................................................... 69
27.3 Payments to Minors or Incompetents............................................................................... 69
27.4 Lost Members or Beneficiaries.................................................................................... 69
27.5 Personal Data to the Administrative Committee.................................................................... 69
27.6 Insurance Contracts.............................................................................................. 70
27.7 Notice to the Administrative Committee........................................................................... 70
27.8 Notices to Members and Beneficiaries............................................................................. 70
27.9 Word Usage....................................................................................................... 70
27.10 Headings......................................................................................................... 70
27.11 Governing Law.................................................................................................... 70
27.12 Heirs and Successors............................................................................................. 70
27.13 Withholding...................................................................................................... 70
</TABLE>
v
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REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS ASSOCIATES, INC.
-----------------------------
As Amended and Restated
Effective November 27, 1989
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
- --------- ---------------------------------------------
1.1 Introduction. On November 27, 1953, the Revised Home Office Pension
------------
Plan of Levi Strauss & Co. was adopted. It was amended and terminated effective
December 31, 1985, and it was renamed the Terminated Home Office Pension Plan of
Levi Strauss & Co. (the "Terminated Plan") for those in benefit pay status. This
Revised Home Office Pension Plan of Levi Strauss Associates Inc. (originally
named the Revised Home Office Pension Plan of Levi Strauss & Co.) (the "Plan")
was adopted effective December 30, 1985. Each employee who was a Member of the
Terminated Plan on December 30, 1985, and who was not receiving benefits on that
date or scheduled to receive benefits no later than January 31, 1986, from the
Terminated Plan was transferred to this Plan as of December 30, 1985. This Plan
was established to maintain retirement benefits and certain other benefits for
those who are transferred from the Terminated Plan and for others who have or
may have rights to benefits under the Terminated Plan as of December 30, 1985,
but who are not receiving benefits on that date or scheduled to receive benefits
no later than January 31, 1986, from the Terminated Plan. This Plan was also
established to provide such benefits to eligible employees ("Employees") of Levi
Strauss & Co. and other Participating Companies (collectively referred to as the
"Company"), or to the beneficiaries of Employees, and thereby to encourage
Employees to make and continue careers with the Company, as described in this
Plan document and in the Trust Agreement adopted as a part of this Plan. The
Plan was amended and restated effective November 28, 1988.
By this instrument Levi Strauss Associates Inc. amends and restates the
Plan to comply with the Tax Reform Act of 1986, as amended, and related
legislation. The provisions of this amended and restated Plan will generally be
effective November 27, 1989, except as specifically stated otherwise in this
document (the "Effective Date"). Levi Strauss Associates Inc. intends that the
Plan as so amended and restated and the Trust Fund established under the Plan,
will continue to qualify as a plan and trust which meet the requirements of
sections 401(a) and 501(a), respectively, of the Internal Revenue Code of 1986,
as amended.
1.2 Persons to Whom Plan Applies. This Plan document is not a new
----------------------------
Plan which succeeds the Plan as previously in effect, but is an amendment and
restatement of the Plan as in effect before the Effective Date. The amount,
right to and form of any benefits under the Plan, of each Member who is an
Employee on and after the Effective Date, or of persons who are claiming through
such a Member, will be determined under this Plan. The amount, right to and form
of any benefits under this Plan, of each Member who has separated from Service
with the Company before the Effective Date, or of persons who are claiming
benefits through such a Member, will be determined in accordance with the
provisions of the Plan in effect on the date of the Member's separation from
Service, except as may otherwise be expressly provided under this Plan, unless
the Member again becomes an Employee on or after the Effective Date. This
1
<PAGE>
amended and restated Plan will not reduce any Member's Retirement Benefit under
the Plan, as determined on the date immediately preceding the Effective Date,
and this Plan will be construed accordingly.
2
<PAGE>
SECTION 2 DEFINITIONS.
- --------- -----------
When used in this Plan document the following terms will have the
following meanings:
2.1 "Act" means the Employee Retirement Income Security Act of 1974, as
---
amended, and any Regulations or rulings issued under the Act.
2.2 "Actuary" means the enrolled actuary (within the meaning of the Act)
-------
engaged by the Administrative Committee.
2.3 "Administrative Committee" means the committee appointed to administer
------------------------
the Plan as described in Section 17.1.
2.4 "Affiliated Company" means:
------------------
(a) A corporation that is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes Levi
Strauss Associates Inc.;
(b) Any trade or business (whether or not incorporated) that is in
common control (as defined in section 414(c) of the Code) with Levi Strauss
Associates Inc.;
(c) An organization (whether or not incorporated) that is a member
of an affiliated service group (as defined in section 414(m) of the Code) which
includes Levi Strauss Associates Inc.;
(d) Any other entity required to be aggregated with Levi Strauss
Associates Inc. under section 414(o) of the Code; and
(e) Any other entity designated as an Affiliated Company by the
Board of Directors.
2.5 "Alternate Payee" means the spouse, former spouse, child or other
---------------
dependent of a Member who is recognized by a Qualified Domestic Relations Order
as having the right to receive all, or a portion of, the Member's Retirement
Benefit.
2.6 "Annuity Contract" means the annuity contract purchased from
----------------
Transamerica Occidental Life Insurance Company with respect to the Revised Home
Office Pension Plan upon the termination of the Terminated Plan on December 30,
1985.
2.7 "Annuity Starting Date" means the first day of the first month for
---------------------
which an amount is payable to a Member as an annuity. The Annuity Starting Date
for a Member who elects (with the consent of his or her spouse if the Member is
legally married) to receive his or her Retirement Benefit in a form other than
an annuity in accordance with Section 11.3 is the first day on which all events
(including the passing of the day on which benefit payments are scheduled to
begin) have occurred which entitle the Member to receive his or her first
benefit payment from the Plan.
3
<PAGE>
2.8 "Beneficiary" means the beneficiary or beneficiaries designated by a
-----------
Member or otherwise under Section 11.3 and Section 15 (or any other person or
persons designated as such under applicable law) to receive the amount, if any,
payable under the Plan upon the Member's death.
2.9 "Benefit Service" means the number of Years of Service and fractions
---------------
of such years before a Member's Retirement Date during which the Member was an
Employee. For this purpose, a Member will accrue a full month of Benefit Service
for every calendar month in which he or she is credited with at least 1 Hour of
Service or in which he or she otherwise has Service. Years of Service and
fractions of such years will be determined by the Administrative Committee based
on such months of Benefit Service.
Benefit Service with respect to a Member who is Totally and Permanently
Disabled, will include any additional Benefit Service credited under Section
9.1.
Benefit Service with respect to a Member who is on a military leave of
absence will include any Benefit Service required to be credited under the
Military Selective Services Act, as amended, or any other federal law of similar
import. If a Member who is on a military leave of absence becomes Totally and
Permanently Disabled, Benefit Service with respect to the Member will include
any additional Benefit Service the Member receives under Section 9.1.
Benefit Service with respect to a Member who is reemployed by the Company
as an Employee or a Casual Employee after his or her Vested Retirement Benefit
Payment Date, Early Retirement Date, Normal Retirement Date or Deferred
Retirement Date, will mean the number of Years of Service and fractions of such
years during which the Member is so reemployed, determined under Section 13.2 of
the Plan. Years of Service will be determined by the Administrative Committee
based on such months of Benefit Service. Such additional Benefit Service will be
added to the Member's Benefit Service earned before his or her Vested Retirement
Benefit Payment Date, Early Retirement Date, Normal Retirement Date, or Deferred
Retirement Date as provided in Section 5.4. A Member who retires and is
reemployed by the Company as a Retiree Coordinator will not resume membership in
the Plan or accrue additional Benefit Service under this Section 2.9 or Section
13.2.
2.10 "Board of Directors" means the Board of Directors of Levi Strauss
------------------
Associates Inc. The Board of Directors may delegate to any committee,
subcommittee or any of its members, or to any agent, its authority to perform
any act under the Plan, including without limitation those matters involving the
exercise of discretion. Any such delegation of discretion will be subject to
revocation at any time at the discretion of the Board of Directors. Any
reference to the Board of Directors in connection with such delegated authority
will be deemed a reference to the delegate or delegates.
2.11 "Break in Service" means a period of at least 12 consecutive calendar
----------------
months, beginning on the date Service ends, during which a person has not
performed 1 Hour of Service (or been treated as performing Service) under
Section 2.58, as determined by the Administrative Committee.
4
<PAGE>
2.12 "Casual Employee" means a Member who is rehired by the Company on or
---------------
after his or her Early Retirement Date or Normal Retirement Date on a temporary
basis. Any Benefit Service earned by a Member who returns to Service as a Casual
Employee will be determined under Section 2.9 and Section 13.2. Any Benefit
Service earned by the Member as a Casual Employee will be added to the Member's
Benefit Service earned before his or her Early Retirement Date or Normal
Retirement Date, as provided in Section 5.4.
2.13 "Code" means the Internal Revenue Code of 1986, as amended, and any
----
Regulations or rulings issued under the Code.
2.14 "Committee" means the Administrative Committee or Investment
---------
Committee, as applicable.
2.15 "Common-Law Spouse" means the spouse of a Member under a common-law
-----------------
marriage that is recognized under the law of the state where the Member resides.
The determination of whether a person is a Common-Law Spouse will be made by the
Administrative Committee, in its sole and absolute discretion.
2.16 "Company" means Levi Strauss Associates Inc., LS&CO. and each other
-------
Participating Company or any of them.
2.17 "Compensation" means for each Plan Year of the Plan or of the
------------
Terminated Plan all compensation reported on an employee's Form W-2 (or any
replacement form issued by the IRS) for the Plan Year which is actually paid to
the employee plus any tax deferred contributions made on behalf of an employee
to the Employee Investment Plan of Levi Strauss Associates Inc. and any amounts
contributed by an employee to a cafeteria plan maintained by the Company under
section 125 of the Code. Back pay awards will be included in "Compensation" only
for the Plan Year in which the back pay award is made and the amount to be
included will be limited to the amount attributable to that Plan Year,
regardless of mitigation of damages.
If an employee is a sales representative, account manager or account
executive, or any of the 3, for the entire Plan Year (or the portion of the Plan
Year during which he or she is a Member), his or her Compensation will not
exceed the following limits, as determined by the Committee:
(a) A sales representative's Compensation will not exceed the maximum
for the LS&CO. Home Office Salary Grade 5 salary range in effect at the end of
such Plan Year; and
(b) An account manager's Compensation will not exceed the maximum for
the LS&CO. Home Office Salary Grade 6 salary range in effect at the end of such
Plan Year; and
(c) Effective on and after November 26, 1990, an account executive's
Compensation will not exceed the maximum for the LS&CO. Home Office Salary Grade
7 salary range in effect at the end of such Plan Year. Prior to November 26,
1990, an account executive's Compensation will not exceed the maximum for the
Home Office Salary Grade 6 in effect at the end of such Plan Year.
5
<PAGE>
In the case of an Employee who is working abroad or who is working for a foreign
subsidiary of the Company, but continues to be paid from the home office of the
Company, Compensation will be the amount determined by the Administrative
Committee to be the amount which would have been paid to the employee if he or
she had been on the domestic service payroll of the Company.
The term "Compensation" will not include:
(a) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, except as provided above;
(b) Relocation expenses;
(c) Any ordinary income recognized by the employee related to the
exercise of any right granted by any stock option plan maintained by the Company
or an Affiliated Company;
(d) Payments under the Company's long-term performance plan;
(e) Any severance payments;
(f) Payments from the Company's Long Term Disability Plan;
(g) "Imputed Income;" or
(h) Perks.
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after the Effective Date, Compensation for
any Plan Year in excess of $200,000 or any successor limitation as provided for
the Plan Year in section 401(a)(17) of the Code (as adjusted as provided under
section 401(a)(17) of the Code) will be disregarded. For Plan Years beginning in
and after 1991, the $200,000 Compensation adjustment that takes effect on
January 1 of each year is effective for the Plan Year beginning in that year.
For the 1989 and 1990 Plan Years, the $200,000 Compensation adjustment that is
effective January 1 of 1989 and 1990 will be used for the Plan Year that ends in
each of such years. In determining the Compensation of an Employee, the family
aggregation rules of section 414(q)(6) of the Code will apply, except that in
applying those rules, the term "family" will include only the spouse of the
Employee and any lineal descendants of the Employee who have not reached age 19
before the close of the Plan Year.
6
<PAGE>
A Member's Compensation will be determined by the Administrative Committee
and such determination will be conclusive and binding on all persons.
2.18 "Deferred Retirement Benefit" means the deferred retirement benefit
---------------------------
payable to a Member under Section 4.3.
2.19 "Deferred Retirement Date" or "Deferred Retirement" means the date a
------------------------
Member is entitled to receive a Deferred Retirement Benefit under Section 4.3.
2.20 "Disability Retirement Service" means the Service credited to a Member
-----------------------------
who is Totally and Permanently Disabled under Section 9.1.
2.21 "Domestic Partner" means the Common-Law Spouse or Unmarried Partner of
----------------
a Member who is entitled to receive a Survivor Annuity under Section 10.
2.22 "Domestic Relations Order" means any judgment, decree, or order
------------------------
(including an order approving a property settlement agreement) that:
(a) Relates to the provision of child support, alimony, or marital
property rights to a spouse, child, or other dependent of a Member; and
(b) Is entered or made under the domestic relations or community
property laws of any state.
2.23 "Early Retirement Benefit" means the early retirement benefit payable
------------------------
to a Member under Section 4.2.
2.24 "Early Retirement Date" or "Early Retirement" means the date a Member
--------------------- ----------------
has reached age 55 and completed 15 Years of Service and is entitled to receive
an Early Retirement Benefit under Section 4.2.
2.25 "Effective Date" means November 27, 1989, except as expressly provided
--------------
otherwise in this document or as required by the Tax Reform Act of 1986, as
amended, or other applicable legislation.
2.26 "Employee" means any person who is employed by the Company excluding:
-------- ---------
(a) Any employee of LS&CO. who is not paid from the home office of
Levi Strauss Associates Inc.;
(b) Any employee of a Participating Company other than LS&CO. who is
not paid on a salary or commission basis;
(c) Any stocktaker, service representative, Retiree Coordinator or
"Temporary Employee;"
7
<PAGE>
(d) Any employee who is not employed in a state or territory of the
United States or who receives no remuneration from the Company that constitutes
income from sources within the United States (within the meaning of section
861(a)(3) of the Code);
(e) Any alien who:
(i) Receives remuneration from the Company that constitutes
income from sources within the United States (within the meaning of section
861(a)(3) of the Code); and
(ii) Has been transferred by the Company from a job outside the
United States to a job within the United States, during any period with
respect to which the alien is benefiting (by reason of accruing a benefit
or making or having contributions made on the alien's behalf) under:
(A) A retirement plan established or maintained outside the
United States by a foreign subsidiary (including a domestic subsidiary operating
abroad) or a foreign division of the Company; or
(B) The Levi Strauss International Retirement Plan for Third
Country National Employees or any successor or similar plan maintained by the
Company or an Affiliated Company;
(f) A United States citizen locally hired by a foreign subsidiary
(including a domestic subsidiary operating abroad) or a foreign division of a
Participating Company;
(g) Any employee who is included in a unit of employees covered by a
negotiated collective bargaining agreement which does not provide for his or her
membership in the Plan;
(h) A "leased employee" (as defined in section 414(n) or section
414(o) of the Code) who is providing services to the Company or an Affiliated
Company;
(i) Any employee who is covered by an personal employment contract
that expressly provides he or she will not be eligible for membership in the
Plan; or
(j) An employee who is included in a group or classification of
employees on a payroll of a company designated by the Board of Directors as not
being eligible to participate in the Plan.
A member of the board of directors of the Company is not eligible for membership
in the Plan unless he or she is also an Employee of the Company. The Board of
Directors may on a nondiscriminatory basis, designate as an Employee a person
described in (c), (d), (f) or (j ) above. Such designation must be made in
writing after receiving the advice of counsel.
Any "Temporary Employee" and any stocktaker employed by the Company will
not be treated as an Employee, except for the purposes of and in accordance with
receiving benefits computed under the Terminated Plan. A "Temporary Employee"
means a person who:
8
<PAGE>
(i) Is hired to fill, for a period not to exceed 6 calendar
months, a position which arises from either an emergency situation or the
temporary absence of an Employee; and
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time.
A person's status as an Employee will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
2.27 "Equivalent Actuarial Value" means a benefit of equivalent value when
--------------------------
computed on the basis of the factors specified in Section 25.
2.28 "Final Average Compensation" means a Member's highest average annual
--------------------------
Compensation, as determined by the Administrative Committee, for the 5
consecutive full Plan Years out of the 10 full Plan Years of Service performed
by the Member immediately before his or her Retirement Date or the date of his
or her earlier termination of Service. If a Member has less than 10 Plan Years
of Service on such date, his or her Final Average Compensation will be computed
on the basis of his or her full Plan Years of Service not in excess of his or
her highest paid 5 consecutive Plan Years of Service. For this purpose, Plan
Years will include Plan Years of this Plan and of the Terminated Plan. In the
case of a Member with less than 5 consecutive full Plan Years of Service as of
November 28, 1988, the Member's Final Average Compensation will in no event be
less than the Member's Final Average Compensation determined under the Plan as
in effect on November 27, 1988.
2.29 "High-3 Year Average Compensation" means a Member's average annual
--------------------------------
compensation from the Company or an Affiliated Company for the 3 consecutive
Plan Years during which his or her compensation was highest. If the Member has
not been employed with the Company or an Affiliated Company for 3 Consecutive
Plan Years, "High-3 Year Average Compensation" will mean the Member's average
annual compensation for the actual number of consecutive Plan Years with the
Company or an Affiliated Company during which his or her compensation was the
highest.
"Compensation" includes the Member's wages, salaries, fees for professional
services and other amounts received (without regard to whether an amount is paid
in cash) for personal services actually performed in the course of employment
with the Company or an Affiliated Company to the extent that the amounts are
includable in gross income (including but not limited to commissions paid sales
representatives, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements or expenses under a nonaccountable plan (as defined in section
1.62(c) of the Code)) determined without regard to the exclusions from gross
income under sections 931 and 939 of the Code. "Compensation" will also include:
(a) In the case of a Member who is an employee within the meaning of
section 401(c) of the Code, the Member's earned income (as described under
section 401(c)(2) of the Code) determined without regard to the exclusions from
gross income similar to those in sections 931 and 939 of the Code;
9
<PAGE>
(b) Any foreign earned income as defined under section 911 (b) of the
Code, regardless of whether such income is excludable from the gross income of
the Employee under section 911 of the Code;
(c) Amounts described in sections 104 (a) (3), 105 (a) and 105(b) of
the Code, but only to the extent that such amounts are includable in the gross
income of the Employee;
(d) Amounts paid or reimbursed by the Company or an Affiliated Company
for moving expenses incurred by the Employee, but only to the extent that such
amounts are not deductible by the Employee under section 217 of the Code;
(e) The value of a nonqualified stock option granted to the Employee
by the Company or an Affiliated Company, but only to the extent that the value
of the option is includable in the gross income of the Employee for the taxable
year when granted; and
(f) The amount includable in the gross income of the Employee upon
making an election described in section 83(b) of the Code.
"Compensation" will not include:
-----------
(a) Company contributions to a deferred compensation plan that before
application of the limitations of section 415 of the Code are not includable in
the Employee's gross income for federal income tax purposes in the taxable year
of the Employee in which the contributions are made;
(b) Company contributions to a simplified employee pension plan
described in section 408(k) of the Code to the extent that such contributions
are not considered as compensation for the taxable year in which contributed;
(c) Any distributions from a deferred compensation plan regardless of
whether such amounts are includable in gross income of the Employee for federal
income tax purposes in the taxable year of distribution;
(d) Amounts realized from the exercise of a nonqualified stock option;
(e) Amounts realized when restricted stock or property becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(f) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(g) Other amounts which receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that the premiums are
excludable from gross income of the Employee); Company contributions to a
cafeteria plan described in section 125 of the Code, or Company contributions
(whether or not under a salary reduction arrangement) towards the purchase of an
annuity contract described in section 403(b) of the Code (whether or not the
contributions are excludable from the gross income of the Employee).
10
<PAGE>
In determining the High-3 Year Average Compensation for each Plan Year
beginning on or after the Effective Date, compensation for any Plan Year in
excess of $200,000, or any successor limitation as provided for the Plan Year in
section 401(a)(17) of the Code (as adjusted as provided under section 401(a)(17)
of the Code) (the "401 (a) (17) limitation"), will be disregarded. For Plan
Years beginning in and after 1991, the adjustment to the 401(a)(17) limitation
that takes effect on January 1 of each year is effective for the Plan Year
beginning in that year. For the 1989 and 1990 Plan Years, the adjustment to the
401(a)(17) limitation that is effective January 1 of 1989 and 1990 will be used
for the Plan Year that ends in each of such years. In determining the
compensation of an Employee, the family aggregation rules of section 414(q)(6)
of the Code will apply, except that in applying those rules, the term "family"
will include only the spouse of the Employee and any lineal descendants of the
Employee who have not reached age 19 before the close of the Plan Year.
2.30 "Highly Compensated Employee" means an Employee of the Company or an
---------------------------
Affiliated Company who:.
(a) During the preceding Plan Year:
(i) Was at any time a 5% owner of the Company or an Affiliated
Company (as defined in section 416(i)(1) of the Code);
(ii) Received "compensation" from the Company or an Affiliated
Company in excess of $75,000 (as adjusted under Regulations or rulings
issued by the IRS);
(iii) Received "compensation" from the Company or an Affiliated
Company in excess of $50,000 (as adjusted under Regulations or rulings
issued by the IRS) and was in the top 20% of employees of the Company and
all Affiliated Companies when ranked on the basis of "compensation" paid
during such Plan Year (referred to as the "Top Paid Group" under IRS
Regulations); or
(iv) Was at any time an officer of the Company or an Affiliated
Company and received "compensation" greater than 50% of the amount in
effect under section 415(b)(1)(A) of the Code; or
(b) During the Plan Year:
(i) Was at any time a 5% owner of the Company or an Affiliated
Company (as defined in section 416(i)(1) of the Code); or
(ii) Satisfies the requirements of paragraphs (ii), (iii), or
(iv) of Section 2.30(a) and is a member of the group consisting of the 100
employees of the Company and all Affiliated Companies paid the greatest
"compensation" during the Plan Year.
For purposes of determining the number of employees in the Top Paid
Group under Section 2.30(a)(iii) for a Plan Year, the following employees,
as described in sections 414(q)(8) and (11) of the Code, will be excluded:
11
<PAGE>
(i) Those who have not completed 6 months of Service;
(ii) Those who normally work less than 17-1/2 hours per week;
(iii) Those who normally work less than 6 months during any year;
(iv) Those who have not attained age 21;
(v) Those subject to a collective bargaining agreement; and
(vi) Nonresident aliens who receive no earned income from
sources within the United States.
The Administrative Committee will determine whether an employee is an
officer based on the responsibilities of the employee with the Company or an
Affiliated Company. Of those employees determined to be officers, no more than
50 employees (or, if less, the greater of 3 employees or 10% of the employees,
excluding all employees described in sections 414 (q) (8) and (11) of the Code)
will be treated as officers. Further, if no officer receives the level of
"compensation" described in Section 2.30(a)(iv), the highest paid officer of the
Company and all Affiliated Companies will be treated as a Highly Compensated
Employee described in Section 2.30(a)(iv).
For purposes of determining whether an employee is a Highly Compensated
Employee only, any person who is a member of the family of a 5% owner or of a
Highly Compensated Employee in the group consisting of the 10 Highly Compensated
Employees paid the greatest compensation during the Plan Year:
(i) Will not be considered a separate employee; and
(ii) Any "compensation" paid to such person and the Company or
Employee contributions made on behalf of such person will be treated as if
it were paid to or on behalf of the 5% owner or Highly Compensated
Employee.
For purposes of the immediately preceding sentence, the term "family" means,
with respect to any employee, the employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
The term "compensation" for purposes of this Section 2.30 means
compensation as defined in section 415(c)(3) of the Code, determined without
regard to section 125 of the Code (regarding contributions to a cafeteria plan),
section 402(a)(8) of the Code (regarding contributions to a 401(k) plan) and
section 402(h)(1)(B) of the Code (regarding contributions to a simplified
employee pension plan), and in the case of employer contributions made under a
salary reduction agreement, without regard to section 403(b) of the Code
(regarding annuity contracts).
2.31 "Highly Compensated Former Employee" means a former employee who
----------------------------------
separated from Service with the Company or an Affiliated Company before the
beginning of the Plan Year and who was a Highly Compensated Employee for either:
12
<PAGE>
(a) The employee's year of separation from Service; or
(b) Any Plan Year ending on or after the employee's 55th birthday.
An employee who performs no services for the Company or an Affiliated Company
during the Plan Year will be treated as a former employee.
2.32 "Home Office Salary Grade" means the job classification system for
------------------------
home office employees as in effect from time to time.
2.33 "Hour of Service" means an hour of employment for which an Employee is
---------------
paid or is entitled to payment for the performance of duties as determined under
the Labor Department Regulations governing the computation of hours of service.
2.34 "Investment Committee" means the committee appointed to control and
--------------------
manage the Plan's assets as described in Section 17.
2.35 "Investment Manager" means a person who is appointed to direct the
------------------
investment of all or any part of the Trust Fund under Section 17.2 and is either
a bank, an insurance company or a registered investment adviser under the
Investment Advisers Act of 1940 and who has acknowledged in writing that it is a
fiduciary with respect to the Plan.
2.36 "IRS" means the United States Internal Revenue Service.
---
2.37 "Labor Department" means the United States Department of Labor.
----------------
2.38 "Legally Married" means that the Member participates in a marriage,
----------------
other than a common-law marriage, which is recognized as legal and binding by
the state where the Member lives.
2.39 "LS&CO." means Levi Strauss & Co., a Delaware corporation.
------
2.40 "Member" means any Employee who is enrolled in the membership of the
------
Plan as provided in Section 3.
2.41 "Membership Date" means June 1 and December 1 of each Plan Year.
---------------
2.42 "Misconduct" means that a person:
----------
(a) Has committed an act of embezzlement, fraud or theft with respect
to the property of the Company or an Affiliated Company or any person with whom
the Company or an Affiliated Company does business;
(b) Has deliberately disregarded the rules of the Company or an
Affiliated Company in such a manner as to cause material loss, damage or injury
to, or otherwise endanger the property or employees of the Company or an
Affiliated Company;
(c) Has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or an Affiliated Company;
13
<PAGE>
(d) Has engaged in any conduct which constitutes unfair competition
with the Company or an Affiliated Company;
(e) Has induced any person to breach any contract with the Company or
an Affiliated Company; or
(f) Has sold Company or Affiliated Company products to an unauthorized
account or has assisted an authorized account in wholesaling Company or
Affiliated Company products.
2.43 "Normal Retirement Age" means age 65 or, in the case of a Member whose
---------------------
Service begins after the Member reaches age 60, the Member's age on the 5th
anniversary of the date the Member's Service begins.
2.44 "Normal Retirement Benefit" means the normal retirement benefit
-------------------------
payable to a Member under Section 4.1.
2.45 "Normal Retirement Date" or "Normal Retirement" means the date the
---------------------- -----------------
Member is entitled to receive a Normal Retirement Benefit under Section 4.1.
2.46 "Participating Company" means LS&CO. or any Affiliated Company, the
---------------------
board of directors or equivalent governing body of which adopts the Plan and the
Trust Agreement by appropriate action with the written consent of the Board of
Directors. Any Affiliated Company which so adopts the Plan will be deemed to
appoint Levi Strauss Associates Inc., the Administrative Committee, the
Investment Committee and the Trustee its exclusive agents to exercise on its
behalf all of the power and authority conferred under this Plan document, or by
the Trust Agreement, upon the Company. The authority of Levi Strauss Associates
Inc., the Committees and the Trustee to act as such agents will continue until
the Plan is terminated as to the Affiliated Company and the relevant portion of
the Trust Fund has been distributed by the Trustee as provided in Section 19.
2.47 "PBGC" means the United States Pension Benefit Guaranty Corporation.
----
2.48 "Plan" means this Revised Home Office Pension Plan of Levi Strauss
----
Associates Inc., as amended from time to time.
2.49 "Plan Year" means the annual period corresponding to LS&Co.'s fiscal
---------
year for federal income tax purposes.
2.50 "Qualified Domestic Relations Order" means a domestic relations order
----------------------------------
that satisfies the requirements described in Section 21.3.
2.51 "Qualified Joint and Survivor Annuity" means an annuity described in
------------------------------------
Section 11.1.
2.52 "Regulations" means the applicable regulations issued under the Code
-----------
or the Act by the IRS, the PBGC, the Labor Department or any other governmental
authority and any temporary rules promulgated by such authorities pending the
issuance of such regulations.
14
<PAGE>
2.53 "Rehire Anniversary Year" means for the first year that a Member
-----------------------
returns to Service as a Casual Employee, the period beginning on the date the
Member returns to Service and ending on December 31. The Rehire Anniversary Year
for the second and all subsequent years that a Member remains in Service as a
Casual Employee means the calendar year. The Benefit Service earned by a Member
during a Rehire Anniversary Year will be determined under Sections 2.9 and 13.2.
A Member may only have one Rehire Anniversary Year at a given time.
2.54 "Required Beginning Date" generally means April 1 of the calendar year
-----------------------
following the year in which the Member attains age 70-1/2. However, the Required
Beginning Date for a Member who is not a 5% owner within the meaning of section
416(i)(1)(B)(i) of the Code, who attained age 70-1/2 during 1988, and had not
retired by the Effective Date, will be April 1, 1990. In addition, the Required
Beginning Date for a Member who attained age 70-1/2 before January 1, 1988, and
who was not a 5% owner within the meaning of section 416(i)(1)(B)(i) of the Code
during any Plan Year ending with or within the Plan Year in which he or she
reached age 66-1/2 or any subsequent year, is the April 1 following the later of
-----
the calendar year in which the Member reaches age 70-1/2 or retires. Lastly, the
Required Beginning Date for a Member who filed a written election under section
242(b) of the Tax Equity and Fiscal Responsibility Act of 1982 before January 1,
1984, will be the date specified in such election if the election satisfies all
of the applicable requirements specified by the IRS, as determined by the
Administrative Committee.
2.55 "Retiree Coordinator" means a retired Employee of the Company who
-------------------
resumes employment with the Company or an Affiliated Company on a temporary
basis for the purpose of providing personal relations type services to other
retired employees of the Company or an Affiliated Company.
2.56 "Retirement Benefit" means the retirement benefit payable to a Member
------------------
in the form of a Straight Life Annuity as provided in Section 5.
2.57 "Retirement Date" means a Member's Normal Retirement Date, Early
---------------
Retirement Date or Deferred Retirement Date, or any other Retirement Date as
provided in Section 4.
2.58 "Service" means employment (whether or not as an Employee) with the
-------
Company or with an Affiliated Company. Periods of employment performed by a
person before the Effective Date which would be disregarded under this Plan or
the Terminated Plan, as then in effect, will only be counted for purposes of
determining membership under Section 3, and not for any other purpose under the
Plan. Service which would be counted under the Terminated Plan will be counted
under this Plan, but the same period will be counted only once. Service will
begin on the date that an Employee first performs 1 Hour of Service for the
Company or Affiliated Company. Service will end on the earlier of:
-------
(a) The date the Employee retires;
(b) The date the Employee dies;
(c) The date the Employee terminates employment; or
15
<PAGE>
(d) On the first anniversary of the date the Employee is absent from
service for any other reason (e.g., an authorized period of absence, as
described in paragraphs (i) and (ii), etc. below).
However, the Service of a Member who becomes Totally and Permanently Disabled
and who continues to accrue Service under Section 9.1 will not terminate on the
date the Member terminates employment with the Company.
Subject to any applicable rules of the Administrative Committee (which
rules will be uniformly applicable to all Employees similarly situated), Service
includes:
(i) Periods of vacation;
(ii) Periods of absence whether or not the Employee is paid, not
to exceed 12 calendar months, authorized by the Company for sickness,
temporary disability or personal reasons;
(iii) Periods of service in the Armed Forces of the United
States, if and to the extent required by the Military Selective Service
Act, as amended, or any other federal law of similar import; provided that
the Employee returns to Service with the Company or an Affiliated Company
within the time his or her employment rights are protected by such law; and
(iv) Any period of 12 consecutive months or less, beginning on
the first day of the month after a Member terminates employment and ending
on the last day of the month preceding the Member's reemployment date, if
the Member performs at least 1 Hour of Service within the first month of
reemployment. Such period of Service will only be considered for
determining Membership in the Plan and determining the Member's Vested
Retirement Benefit, Early Retirement Benefit and Disability Retirement
Benefit.
Effective November 25, 1985, solely for the purpose of determining whether
an Employee has incurred a Break in Service, Service will end on the second
anniversary of the first day of a period of absence caused by any of the
following:
(i) The Employee's pregnancy;
(ii) The birth of the Employee's child;
(iii) The placement of a child with the Employee in connection
with the adoption of the child by the Employee; or
(iv) The care of the Employee's child immediately following the
child's birth or adoption.
The Administrative Committee may require the Employee to provide evidence that
the period of absence was due to one of the reasons described above.
16
<PAGE>
A Member's Service will be determined by the Administrative Committee and
such determination will be conclusive and binding on all persons.
If an Employee terminates employment and is reemployed after incurring a
Break in Service, as defined in Section 2.11, Service will recommence on the
date the Employee again performs 1 Hour of Service. A Member will receive credit
for the aggregate of all periods of Service, except as follows:
If the Member has incurred a 60 consecutive month Break in Service,
Service before such 60-month Break in Service will only be counted if the Member
had a Vested Retirement Benefit under Section 2.70 before such 60 consecutive
month Break in Service; and
If a Member's Service as of November 25, 1985, would be disregarded
under the Terminated Plan in effect as of such date, such Service will continue
to be disregarded on and after November 25, 1985, under this Plan to the extent
permitted by applicable law.
2.59 "Social Security Benefit" means the annual amount of old age insurance
-----------------------
benefits which would be payable to a Member on his or her 65th birthday, or any
later Retirement Date, computed under the Federal Social Security Act in effect
on the date (which may not be later than the date of the Member's termination of
Service or, for a Member who terminates employment by reason of Total and
Permanent Disability, the date that the Member is determined to be Totally and
Permanently Disabled) as of which such computation is made, on the assumptions
that:
(a) There are no increases in the level of such old age benefits after
such computation date;
(b) If the Member retired on an Early Retirement Date, the Member is
not paid any Compensation on or after his or her Early Retirement Date;
(c) If the Member terminates Service other than on his or her Early
Retirement Date and before his or her 65th birthday the Member continues to be
paid annual Compensation from such computation date 'until his or her 65th
birthday at his or her annual rate of Compensation (as determined by the
Administrative Committee) in effect on such computation date; and
(d) The Member does not fail to qualify for, or lose such old age
insurance benefits by failure to apply for such benefits, entry into covered
employment or otherwise.
2.60 "Social Security Retirement Age" means age 65 if the Member was born
------------------------------
before January 1, 1938; age 66 if the Member was born on or after January 1,
1938, and before January 1, 1955; and age 67 if the Member was born on or after
January 1, 1955.
2.61 "Straight Life Annuity" means an annuity described in Section 11.2.
---------------------
17
<PAGE>
2.62 "Surviving Spouse" means:
----------------
(a) With respect to a Member who dies on or after the Annuity Starting
Date, the spouse to whom such Member was Legally Married as of the Annuity
Starting Date; and
(b) With respect to a Member who dies before the Annuity Starting
Date, the spouse to whom such Member was Legally Married for at least 1 year as
of the date of the Member's death.
If a Member divorces his or her Surviving Spouse after the Member's Annuity
Starting Date, such Surviving Spouse will continue to be the Member's Surviving
Spouse for purposes of the Plan unless provided otherwise based on the terms of
a Qualified Domestic Relations Order under Section 21.3. The preceding sentence
will apply regardless of whether the Member remarries after his or her divorce
from such Surviving Spouse. For purposes of the Plan, the term "Surviving
Spouse" will not include a Common-Law Spouse.
2.63 "Survivor Annuity" means the annuity described in Section 10.1 payable
----------------
with respect to a Member who dies before the Annuity Starting Date.
2.64 "Terminated Plan" means the Terminated Home Office Pension Plan of
---------------
Levi Strauss & Co. for those in benefit pay status, as amended and terminated
effective December 31, 1985.
2.65 "Totally and Permanently Disabled" or "Total and Permanent Disability"
-------------------------------- ------------------------------
means the Member is eligible to receive disability benefits under the Federal
Social Security Act or, alternatively, has been determined to be Totally and
Permanently Disabled by the Administrative Committee based on competent medical
evidence.
2.66 "Trust Agreement" means the trust agreement between Levi Strauss
---------------
Associates Inc. and the Trustee as a part of the Plan under which the assets of
the Plan are managed.
2.67 "Trust Fund" means the trust fund consisting of the assets of the Plan
----------
and maintained by the Trustee under the Plan and Trust Agreement.
2.68 "Trustee" means the Trustee or Trustees of the Trust Fund.
-------
2.69 "Unmarried Partner" means a "partner" who shares a committed
-----------------
relationship with the Member which has the following characteristics:
(a) The Member and "partner" live together;
(b) The Member and "partner" are financially interdependent;
(c) The Member and "partner" are jointly responsible for each other's
common welfare;
(d) The Member and "partner" consider themselves as life partners; and
18
<PAGE>
(e) The Member registers his or her partner as an Unmarried Partner
with LS&CO.
A "partner" does not include a Member's roommate, sibling, parent or other blood
relative. In addition, to qualify as an Unmarried Partner neither the Member or
the partner must be Legally Married. A "partner" who satisfies all of the above
characteristics will not qualify as an Unmarried Partner until 1 year after the
date the Member registers the partner as an Unmarried Partner with LS&CO.,
unless at the time the Member registers the partner, the Member provides proof
that the Member and his or her Domestic Partner have been together in a
relationship which satisfies the above requirements for at least 1 year, in
which case the partner will qualify as a Domestic Partner on such registration
date. The determination of whether a partner qualifies as an Unmarried Partner
will be made by the Administrative Committee in its sole and absolute
discretion.
2.70 "Vested Retirement Benefit" means the nonforfeitable Retirement
-------------------------
Benefit of a Member who has:
(a) Completed 5 Years of Service;
(b) Become eligible for benefits under Section 4.1 on account of the
attainment of Normal Retirement Age; or
(c) Become eligible for the Disability Retirement Service provided in
Section 9.1.
The term "Vested Retirement Benefit" also includes a Member's normal retirement
benefit earned under the Terminated Plan as of December 30, 1985. If the Plan
becomes Top Heavy, a Member's Vested Retirement Benefit will be determined under
Section 26.
2.71 "Vested Retirement Benefit Payment Date" means the date described in
--------------------------------------
Section 8 on which the payment of the Member's Vested Retirement Benefit begins.
2.72 "Year of Service" means a 12 month period of Service in which a Member
---------------
has Service under Section 2.58. A Member's Years of Service will be determined
by the Administrative Committee and such determination will be conclusive and
binding on all persons.
Years of Service and fractions of such years with respect to a Member who has
terminated Service and returns to Service with the Company will be determined
under Sections 2.58 and 3.3. Years of Service with respect to an Employee who
has terminated Service and returns to Service with the Company will be
determined under Sections 2.58 and 3.4.
19
<PAGE>
SECTION 3 MEMBERSHIP AND TRANSFERS.
- --------- ------------------------
3.1 Commencement of Membership. Each Employee who was a Member of the Plan
--------------------------
as of the Effective Date, will continue to be a member. Each Employee who was
not a Member as of the Effective Date, will automatically become a Member in the
Plan on the later of the Membership Date next following:
(a) The first anniversary of the date the Employee's Service
commenced; or
(b) The date on which he or she becomes an Employee.
The Administrative Committee will take any necessary or appropriate action
to enroll each Employee eligible to be enrolled in the Plan under this Section
3. If it is determined that an Employee has for any reason not been timely
enrolled in the membership of the Plan, such Employee will be retroactively
enrolled to the extent permitted by law.
3.2 Termination of Membership. A Member's membership in the Plan will end
-------------------------
upon his or her:
(a) Termination of Service for the purpose of retirement after his
or her Early Retirement Date, Normal Retirement Date or Deferred Retirement
Date;
(b) Death;
(c) Total and Permanent Disability (unless the Member continues to
accrue Service under Section 9.1);
(d) Termination of employment with the Company; or
(e) Upon any Break in Service.
The membership of a Member who, without any Break in Service, ceases to be an
Employee will not end but no subsequent Service will be treated as Benefit
Service unless and until the Member again becomes an Employee.
3.3 Rehired Members. If a Member who incurs a Break in Service is rehired,
---------------
he or she will recommence membership in the Plan and be credited with his or her
prior Service under the following paragraph (a) or (b):
(a) If the Member had a Vested Retirement Benefit at the time of
his or her Break in Service or, alternatively, has not incurred a 60 consecutive
month Break in Service, then the Member will recommence membership in the Plan
on:
(i) The date of his or her reemployment, if the Member is
rehired as an Employee, or
(ii) The date he or she becomes an Employee, if the Member
is not rehired as an Employee.
20
<PAGE>
The Member's prior Service will be taken into account for purposes of
determining his or her Vested Retirement Benefit under Section 2.70 and years of
Benefit Service under Section 2.9.
(b) If the Member did not have a Vested Retirement Benefit at the
time of his or her Break in Service and has incurred a 60 consecutive month
Break in Service, then the Member will be considered a new hire and begin
Membership in the Plan on the date he or she satisfies the eligibility
requirements described in Section 3.1. The Member's prior Service will not be
taken into account for purposes of determining his or her Vested Retirement
Benefit under Section 2.70 and years of Benefit Service under Section 2.9.
3.4 Rehired Employees. If an Employee who is not a Member is rehired
-----------------
following a Break in Service, he or she will begin membership in the Plan and
will be credited with his or her prior Service under the following paragraph (a)
or (b):
(a) If the Employee has not incurred a 60 consecutive month Break
in Service, the Employee will begin membership in the Plan on the date he or she
satisfies the eligibility requirements described in Section 3.1 taking into
account his or her prior Years of Service. The Employee's prior Service will
also be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under Section
2.9.
(b) If the Employee has incurred a 60 consecutive month Break in
Service, the Employee will be considered a new hire and will begin membership in
the Plan on the date he or she satisfies the eligibility requirements described
in Section 3.1 based on his or her date of rehire without taking into account
his or her prior Years of Service. The Employee's prior Service will not be
taken into account for purposes of determining his or her Vested Retirement
Benefit under Section 2.70 and years of Benefit Service under Section 2.9.
21
<PAGE>
SECTION 4 RETIREMENT DATE.
- --------- ---------------
4.1 Normal Retirement Date. The Normal Retirement Date of a Member will be
----------------------
the first day of the month coincident with or next following the date the Member
reaches Normal Retirement Age. A Member will have a right to his or her Vested
Retirement Benefit upon reaching his or her Normal Retirement Age. Payment of a
Member's Normal Retirement Benefit will begin on the last day of the month in
which the Member's Normal Retirement Date occurs unless the Member elects to
delay the payment of such benefit under Section 4.4. A Member may remain in
Service after his or her Normal Retirement Date, in which case the date as of
which the Member will be deemed to retire will be determined under Section 4.3.
A Member who has been deemed to retire will continue to accrue Benefit Service
under the Plan until his or her actual retirement.
4.2 Early Retirement Date. The Early Retirement Date of a Member who has
---------------------
reached Early Retirement Age will be the date specified in his or her written
application for Early Retirement Benefits. Such Early Retirement Date will be
the first day of a month which is not less than 30 nor more than 90 days
following the date the Member files an Early Retirement Benefit application with
the Administrative Committee. Payment of a Member's Early Retirement Benefit
will begin on the last day of the month in which the Member's Early Retirement
Date occurs. Alternatively, a Member who has reached Early Retirement Age may
elect to delay the payment of his or her Early Retirement Benefit under Section
4.4.
4.3 Deferred Retirement Date. The Deferred Retirement Date of a Member who
------------------------
remains in Service after his or her Normal Retirement Date will be the first day
of the month next following the date of his or her termination of Service.
However, a Member will be deemed to retire (and the distribution of the Member's
Retirement Benefit will begin) as of the Member's Required Beginning Date
whether or not the Member's Service terminates at that time. In addition, a
Member who remains in Service after his or her Normal Retirement Date will be
deemed to retire on the first day of any calendar month in which he or she is
paid (or is entitled to payment) for less than 40 Hours of Service by the
Company or an Affiliated Company as provided in Section 6.2. Payment of a
Member's Deferred Retirement Benefit will begin on the last day of the month in
which his or her Deferred Retirement Date occurs.
4.4 Postponement of Retirement Benefits. A Member may elect to delay the
-----------------------------------
payment of his or her Retirement Benefit beyond his or her Early Retirement Age
or the last day of the month in which the Member's Normal Retirement Date or
Deferred Retirement Date occurs, except as provided by paragraph (a) or (b)
below:
(a) Payment of a Member's Early Retirement Benefit must begin no
later than the month which includes his or her Normal Retirement Date; and
(b) Payment of a Member's Normal Retirement Benefit or Deferred
Retirement Benefit must begin no later than the Member's Required Beginning
Date.
22
<PAGE>
SECTION 5 RETIREMENT BENEFIT.
- --------- ------------------
5.1 Basic Retirement Benefit. As of any date, the Retirement Benefit of any
------------------------
Member payable as of his or her Normal Retirement Date or Deferred Retirement
Date will be:
(a) 2% of the Member's Final Average Compensation multiplied by
the Member's Benefit Service not in excess of 25 years, less
(b) 2% of the Member's Social Security Benefit multiplied by the
Member's Benefit Service not in excess of 25 years, plus
(c) 0.25% of the Member's Final Average Compensation multiplied by
the Member's Benefit Service in excess of 25 years.
A Member's Retirement Benefit will be subject to adjustment as provided in
Sections 5.2, and 5.3 and, if the Member is a reemployed Member, will be
calculated in accordance with Section 5.4.
5.2 Coordination of Retirement Benefits. The Retirement Benefit of a Member
-----------------------------------
who was a participant in any plan which is qualified under section 401(a) of the
Code and which is maintained by (a) the Company, (b) a corporation acquired by
the Company, or (c) under a collective bargaining agreement with the Company or
any such corporation, will be reduced by the Equivalent Actuarial Value of any
benefits payable from that plan to the Member with respect to any period of the
Member's Benefit Service for which benefits are also provided under this Plan.
This reduction will not apply to any benefits payable to a Member under the
Employee Investment Plan of Levi Strauss Associates Inc. or the Levi Strauss
Associates Inc. Employee Long-Term Investment and Savings Plan.
5.3 Reduction of Retirement Benefit. The Retirement Benefit of a Member who
-------------------------------
was a member of the Terminated Plan will be reduced by any benefits payable from
that plan (including amounts paid through the Annuity Contract purchased by the
Terminated Plan) to or with respect to the Member. Similarly, the Retirement
Benefit of a Member who was a member of the Pension Plan of Miller Belts, Ltd.,
Inc. will be reduced by the Equivalent Actuarial Value of any benefits payable
from that plan to or with respect to the Member.
5.4 Retirement Benefit of Certain Reemployed Members. If a Member who does
------------------------------------------------
not have a Vested Retirement Benefit and who incurs a Break in Service for any
reason returns to Service after incurring a 60 consecutive month Break in
Service under Section 3.3(b), then on the Member's later retirement or
termination of Service, his or her Retirement Benefit will be based only upon
the Member's Benefit Service after his or her return to Service. In all other
cases where a Member returns to Service, the Member's Retirement Benefit upon
later retirement or termination of Service will be based on his or her total
Benefit Service, reduced by the Equivalent Actuarial Value of any benefit
payments previously made to him or her (provided this does not decrease his or
her Retirement Benefit). See also Section 5.1 concerning the benefit rate
applied to a Member's Benefit Service.
23
<PAGE>
SECTION 6 NORMAL RETIREMENT BENEFIT.
- --------- -------------------------
6.1 Payment of Benefits. A Member who retires from Service on his or her
-------------------
Normal Retirement Date will be entitled to begin receiving Retirement Benefit
payments on the last day of the month in which his or her Normal Retirement Date
occurs. If the Member could have received a larger Early Retirement Benefit
(calculated in accordance with Section 7) under Section 4.2, beginning as of any
date which could have been his or her Early Retirement Date, such larger Early
Retirement Benefit will be payable to the Member.
6.2 Termination of Employment after Normal Retirement Age. In the case of a
-----------------------------------------------------
Member who continues to be employed as an Employee or is reemployed as an
Employee after reaching Normal Retirement Age, the Member will be deemed to
retire for purposes of the Plan on the first day of any calendar month in which
he or she is paid (or is entitled to payment) for less than 40 Hours of Service
by the Company or an Affiliated Company, or as of the Member's Required
Beginning Date. Payment of the Member's Retirement Benefit will be made as
follows:
(a) In the case of a Member who continues to be employed as an
Employee, or in the case of a Member who terminated employment with the Company
after reaching Normal Retirement Age but is reemployed before beginning to
receive monthly Retirement Benefit payments, payment of the Member's Retirement
Benefit will begin (in the form determined under Section 11) as of the last day
of the month in which the Member is deemed to retire. If a Member who is deemed
to retire under this Section 6.2 does not make a valid election for payment of
the Member's Retirement Benefit, the Member's Retirement Benefit will be paid as
a 50% Qualified Joint and Survivor Annuity.
(b) In the case of a Member who is reemployed as an Employee after
reaching Normal Retirement Age and beginning to receive monthly Retirement
Benefit payments but whose benefits are suspended under Section 13.2, payment of
the Member's Retirement Benefit will recommence (in the same form as before the
suspension) as of the last day of the month in which the Member is deemed to
retire.
Any Member whose Retirement Benefit begins to be paid will be deemed to be
reemployed as of the first day of any subsequent calendar month in which he or
she is paid (or entitled to payment) for 40 or more Hours of Service, and the
Retirement Benefit suspension provisions of Section 13.2 will apply.
24
<PAGE>
SECTION 7 EARLY RETIREMENT BENEFIT.
- --------- ------------------------
7.1 Payment of Early Retirement Benefit. A Member who retires on an Early
-----------------------------------
Retirement Date under Section 4.2 will be entitled to receive an Early
Retirement Benefit under this Section 7.
A Member who retires on an Early Retirement Date will be entitled to
receive the percentage of his or her Retirement Benefit based on the Member's
age as of his or her Early Retirement Date as described in the following Table:
Table A
-------
Age at Member's Early Retirement Date Percentage Factor
------------------------------------- -----------------
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 92%
62 94%
63 96%
64 98%
65 100%
In applying the above table, the Member's age at his or her Early Retirement
Date will be computed to years and completed months and the percentages will be
interpolated. Payment of a Member's reduced Early Retirement Benefit will begin
on the last day of the month in which the Member's Early Retirement Date occurs.
If the Administrative Committee determines that a Member who is
eligible to retire on an Early Retirement Date has engaged in any act of
Misconduct while in Service, the Early Retirement Benefit payable to the Member
will be the Equivalent Actuarial Value of his or her accrued Retirement Benefit.
7.2 Postponement of Early Retirement Benefit. A Member who retires on an
----------------------------------------
Early Retirement Date may elect to delay payment of his or her Early Retirement
Benefit until the last day of any month following the Member's Early Retirement
Date, but no later than the month which includes the first date which could have
been the Member's Normal Retirement Date. The early retirement factor to be used
to calculate the Early Retirement Benefit of a Member who delays benefit payment
is the factor at the Member's age on the date payment of his or her Early
Retirement Benefit begins. If a Member makes an election to delay the payment of
his or her Early Retirement Benefit and dies before the Annuity Starting Date, a
Survivor Annuity will be payable to the Member's Surviving Spouse or Domestic
Partner as of the date of the Member's
25
<PAGE>
death as described in Section 10.1. The Member may revoke an election to delay
the payment of his or her Early Retirement Benefit at any time before the
Annuity Starting Date.
26
<PAGE>
SECTION 8 TERMINATION OF SERVICE BEFORE RETIREMENT.
- --------- ----------------------------------------
8.1 Payment of Vested-Retirement Benefits. A Member who has completed 5
-------------------------------------
Years of Service will have a Vested Retirement Benefit determined in accordance
with Section 2.70 as of the date his or her Service terminates. If the Plan
becomes Top Heavy, as defined in Section 26, the Member's Vested Retirement
Benefit will be determined under Section 26. A Member will have a right to begin
receiving payment of his or her Vested Retirement Benefit on the last day of the
month in which his or her Normal Retirement Date occurs.
A Member who, at any time between December 1 and December 30, 1985, was a
member of the Terminated Plan and was in Service, will have a vested right to
his or her Retirement Benefit earned up to and including December 30, 1985.
Other persons, the liabilities of whose benefits were assumed by this Plan, will
continue to have the same vested right to benefits that they had in the
Terminated Plan (if any).
8.2 Early Payment of Vested Retirement Benefits. A Member with a right to
-------------------------------------------
receive his or her Vested Retirement Benefit may elect to begin receiving
benefit payments before the Member's Normal Retirement Date. The amount
distributable to the Member will equal the percentage of the Member's Retirement
Benefit based on the Member's age on the date such benefit payments begin as
described in the following Table B:
Table B
-------
Age at Commencement Percentage Factor
------------------- -----------------
55 42%
56 45%
57 49%
58 53%
59 58%
60 63%
61 69%
62 76%
63 83%
64 91%
65 100%
Such an election must be received by the Administrative Committee at least 30
days before the date on which benefit payments are to begin. Payment of the
Member's Vested Retirement Benefit will begin on the last day of any month
before the Member's Normal Retirement Date and on or after his or her 55th
birthday.
8.3 Death Before the Payment of Vested Retirement Benefits. If a Member
------------------------------------------------------
with a right to receive his or her Vested Retirement Benefit dies before the
Annuity Starting Date, a Survivor Annuity will be payable to the Member's
Surviving Spouse or Domestic Partner. The Survivor Annuity will be calculated as
of the date of the Member's death under Section 10.2.
27
<PAGE>
8.4 Limitation on Vested Retirement Benefit Eligibility. If a Member is not
---------------------------------------------------
entitled to a benefit or additional Service on account of his or her:
(a) Normal Retirement Date under Section 6;
(b) Early Retirement Date under Section 7;
(c) Total and Permanent Disability under Section 9; or
(d) Death under Section 10;
then no Retirement Benefit will be payable under the Plan upon the Member's
termination of Service unless the Member has completed 5 Years of Service or has
a right to a Vested Retirement Benefit under Section 26.
28
<PAGE>
SECTION 9 DISABILITY BEFORE RETIREMENT.
- --------- ----------------------------
9.1 Eligibility for Disability Service. A Member who has at least 5 Years
----------------------------------
of Service as of the date the Member becomes Totally and Permanently Disabled
and who is receiving disability benefits under the Levi Strauss & Co. Welfare
Plan will continue to accrue additional Benefit Service and Years of Service
under the Plan.
(a) Duration of Disability Service. A Member will continue to
------------------------------
accrue Benefit Service and Years of Service under the Plan until the earliest of
--------
the date:
(i) The Member is no longer Totally and Permanently
Disabled;
(ii) The Member elects an Early Retirement Date;
(iii) The Member reaches his or her earliest Normal
Retirement Date; or
(iv) Disability benefits are no longer payable to the
Member under the Levi Strauss & Co. Welfare Plan.
However, if the Administrative Committee determines that the Member engaged in
any act of Misconduct while in Service, he or she will not be entitled to accrue
additional Service under this Section 9.1 or any other provision of the Plan.
The Retirement Benefit of a Member who is Totally and Permanently Disabled who
engages in an act of Misconduct will be determined based on the Member's Benefit
Service as of the date the Member became Totally and Permanently Disabled, as
provided in Section 8.
(b) Payment of Retirement Benefit. Payment of the Retirement
-----------------------------
Benefit of a Member who accrues additional Service under this Section 9.1 will
begin in accordance with Section 7, if the Member elects an Early Retirement
Date, or if the Member does not elect an Early Retirement Date, in accordance
with Section 6 when the Member reaches his or her Normal Retirement Date. The
Member's Final Average Compensation, as determined by the Committee, at the
onset of his or her Total and Permanent Disability will be the Member's Final
Average Compensation for purposes of the Plan.
(c) Form of Retirement Benefit. The Retirement Benefit of a Member
--------------------------
who is Totally and Permanently disabled may be paid in any of the forms of
benefit provided in Section 11.3. However, if the Member is legally married such
benefit must be paid in the form of a Qualified Joint and Survivor Annuity
unless the Member elects otherwise with the written consent of his or her spouse
under Section 12.1. If the Member dies before the Annuity Starting Date, his or
her Surviving Spouse or Domestic Partner will be entitled to receive a Survivor
Annuity under Section 10.
9.2 Forfeiture of Disability Service. If a former Member who has completed
--------------------------------
at least 5 Years of Service and is otherwise entitled to Disability Service
under Section 9.1 fails to provide all information reasonably requested by the
Administrative Committee, or if the Administrative
29
<PAGE>
Committee determines that the Member has engaged in any act of Misconduct while
in Service, no additional Disability Service will be credited to the Member
under Section 9.1.
30
<PAGE>
SECTION 10 DEATH BENEFITS.
- ---------- --------------
10.1 Survivor Annuity. This Section 10 will govern the payment of
----------------
Retirement Benefits, if any, if the Member dies before the Annuity Starting
Date. Section 11 will govern the payment of Retirement Benefits, if any, if the
Member dies on or after the Annuity Starting Date.
10.2 Amount of Survivor Annuity. A Survivor Annuity will be payable to the
--------------------------
Surviving Spouse or Domestic Partner of a Member who dies with a Vested
Retirement Benefit before the Annuity Starting Date. The Survivor Annuity will
provide the Surviving Spouse or Domestic Partner with a monthly benefit
calculated as follows:
(a) If the Member dies before the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member:
(i) Separated from Service on the date of his or her death
(unless the Member had separated from Service before his or her death, in
which case the Member's actual date of separation from Service will be
used);
(ii) Survived until the earliest age the Member could have
begun receiving benefit payments under the Plan;
(iii) Elected to receive a 50% Qualified Joint and Survivor
Annuity, with his or her Surviving Spouse or Domestic Partner as contingent
annuitant, beginning on the earliest age the Member could have begun
receiving benefit payments under the Plan; and
(iv) Died on the day after such annuity became effective.
Such benefit will be calculated using the factors listed in Table B in Section
8. Benefit payments to the Surviving Spouse or Domestic Partner will begin on
the last day of the month following the later of the date the Member would have
-----
reached age 55 or the month in which the Member dies.
(b) If the Member dies after the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member had
retired on the first day of the month coincident with or next following the date
of the Member's death with a 50% Qualified Joint and Survivor Annuity, with his
or her Surviving Spouse or Domestic Partner as contingent annuitant. The
payments to the Surviving Spouse or Domestic Partner will begin no later than
the last day of the month following the date of the Member's death.
Neither the Member nor the Surviving Spouse nor the Domestic Partner may waive
the Survivor Annuity.
31
<PAGE>
10.3 Entitlement to Death Benefit. No death benefit will be payable under
----------------------------
the Plan with respect to a Member who dies without both a Vested Retirement
Benefit and a Surviving Spouse or Domestic Partner.
32
<PAGE>
SECTION 11 METHOD OF PAYMENT.
- ---------- -----------------
11.1 Normal Form of Benefit for Married Members. The normal form of
------------------------------------------
benefit for a Member who is Legally Married on the Annuity Starting Date is a
"Qualified Joint and Survivor Annuity." The term "Qualified Joint and Survivor
Annuity" means a benefit providing a reduced monthly annuity for the life of the
Member, ending with the payment due on the last day of the month in which the
Member died, and, if the Member dies leaving a Surviving Spouse described in
Section 2.62, a survivor annuity, in an amount equal to either 50% or 100% (as
elected by the Member) of the monthly annuity payable to the Member, for the
life of the Surviving Spouse, beginning on the last day of the month following
the month in which the Member dies and ending with the payment due on the last
day of the month in which the Surviving Spouse dies. A Member who has a Domestic
Partner on the Annuity Starting Date may elect to receive a survivor annuity
with his or her Domestic Partner as the Beneficiary under Section 11.3(b). See
Section 12.4(b) for cases where the Member dies after the Annuity Starting Date
but before his or her first Retirement Benefit payment.
11.2 Normal Form of Benefit for Single Members. The normal form of benefit
-----------------------------------------
for a Member who does not have a Surviving Spouse on the Annuity Starting Date
is a "Straight Life Annuity." The term "Straight Life Annuity" means a benefit
providing a monthly annuity for the life of the Member ending with the payment
due on the last day of the month in which the Member dies.
11.3 Optional Forms Of Benefit. Instead of the annuity otherwise payable
-------------------------
to the Member under Sections 11.1 or 11.2, a Member may elect to receive the
Equivalent Actuarial Value of any benefit to which he or she is entitled under
the Plan in one of the following forms:
(a) Straight Life Annuity: The Member may elect to receive a monthly
---------------------
annuity payable to the Member for his or her life, ending with the payment due
on the last day of the month in which the Member dies.
(b) Survivorship Options: The Member may elect to receive a reduced
--------------------
monthly annuity payable for the Member's life, and, after his or her death, a
monthly survivor annuity in the same amount (a "100% survivor annuity") or 1/2
of such amount for the life of the Beneficiary. However, no 100% survivor
annuity will be payable unless the Beneficiary is the Member's Surviving Spouse
or the Beneficiary is no more than 10 years younger than the Member. If the
Member's Beneficiary dies before benefit payments begin, the Survivorship Option
elected by the Member will automatically be cancelled and the Member's
Retirement Benefit will be paid in the normal form specified in Section 11.1 or
11.2, as appropriate, unless the Member elects another optional form of benefit
under Section 12.1.
(c) 10-Year Certain and Life Option: The Member may elect to receive
-------------------------------
a reduced monthly annuity payable for the Member's life. If the Member dies
before receiving 120 monthly payments, monthly payments will continue to the
Beneficiary designated by the Member (or, in the event of the Beneficiary's
death, to the Beneficiary's estate) until a total of 120 payments have been
received by the Member and Beneficiary (or the Beneficiary's estate). Payments
under the 10-Year Certain and Life Option may not be made over a period
exceeding
33
<PAGE>
the life expectancies of the Member and the Beneficiary, as determined under
section 72(t) of the Code.
If the Member's Beneficiary dies before benefit payments begin, the 10-Year
Certain and Life Option selected by the Member will automatically be cancelled
and the Member's benefit will be paid in the normal form of benefit specified in
Section 11.1 or 11.2, as appropriate, unless the Member elects another optional
form of benefit under Section 12.1.
(d) Direct Transfer Option. Effective for single sum distributions
----------------------
made on and after January 1, 1993, the Member may elect to have his or her
Retirement Benefit directly transferred to a plan qualified under section 401(a)
of the Code which accepts direct transfer contributions, an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code (other than an
endowment contract), or an annuity plan described in section 403(a) of the Code;
provided that such single sum distribution exceeds $200 and otherwise qualifies
for transfer pursuant to section 401(a)(31) of the Code.
The Administrative Committee will provide each eligible Member with notice
of the direct transfer option as required by section 402(f) of the Code (the
"Section 402(f) Notice") at least 90 days and not less than 30 days before the
Annuity Starting Date. The Member will have at least 30 days after the Section
402(f) Notice is provided to elect to have his or her Retirement Benefit paid in
the form of a direct transfer. The Member may elect to waive this 30 day
election period by affirmatively electing, before the expiration of the 30 day
period, to have his or her Retirement Benefit paid in the form of a direct
transfer. If the Member makes such an election, no other benefits will be
payable from the Plan to the Member and his or her Beneficiary.
The interest rate specified in Section 25 will be used for determining a
single sum of Equivalent Actuarial Value of the Member's Retirement Benefit.
11.4 Limitation on Optional Forms of Benefit. No election or revocation of
---------------------------------------
an election of an optional form of benefit may be made that would result in
payments to any person of less than $10 per month, and any annuity amounting to
less than $10 per month may be paid in quarterly or semiannual installments. If
this Section 11.4 is applicable to a Member, any references to monthly benefits
which would otherwise apply to the Member will be modified to reflect that the
Member is receiving quarterly or semiannual installments, as applicable.
11.5 Mandatory Cash Out of Benefits Less than $3,500. If the Equivalent
-----------------------------------------------
Actuarial Value of a Member's Retirement Benefit is $3,500 or less, such
Equivalent Actuarial Value will be paid to the Member in a single sum. Such
single sum will be paid as soon as practicable after the Member's Service
terminates instead of any other payments under the Plan. No single sum
distribution will be made to a Member or to a Member's Surviving Spouse after
the Annuity Starting Date. Alternatively, effective with respect to single sum
distributions in excess of $200 made on and after January 1, 1993, the Member
may elect to have such distribution made in the form of a direct transfer as
described in Section 11.3(d).
The interest rate specified in Section 25 will be used for determining a
single sum Equivalent Actuarial Value of the Member's Retirement Benefit.
34
<PAGE>
11.6 Reduction of Benefits. If a Member who has received a single sum
---------------------
distribution under Section 11.5 returns to Service, his or her Retirement
Benefit will be based on his or her total Benefit Service but will be reduced by
the amount of the prior single sum distribution. Such subsequent Retirement
Benefit, if any, will be paid in the form determined under Section 12.4.
35
<PAGE>
SECTION 12 BENEFIT ELECTIONS.
- ---------- -----------------
12.1 Election of Optional Forms of Benefits. A Member whose Retirement
--------------------------------------
Benefit is otherwise payable under the normal form described in Section 11.1 or
Section 11.2 may elect in writing to receive his or her benefit under one of the
optional forms of benefit described in Section 11.3 during the Election Period
specified in Section 12.3.
12.2 Written Explanation and Election Form. Not more than 90 days and at
-------------------------------------
least 30 days before the Annuity Starting Date, the Administrative Committee
will provide an election form for purposes of electing an optional form of
benefit under the Plan as well as a written explanation of the terms, conditions
and effects of such election to each active Member and each separated Member
with a Vested Retirement Benefit whose benefit payments have not yet begun.
The written explanation will contain:
(a) A description of the Qualified Joint and Survivor Annuity and
Straight Life Annuity described in Section 11.1 and Section 11.2;
(b) Notice of the Member's right to waive the Qualified Joint and
Survivor Annuity or Straight Life Annuity by electing an optional form of
benefit;
(c) A description of the different optional forms of benefit described
in Section 11.3;
(d) Notice of the requirement that the Member's spouse must consent to
the Member's waiver of the Qualified Joint and Survivor Annuity and election of
an optional form of benefit;
(e) Notice of the Member's right to revoke the waiver of the Qualified
Joint and Survivor Annuity or Straight Life Annuity and election of an optional
form of benefit during the Election Period specified in Section 12.3;
(f) A general explanation of the financial effect of election of each
of the optional forms of benefit; and
(g) Notice that the Member may request an explanation of the specific
financial effect, in terms of monthly payments, on the Member's benefit of
making an election.
If the Member requests a written explanation of the specific financial
effect of electing an optional form of benefit under the Plan during the
Election Period, such explanation will be provided to the Member within 30 days
of the date of his or her request. Alternatively, the Administrative Committee
may in its discretion, before a request by a Member, include the written
explanation of the specific financial effect of electing an optional form of
benefit under the Plan in the explanatory notice described above.
36
<PAGE>
12.3 Applicable Election Period and Form of Election. The Election Period
-----------------------------------------------
will begin on the date the Administrative Committee provides the Member with the
written explanation of the optional forms of benefit under the Plan described in
Section 12.2 and generally will end on the earlier of:
-------
(a) The date of the Member's death; or
(b) The later of:
(i) The Member's Annuity Starting Date; or
(ii) 90 days after the date that such written explanation is
furnished.
However, if the Member requests a written explanation of the specific financial
effect of electing an optional form of benefit under the Plan under Section
12.2, the Election Period will end on the earlier of (i) the date of the
-------
Member's death or (ii) 90 days after the date that such written explanation is
furnished.
During the Election Period, any election not to take payment in the normal
form of benefit provided in Section 11.1 and Section 11.2 will be revocable.
After the expiration of the Election Period, any election made will be
irrevocable, and the Member will not be entitled to make an election if no
election has been made. A Member may elect to begin receiving monthly benefit
payments before the expiration of the Election Period. If the Member is Legally
Married and elects to receive his or her Retirement Benefit in a form other than
the Qualified Joint and Survivor Annuity, such election will not be effective
without the written consent of his or her spouse. A Member who elects to begin
receiving monthly benefit payments before the expiration of the Election Period
may, nevertheless, elect to change his or her benefit election, and elect
another optional form of benefit during the remainder of the Election Period. If
a Member makes such an election, his or her Retirement Benefit will begin being
paid in the new optional benefit form as soon as practicable after the
Administrative Committee receives the Member's benefit election.
If a Legally Married Member elects to receive his or her Retirement Benefit
in a form other than the Qualified Joint and Survivor Annuity specified in
Section 11.1 and/or designates a person other than his or her spouse as his or
her contingent annuitant, the election or designation will be effective only if
consented to by the Member's spouse. The consent must:
Be in writing;
Acknowledge the effect of the election and/or designation and the
spouse's consent thereto;
Be witnessed by a notary public; and
Be delivered to the Administrative Committee.
No spousal consent will be required if the Administrative Committee determines
to its satisfaction that the spouse cannot be located or that there exist such
other circumstances
37
<PAGE>
preventing such consent that may be prescribed in applicable Regulations or
rulings issued by the IRS. The Administrative Committee may determine a Member's
marital status in accordance with such reasonable procedures as it may adopt
from time to time.
If an active or separated Member's spouse or contingent annuitant dies
before payment of the Member's Retirement Benefit begins and the Member elected
a contingent annuitant option under Section 11.3, such form of benefit will be
automatically cancelled and the Member will be deemed not to have selected an
optional form of benefit (if an optional contingent annuitant benefit was
elected). The Member may later elect an optional form of benefit if the election
is timely made. Each Member may (with the written consent of his or her spouse
if the Member is Legally Married) change any election of a form of benefit by
executing a new election in accordance with this Section 12 until the expiration
of the Election Period.
12.4 Special Circumstances Governing Elections. The following paragraphs
-----------------------------------------
govern the election of optional forms of benefit under the Plan.
(a) Death Before Annuity Starting Date. If a Member who is Legally
----------------------------------
Married or who has a Domestic Partner dies before the Annuity Starting Date and
before the beginning of the Election Period, his or her Surviving Spouse or
- ------
Domestic Partner, as applicable, will be entitled to receive a Survivor Annuity
under Section 10 of the Plan. If a Member who is Legally, Married dies before
the Annuity Starting Date but during the Election Period after electing (with
the written consent of his or her spouse) to waive the Qualified Joint and
Survivor Annuity, the Member's spouse will nevertheless be entitled to receive a
Survivor Annuity under Section 10 of the Plan. Similarly, if a Member who has a
Domestic Partner dies before the Annuity Starting Date but during the Election
Period after electing to waive the Straight Life Annuity, the Member's Domestic
Partner will nevertheless be entitled to receive a Survivor Annuity under
Section 10 of the Plan.
(b) Death on or After Annuity Starting Date. If a Member who is
---------------------------------------
Legally Married dies on or after the Annuity Starting Date, the Member's
-----------
Retirement Benefit will be paid to his or her Surviving Spouse in the form of a
Qualified Joint and Survivor Annuity under Section 11.1, unless the Member
elected an optional form of benefit (with his or her spouse's consent).
Conversely, if the Member delays the payment of his or her Retirement Benefit
beyond the Annuity Starting Date and dies on or after the Annuity Starting Date
after having elected an optional form of benefit, the Member's benefit will be
paid under the terms of that election upon his or her death. The Member's
election and the spouse's consent must comply with the requirements of Section
12.3.
If a Member who has a Domestic Partner dies on or after the Annuity
-----------
Starting Date, no Retirement Benefit will be payable to his or her Domestic
Partner unless the Member elected an optional form of benefit which provides for
such payment. Conversely, if a Member who has a Domestic Partner delays the
payment of his or her Retirement Benefit beyond the Annuity Starting Date and
dies on or after the Annuity Starting Date after electing an optional form of
benefit, the Member's Retirement Benefit will be paid under the terms of that
election upon his or her death.
38
<PAGE>
(c) Reemployed Members. If a Member is reemployed by the Company after
------------------
his or her Normal Retirement Date, Deferred Retirement Date or Vested Retirement
Benefit Payment Date described in Section 8.1 and the Member's Retirement
Benefit payments are suspended under Section 13.2(a) or Section 13.2(b), the
Administrative Committee will not be required to provide the Member with a
written explanation of the optional forms of benefit payable under the Plan nor
obtain a new benefit election and spousal consent upon the Member's later
termination of Service or the resumption of benefit payments under Section
13.2(a) or Section 13.2(b). Rather, upon the Member's later termination of
Service, or upon the later resumption of benefit payments, his or her benefit
(as adjusted under Section 13.2(d) after the Member's reemployment) will
recommence in the form in which they were being paid before the suspension of
such benefit payments under Section 13.2.
If a Member is reemployed by the Company after his or her Early Retirement
Date or Vested Retirement Benefit Payment Date described in Section 8.2 and the
Member's Retirement Benefit payments are suspended under Section 13.2(a) or
Section 13.2(b), the Member's prior benefit election will automatically be
cancelled and of no effect. Upon the Member's later termination of Service, the
Administrative Committee will provide the Member with the written explanation of
the optional forms of benefit payable under the Plan and obtain a new benefit
election and spousal consent, if the Member is Legally Married. Upon the
Member's later termination of Service, his or her Retirement Benefit (as
adjusted under Section 13.2(d) after the Member's reemployment) will be paid in
the form in which the Member elects under Section 13.2.
(d) Reemployment After Cashout. If a Member is reemployed by the
--------------------------
Company after receiving a mandatory cash out of his or her Retirement Benefit
under Section 11.5, then any additional Retirement Benefit payable to the Member
upon his or her later termination of Service will be subject to the terms and
conditions of Section 10, regarding the Survivor Annuity, and Section 11,
regarding the Qualified Joint and Survivor Annuity. Accordingly, if the Member
is Legally Married or has a Domestic Partner and dies before the Annuity
Starting Date, the Member's Retirement Benefit will be paid in the form of a
Survivor Annuity. If the Member is Legally Married and dies on or after the
Annuity Starting Date, the Member's Retirement Benefit will be paid in the form
of a Qualified Joint and Survivor Annuity, unless such annuity is waived, with
the consent of the Member's spouse. If the Member has a Domestic Partner and the
Member dies on or after the Annuity Starting Date, no Retirement Benefit will be
payable under the Plan, unless the Member has elected an optional form of
benefit under Section 12.3.
If the Equivalent Actuarial Value of a Member's Retirement Benefit, is
$3,500 or less as of the date of the Member's separation from Service, such
benefit will be paid in the form of a single sum under Section 11.5.
39
<PAGE>
SECTION 13 PAYMENT AND SUSPENSION OF BENEFITS.
- ---------- ----------------------------------
13.1 Payment of Benefits. Payment of a Member's Retirement Benefit will
-------------------
begin not later than the earlier of:
-------
(a) 60 days after the last to occur of:
----
(i) The last day of the Plan Year in which the Member
reaches age 65;
(ii) The last day of the Plan Year in which the Member
separates from Employment with the Company; or
(iii) The last day of the Plan Year which contains the 10th
anniversary of the date the Member began membership in the Plan; or
(b) The Required Beginning Date.
If a Member or former Member dies before his or her entire Retirement
Benefit has been distributed, such benefit will become payable in full not later
than 5 years following the date of the Member's death. However, if benefit
payments have begun and will be made to the Member over a period not extending
beyond the life expectancy of the Member or the joint lives or joint life
expectancy of the Member and the Member's Beneficiary, any remaining benefit may
be paid over a period not extending beyond the payment period elected by the
Member and in effect at his or her death. The preceding requirements will be
satisfied if the Member's benefit is to be paid over the life or life expectancy
of the Beneficiary in accordance with Regulations issued by the IRS and the
payment of such benefit begins no later than (i) 1 year after the death of the
-----
Member, or (ii) if the Member's Surviving Spouse is the designated Beneficiary,
the date the Member would have attained age 70-1/2. If the Surviving Spouse of
the Member dies before the complete payment of the Member's Retirement Benefit,
the remainder of such benefit may be paid to the Surviving Spouse's designated
beneficiary as if the Surviving Spouse were a Member.
All Retirement Benefit payments will be made in accordance with the minimum
distribution and incidental benefit requirements of section 401(a)(9) of the
Code which require generally that certain minimum amounts be distributed to the
Member each calendar year, beginning with the calendar year in which the
Member's Required Beginning Date falls, in order to assure that certain minimum
amounts be paid to the Member and that only "incidental" benefits be provided to
the Member's Beneficiaries. Any distribution option required by section
401(a)(9) of the Code will override and supersede any inconsistent distribution
options provided for in the Plan.
13.2 Suspension of Benefits. A Member who is reemployed by the Company
----------------------
after his or her Retirement Date will be subject to the following benefit
suspension provisions.
(a) Reemployment as Employee. If a Member who is receiving monthly
------------------------
benefit payments on account of his or her Normal Retirement, Deferred Retirement
or Vested Retirement Benefit Payment Date described in Section 8.1 is reemployed
by the Company as an Employee, such monthly benefit payments will be suspended
upon the Member's reemployment.
40
<PAGE>
Such monthly benefit payments will recommence (in the form in which they were
being paid before the suspension) upon the earlier of (i) the date the Member
-------
terminates Service, or (ii) any month during which the Member is credited with
less than 40 Hours of Service.
If a Member who is receiving monthly benefit payments on account of his or
her Early Retirement or Vested Retirement Benefit Payment Date described in
Section 8.2 is reemployed by the Company as an Employee, such monthly benefit
payments will be suspended upon the Member's reemployment. Such monthly benefit
payments will recommence (in the form elected by the Member under Section 12)
upon the Member's subsequent termination of Service.
(b) Reemployment as a Casual Employee. If a Member who is receiving
---------------------------------
monthly benefit payments on account of his or her Normal Retirement, Deferred
Retirement or Vested Retirement Benefit Payment Date described in Section 8.1 is
reemployed by the Company as a Casual Employee, such monthly benefit payments
will be suspended after the Member completes 950 Hours of Service during a
Rehire Anniversary Year. Such suspension will be effective for each month in
which the Member is credited with at least 40 Hours of Service. Such monthly
benefit payments will recommence during each succeeding Rehire Anniversary Year
and will continue to be paid (in the same form as they were before the
suspension) until the Member again completes 950 Hours of Service, in which case
such benefit payments will be suspended.
If a Member who is receiving monthly benefit payments on account of his or
her Early Retirement or Vested Retirement Benefit Payment Date described in
Section 8.2 is reemployed by the Company as a Casual Employee, such monthly
benefit payments will be suspended after the Member completes 950 Hours of
Service during a Rehire Anniversary year. Such benefit payments will not
recommence until the Member's termination of Service. At such time, the Member's
Retirement Benefit will be paid in the form elected by the Member under Section
12.
(c) Limitations on Benefit Suspension. If a Member or former Member is
---------------------------------
reemployed by the Company after reaching age 70-1/2, his or her monthly benefit
payments, if any, will continue. In addition, if a Member who is reemployed
after his or her Retirement Date continues in Service after his or her Required
Beginning Date, the Member will be deemed to have terminated Service for
purposes of this Section 13 and Section 12.4 as of his or her Required Beginning
Date.
(d) Benefit Service While Reemployed. A Member described in any of the
--------------------------------
preceding paragraphs who is reemployed by the Company as an Employee or as a
Casual Employee will be credited with a full month of Benefit Service for every
calendar month in which he or she is credited with at least 1 Hour of Service or
in which he or she otherwise has Service. However, any additional Retirement
Benefit the Member would accrue as a result of being credited with Benefit
Service under this Section 13.2, will be offset by the monthly benefits
distributed to the Member. Such offset will not reduce the Member's monthly
benefit payments below the amount the Member was receiving on account of his or
her earlier termination of employment. Such offset will be made for a Member who
is reemployed by the Company after his or her Normal Retirement, Deferred
Retirement or Vested Retirement Benefit Payment Date described in Section 8.1
for each month the Member is engaged in "Section 203(a)(3)(B) Service," as
defined in the Act. A Member will be engaged in Section 203(a)(3) (B) Service
during any month in which he or she is credited with at least 40 Hours of
Service.
41
<PAGE>
Such offset will be made for a Member who is reemployed by the Company after his
or her Early Retirement or Vested Retirement Benefit Payment Date described in
Section 8.2 for each month of the Member's reemployment. Any additional
Retirement Benefit earned by the Member will be paid in the form provided by
Section 12.4.
(e) Retiree Coordinators. If a Member retires and is reemployed by the
--------------------
Company as a Retiree Coordinator, he or she will continue to receive monthly
Retirement Benefits, if any, and will not resume membership in the Plan while so
employed.
42
<PAGE>
SECTION 14 MAXIMUM AMOUNT OF RETIREMENT BENEFIT.
- ---------- ------------------------------------
14.1 Scope of Limitations on Benefits. The provisions of this Section 14
--------------------------------
will govern the following benefits:
(a) Any annuity payable to a Member for life as part of a Qualified
Joint and Survivor Annuity or as part of a Survivorship Option elected by the
Member under Section 11.3 and having the effect of a "qualified joint and
survivor annuity" within the meaning of section 417 of the Code;
(b) Any Straight Life Annuity payable to a Member under Section 11.2
or 11.3; and
(c) Any other Survivorship Option or other option elected by a Member
under Section 11.3 (including both the annuity payable to the Member and any
other annuity or benefit payable).
14.2 Basic Limitations on Benefits. The benefits to which Section 14 is
-----------------------------
applicable may not exceed the Equivalent Actuarial Value of a Qualified Joint
and Survivor Annuity or Straight Life Annuity in an annual amount equal to the
lesser of:
- ------
(a) The $90,000 limitation in effect under section 415(b)(1)(a) of the
Code (as adjusted to take into account changes in the cost-of-living under any
Regulations or rulings of the IRS) (the "$90,000 Limitation"); or
(b) 100% of the Member's High-3 Year Average Compensation (the
"Compensation Limitation"), subject, however, to the following provisions of
this Section 14.
If a Member's benefit would exceed the above limitation, then the Member's
benefit will be reduced as necessary. However, the Member's benefit will in no
event be reduced below the amount of such benefit as of November 27, 1983,
determined under the Terminated Plan (including its benefit limitations) as then
in effect.
14.3 Adjustments to Limitations. The $90,000 Limitation and Compensation
--------------------------
Limitation will be subject to the following provisions:
(a) Benefits Payable to Former Members. In the case of a Member who
----------------------------------
has separated from Service, the $90,000 Limitation will be adjusted annually to
reflect changes in the cost-of-living under any Regulations or rulings issued by
the IRS.
(b) Early Payment Adjustment. If benefits become payable to a Member
------------------------
before he or she reaches the Social Security Retirement Age but on or after the
date on which the Member reaches age 62, the $90,000 Limitation will be reduced
by .00556 for each of the first 36 months and by .00417 for each additional
month by which the Member's benefit commencement date precedes his or her Social
Security Retirement Age. If benefits become
43
<PAGE>
payable before the Member reaches age 62, the $90,000 Limitation will be reduced
as provided in the preceding sentence until age 62 and will be further reduced
for each month by which the benefit commencement date precedes the Member's 62nd
birthday. In adjusting the $90,000 Limitation for the payment of benefits before
age 62, the interest rate used will be the greater of 5% per annum or the rate
used for determining actuarial reductions for Early payment of benefits
described in Section 25 of this Plan.
(c) Delayed Payment Adjustment. If benefits become payable to a Member
--------------------------
after he or she reaches the Social Security Retirement Age, the $90,000
Limitation will be adjusted, using an interest assumption not greater than the
lesser of 5% or the post-retirement interest rate used for making Equivalent
Actuarial Value determinations under the Plan, so that it has an Equivalent
Actuarial Value to a $90,000 benefit beginning at the Social Security Retirement
Age. Such limitation may not exceed the Compensation Limitation.
(d) Service and Membership Reductions. If the Member has completed
---------------------------------
less than 10 Years of Plan membership and/or less than 10 Years of Service
(including fractional parts of a year), the $90,000 Limitation will be reduced
by multiplying it by a fraction, the numerator of which is the number of years
of Plan membership of the Member and the denominator of which is 10, and the
Compensation Limitation will be multiplied by a fraction the numerator of which
is the number of Years of Service of the Member and the denominator of which is
10. As provided in Sections 2.58 and 2.72, Years of Service which would be
counted under the Terminated Plan will be counted under this Plan but the same
period will be counted only once.
14.4 Minimum Benefit. The $90,000 Limitation and Compensation Limitation
---------------
will not apply if:
(a) The annual benefits payable under all defined benefit plans
maintained by the Company or an Affiliated Company with respect to the Member
does not exceed $1,000 multiplied by the Member's Years of Service (not to
exceed 10); and
(b) The Member has not participated in any defined contribution plan
(within the meaning of section 414(i) of the Code) maintained by the Company or
an Affiliated Company.
14.5 TRA 86 Protected Benefits. If on or before the first day of the first
-------------------------
Plan Year beginning after December 31, 1986 (November 30, 1987), a Member was a
participant in 1 or more defined benefit plans maintained by the Company or an
Affiliated Company which were in existence on May 6, 1986, and that met the
applicable requirements of section 415 of the Code for all prior Plan Years, the
$90,000 Limitation will equal the greater of the amount specified in Section
14.2(a), as adjusted under the preceding paragraphs of this Section 14, or the
Member's Retirement Benefit at the close of the last Plan Year beginning on or
before December 31, 1986, calculated as if the Member had terminated employment
on the last day of said Plan Year. In calculating a Member's Retirement Benefit
for purposes of the preceding sentence, the Administrative Committee will
disregard changes in the terms and conditions of the Plan and cost-of living
adjustments occurring after May 5, 1986.
14.6 Multiple Plans. The Administrative Committee will, to the extent
--------------
required by the Act and the Code and in accordance with the Regulations, apply
the $90,000 Limitation and
44
<PAGE>
Compensation Limitation by taking into account the benefits payable and the
contributions made under any other plans maintained by the Company or Affiliated
Company which are qualified under section 401(a) of the Code. If such other plan
is a defined contribution plan, then the sum of the "defined benefit plan
fraction" (as defined in section 415(e)(2) of the Code) and the "defined
contribution plan fraction" (as defined in section 415(e)(3) of the Code) may
not exceed 1. In any case where the combined fraction is in excess of 1, then
the Retirement Benefit payable under this Plan will be reduced (but not below
the Member's Retirement Benefit as of the last day of the Plan Year beginning
before January 1, 1987). The reduction will be of sufficient amount to eliminate
the excess over the combined maximum.
If the Plan becomes Top Heavy and, therefore, subject to the provisions of
Section 26, then for purposes of determining the "defined benefit plan fraction"
and the "defined contribution plan fraction," a factor of 100% will be
substituted for the factor of 125% used in calculating the denominators of such
fractions, unless both of the following conditions are satisfied:
(a) The Plan is not Super Top Heavy as defined in Section 26 of the
Plan; and
(b) The contributions and benefits on behalf of all Participants other
than Key Employees meet the requirements of section 416(h) of the Code.
14.7 Special Limitations on Benefits. The annual Retirement Benefit
-------------------------------
payments to a Member who is among the 25 highest Highly Compensated Employees
and highest Highly Compensated Former Employees will be restricted to an amount
equal to the payments that would be made on behalf of the Member under a single
life annuity that is the Equivalent Actuarial Value of the Member's Retirement
Benefit under the Plan. The above restrictions will not apply, however, if one
---
of the following conditions is met:
(a) After payment to a Member described in the preceding paragraph of
all of his or her "benefits" under the Plan, the value of the Plan assets equals
or exceeds 110% of the value of current liabilities as defined in section
412(l)(7) of the Code; or
(b) The value of "benefits" for a Member described in the preceding
paragraph is less than 1% of the value of current liabilities; or
(c) The value of "benefits" payable to the Member under the Plan does
not exceed the amount described in section 411(a)(11)(A) of the Code regarding
the restrictions on mandatory single sum distributions of less than $3,500.
"Benefits" include any periodic income, any withdrawal values payable to a
living Member, and any death benefits not provided for by insurance on the
Member's life.
45
<PAGE>
SECTION 15 BENEFICIARIES.
- ---------- -------------
If no Beneficiary designation is in effect under Section 11.3 at the time
of a Member's death, or if no designated Beneficiary survives the Member, the
payment of the Member's Vested Retirement Benefit, if any, will be made to the
following persons in the order listed:
(a) To the Member's Surviving Spouse, if any;
(b) If the Member has no Surviving Spouse, then to his or her
children;
(c) If the Member has no living children, then to his or her parents;
(d) If the Member has no living parents, then to his or her brothers
and sisters; or
(e) If the Member has no living brothers and sisters, then to his or
her estate.
The Administrative Committee will, in its sole and absolute discretion,
determine the right of such persons to receive the benefit payable with respect
to a Member, if any. If the Administrative Committee is in doubt as to the right
of any person to receive such amount, the Administrative Committee may direct
the Trustee to retain such amount, without liability for any interest on such
amount, until the rights to such amount are determined, or, alternatively, may
direct the Trustee to pay such amount into any court of appropriate jurisdiction
and such payment will be a complete discharge of the liability of the Plan and
the Trust Fund.
46
<PAGE>
SECTION 16 FUNDING AND CONTRIBUTIONS.
- ---------- -------------------------
16.1 Contributions. Subject to the provisions of Sections 19 and 20 of this
-------------
Plan, the Company will contribute to the Trust Fund, for each Plan Year, the
amount required by the Act and the Code. The Investment Committee will arrange
for the establishment and maintenance of such funding accounts as are required
by the Act and the Code.
16.2 Actuarial Assumptions. The Administrative Committee will adopt and may
---------------------
change from time to time the actuarial assumptions and methods that are
recommended by the Actuary for purposes of making actuarial valuations for the
Plan. At such times as may be required by the Act or the Code or requested by
the Administrative Committee, the Actuary will make an actuarial valuation of
the Plan, including such calculations as may be necessary to determine whether
the Plan is adequately funded, will estimate the contributions required under
Section 16.1 and will report the results of its valuation to the Administrative
Committee. Before the termination of the Plan, forfeitures of benefits arising
from a Member's termination of Service, death or any other reason will not be
applied to increase the benefit that any Member would otherwise be entitled to
receive under the Plan, but may be anticipated in estimating costs and will be
applied to reduce the Company's contributions under the Plan.
16.3 Trust Fund. All monies, securities or other property received as
----------
contributions under the Plan will be delivered to the Trustee under the Trust
Fund, to be managed, invested, reinvested and distributed in accordance with the
Plan, the Trust Agreement, and any agreement with an insurance company or other
financial institution constituting a part of the Plan and Trust Agreement.
16.4 Expenses of the Plan. The expenses of administering the Plan may be
--------------------
paid out of the Trust Fund if the Participating Companies do not pay such
expenses directly in such proportions as determined by the Administrative
Committee. The administrative expenses include but are not limited to:
(a) The premiums for termination insurance payable to the PBGC;
(b) The fees and expenses of any employee and of the Trustee for the
performance of their duties under the Trust Agreement;
(c) The expenses incurred by the members of the Administrative
Committee and of the Investment Committee in the performance of their duties
under the Plan (including reasonable compensation for any legal counsel,
certified public accountants and actuaries and any outside agents and cost of
services provided with respect to the Plan); and
(d) All other proper charges and disbursements of the Trustee or the
members of the Administrative Committee and of the Investment Committee
(including settlements of claims or legal actions approved by counsel to the
Plan),
An election by the Participating Companies to pay all or a part of the above
expenses directly will not bind the Participating Companies as to their rights
to elect, with respect to the same or other expenses, at any other time to have
such expenses paid from the Trust Fund or to have the
47
<PAGE>
Trustee reimburse the Participating Companies for expenditures already made. In
estimating costs under the Plan, administrative costs may be anticipated.
48
<PAGE>
SECTION 17 ADMINISTRATION OF THE PLAN.
- ---------- --------------------------
17.1 Administrative Committee. The Administrative Committee is the "Plan
------------------------
Administrator" of the Plan (as such term is used in the Act) and the "Named
Fiduciary" (as defined under section 402 of the Act) with respect to the
operation and administration of the Plan. The Administrative Committee will
employ the Actuary and such certified public accountants as it requires or may
deem advisable for the Plan. The Administrative Committee will make rules and
regulations and take any other actions to administer the Plan as it may deem
appropriate. The Administrative Committee may adopt periods in which advance
notice required under the Plan must be given and will communicate such periods
to Employees. The Administrative Committee will have sole discretion to
interpret the terms of the Plan and to determine eligibility for benefits and
the amount of benefits payable to a Member, if any, under the objective criteria
set forth in the Plan. The Administrative Committee's rules, interpretations,
regulations and actions will be conclusive and binding on all persons.
In administering the Plan, the Administrative Committee (a) will act in a
nondiscriminatory manner to the extent required by section 401(a) and related
sections of the Code, and (b) will at all times discharge its duties in
accordance with the standards set forth in section 404(a)(1) of the Act.
17.2 Control and Management of Plan Assets. The Investment Committee is the
-------------------------------------
"Named Fiduciary" (as defined under section 402 of the Act) with respect to the
management and control of the assets of the Plan, but only to the extent that it
will have the authority to:
(a) Appoint 1 or more Trustees to hold the assets of the Plan in trust
and to enter into a trust agreement with each Trustee it appoints;
(b) Appoint 1 or more Investment Managers for any assets of the Plan
and to enter into an investment management agreement with each Investment
Manager it appoints;
(c) Remove any Trustee or Investment Manager so appointed;
(d) Direct the investment of any Plan assets not assigned to an
Investment Manager or to the Trustee; and
(e) Perform such other functions as are specifically assigned to the
Investment Committee under the Plan.
In addition, the Investment Committee will have the responsibility for
monitoring and reviewing the investment performance of the Plan to ensure that
it is consistent with the requirements of the Act and the Code and the funding
policy adopted by the Administrative Committee. The Investment Committee will
establish the necessary parameters or standards regarding Plan investments to
ensure that such criteria continue to be met.
17.3 Trustees and Investment Managers. Each Trustee appointed under Section
--------------------------------
17.2 will have the exclusive authority and discretion to control and manage the
Plan assets held in trust by it, except to the extent that:
49
<PAGE>
(a) The Investment Committee directs how those assets will be
invested;
(b) The Investment Committee allocates the authority to manage those
assets to 1 or more Investment Managers; or
(c) The Plan prescribes how those assets will be invested.
Each Investment Manager appointed will have the exclusive authority to manage,
including the power to acquire and dispose of, the Plan assets assigned to it by
the Investment Committee, except to the extent that the Investment Committee
prescribes how those assets will be invested. The Trustee and each Investment
Manager will be solely responsible for diversifying the investment, in
accordance with section 404(a)(1)(C) of the Act, of the Plan assets assigned to
them by the Investment Committee, except to the extent that the Investment
Committee directs or the Plan prescribes how those assets will be invested.
17.4 Committee Membership. Both the Administrative Committee and the
--------------------
Investment Committee will consist of at least 3 members. Each Member will be
appointed by, will remain in office at the will of, and may be removed, with or
without cause, by the Board of Directors. Any member of either Committee may
resign at any time. The Board of Directors will designate the chairman of each
Committee.
To the maximum extent permitted by law, no member of either Committee will
be personally liable by reason of any contract or other instrument executed by
him or her, or on his or her behalf, in his or her capacity as a member of such
Committee, nor for any mistake of judgment made in good faith. The Company will
indemnify and hold harmless, directly from its own assets (including the
proceeds of any insurance policy the premiums of which are paid from the
Company's own assets), each member of the Administrative Committee and
Investment Committee and each other officer, employee or director of the Company
to whom any duty or power relating to the administration or interpretation of
the Plan or to the management and control of the assets of the Plan may be
delegated or allocated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Company) arising out of any act or omission to act in connection with the
Plan, unless arising out of such person's own fraud or willful misconduct.
17.5 Reports to Board of Directors. Each Committee will report to the Board
-----------------------------
of Directors, or to its designee for this purpose, annually and at such other
times specified by the Board of Directors or such designee, with regard to the
matters for which it is responsible under the Plan.
17.6 Employment of Advisers. The Administrative Committee and the
----------------------
Investment Committee may make use of employees of the Company or outside agents
as they each require or may deem advisable for purposes of performing their
respective duties under the Plan. Either Committee may rely upon the written
opinion or advice of counsel provided by the Company, fairness opinions provided
by investment bankers and written opinions or advice provided by the Actuary and
accountants engaged by the Administrative Committee. Either Committee may
delegate to any such agent or to any subcommittee or member of the Committees
its authority to perform any act under the Plan, including, without limitation,
those matters involving the
50
<PAGE>
exercise of discretion. Any such delegation of discretion will be subject to
revocation at any time at the discretion of the appropriate Committee.
17.7 Limitations on Committee Actions. No member of either Committee will
--------------------------------
be entitled to act on or decide any matter relating solely to himself or herself
or any of his or her rights or benefits under the Plan. The members of the
Administrative Committee and of the Investment Committee will not receive any
special compensation for serving in their capacities as members of such
Committees but will be reimbursed for any reasonable expenses incurred in
connection with performing their Committee duties. Except as otherwise required
by the Act, no bond or other security will be required of either Committee or
any Committee member in any jurisdiction. Any person may serve on both
Committees, and any member of either Committee, any subcommittee or agent to
whom either Committee delegates any authority, and any other person or group of
persons, may serve in more than one fiduciary capacity (including service both
as a trustee and administrator) with respect to the Plan.
17.8 Committee Meetings. Each Committee will establish its own procedures
------------------
and the time and place for its meetings, and provide for the keeping of minutes
of all meetings. A majority of the members of a Committee will constitute a
quorum for the transaction of business at a meeting of the Committee. Any action
of a Committee may be taken upon the affirmative vote of a majority of the
members of the Committee at a meeting or, at the direction of its chairman,
without a meeting by "mail," telegraph or telephone; provided that all of the
members of the Committee are informed by mail or telegraph of their right to
vote on the proposal and of the outcome of the vote. "Mail" will include any
written or electronic interoffice communication.
17.9 Accounting and Disbursement of Plan Assets. The Administrative
------------------------------------------
Committee will appoint a person who will cause to be kept full and accurate
accounts of receipts and disbursements of the Plan, and will cause to be
deposited all funds of the Plan to the name and credit of the Plan, in such
depositories as may be designated by the Investment Committee. Such person will
cause to be disbursed the monies and funds of the Plan when so authorized by
either the Investment Committee or the Administrative Committee and will
generally perform such other duties as may be assigned to him or her from time
to time by either Committee. All demands for money of the Plan will be signed by
such person or such other person or persons as either Committee may from time to
time designate in writing.
51
<PAGE>
SECTION 18 CLAIMS AND REVIEW PROCEDURES.
- ---------- ----------------------------
18.1 Applications for Benefits. Any application for a benefit under the
-------------------------
Plan must be submitted to the Administrative Committee at the Company's
principal office. The application must be in writing on the prescribed form and
must be signed by the applicant.
18.2 Denial of Applications. If any application for a benefit is denied in
----------------------
whole or in part, the Administrative Committee will notify the applicant in
writing of the right to a review of the denial. The written notice will state,
in a manner reasonably calculated to be understood by the applicant:
(a) The specific reasons for the denial;
(b) The specific references to the Plan provisions on which the denial
was based;
(c) A description of any information or material necessary to perfect
the application;
(d) An explanation of why such material is necessary; and
(e) An explanation of the Plan's review procedure.
The written notice will be given to the applicant within 90 days after the
Administrative Committee receives the application, unless special circumstances
require an extension of time for processing the application. In no event will
the extension exceed a period of 90 days from the end of the initial 90-day
period. If an extension is required, written notice of the need for the
extension will be furnished to the applicant before the end of the initial
90-day period. The notice will indicate the special circumstances requiring the
extension of time and the date by which the Administrative Committee expects to
give a decision. If written notice is not given to the applicant within the
initial 90-day period, then the application will be deemed to have been denied
(for purposes of Section 18.3) upon the expiration of such period.
18.3 Requests for Review. Any person whose application for a benefit is
-------------------
denied in whole or in part (or such person's duly authorized representative) may
appeal the denial by submitting to the Administrative Committee a request for a
review of such application within 60 days after receiving written notice of the
denial (or within 60 days of a deemed denial under Section 18.2). The
Administrative Committee will give the applicant or such representative an
opportunity to review pertinent documents (except legally privileged materials)
in preparing such request for review and to submit issues and comments in
writing. The request for review must be in writing and must be addressed to the
Company's principal office. The request for review must state all of the grounds
on which it is based, all facts in support of the request and any other matters
which the applicant deems pertinent. The Administrative Committee may require
the applicant to submit such additional facts, documents or other material as it
may deem necessary or appropriate in making its review.
18.4 Decisions on Review. The Administrative Committee will act upon each
-------------------
request for review within 60 days after it receives the request unless special
circumstances require an
52
<PAGE>
extension of time for processing, but in no event will the decision on review be
given more than 120 days after the Administrative Committee receives the request
for review. If an extension is required, written notice of the need for an
extension will be given to the applicant before the end of the initial 60-day
period. The Administrative Committee will give prompt, written notice of its
decision to the applicant. If the Administrative Committee confirms the denial
of the application for a benefit in whole or in part, the notice will state, in
a manner calculated to be understood by the applicant, the specific reasons for
the denial and specific references to the Plan provisions on which the decision
is based. To the extent that the Administrative Committee overrules the denial
of the application for a benefit, such benefit will be paid to the applicant.
18.5 Exhaustion of Administrative Remedies. No legal or equitable action
-------------------------------------
for a benefit under the Plan will be brought unless and until the claimant has
completed the following:
(a) Submitted a written application for a benefit in accordance with
Section 18.1;
(b) Been notified that the application is denied;
(c) Filed a written request for a review of the application in
accordance with Section 18.3; and
(d) Been notified in writing that the Administrative Committee has
affirmed the denial of the application.
A claimant may bring an action without completing the above steps after the
Administrative Committee has failed to act on the claim within the time
prescribed in Section 18.2 and Section 18.4.
53
<PAGE>
SECTION 19 TERMINATION OF EMPLOYER PARTICIPATION.
- ---------- -------------------------------------
19.1 Termination by Participating Company. Any Participating Company may
------------------------------------
terminate its participation in the Plan by giving the Board of Directors prior
written notice specifying a termination date which will be the last day of a
month at least 60 days after the date such notice is received by the Board of
Directors. If the specified termination date is not at least 60 days after the
date the notice of termination is received by the Board of Directors, the
specified termination date will automatically be changed to the last day of the
first month which is at least 60 days after the date the notice is received. The
Board of Directors may waive the 60 day notice requirement and terminate the
Participating Company's participation in the Plan as of any earlier date. The
Board of Directors may also terminate any Participating Company's participation
in the Plan, as of any termination date specified by the Board of Directors, for
the failure of the Participating Company to make proper contributions or to
comply with any other provision of the Plan, or for any other reason the Board
of Directors deems appropriate. In any event, the Administrative Committee will
promptly notify the IRS, the PBGC and other appropriate governmental authorities
under Sections 19.3 and 20.3 of the Plan.
19.2 Effect of Termination. Upon termination of the Plan as to any
---------------------
Participating Company, no amount will subsequently be payable under the Plan to
or with respect to any Members then employed by such Participating Company,
except as provided in this Section 19, and no amount will be payable to the
Participating Company. Subject to any conditions which the IRS, the PBGC or any
other governmental authority may impose, the Administrative Committee will
direct the Trustee to segregate such portion of the Trust Fund (the
"Distributable Reserve") as the Actuary determines to be properly allocable in
accordance with the Act to the active employees of such Participating Company.
To the maximum extent permitted by the Act, any rights of Members no longer
employed by the Participating Company, former Members and their Beneficiaries,
Surviving Spouses and other eligible survivors under the Plan will be unaffected
by a termination of the Plan as to any Participating Company, and any payments,
transfers or contributions of the Distributable Reserve as provided in Section
20 will constitute a complete discharge of all liabilities under the Trust Fund.
If the Plan is terminated with respect to a Participating Company, the
Retirement Benefit of any Highly Compensated Employee and any Highly Compensated
Former Employee of such company will be limited to a benefit that is
nondiscriminatory under section 401(a)(4) of the Code.
19.3 IRS Termination Procedure. If the Plan is terminated with respect to a
-------------------------
Participating Company, the Administrative Committee or the appropriate Company
office must submit the Plan to the IRS for a determination that the termination
of the Plan with respect to the Participating Company will not adversely impact
the qualified status of the Plan and the Trust Fund under sections 401(a) and
501(a) of the Code. No distributions of assets will be made in connection with
the termination of the Plan until the IRS has issued a determination as to the
effect of such termination. The Participating Company may, by written notice
delivered to the Administrative Committee and the Trustee, waive its right to
apply for such a determination. Any such waiver request must be approved by the
Board of Directors.
54
<PAGE>
19.4 PBGC Termination Procedure. Upon receipt by the Administrative
--------------------------
Committee of an IRS determination regarding the termination of the Plan as to a
Participating Company, or if the Participating Company waives its right to
obtain an IRS determination and the Board of Directors approves such waiver
request, the following provisions will apply:
(a) At least 60 days before the date on which the Participating
Company's participation in the Plan is to be terminated, the Administrative
Committee will provide Members and Beneficiaries with a Notice of Intent to
Terminate the Plan with respect to the Participating Company. As soon as
administratively practicable after such Notice of Intent to Terminate is
provided, the Administrative Committee will file notice with the PBGC indicating
that the Plan is to be terminated with respect to the Participating Company.
(b) If the PBGC issues a Notice of Noncompliance within 60 days after
it receives notice of the termination of the Plan, the Administrative Committee
will refrain from taking any further action to terminate the Plan with respect
to the Participating Company and will cooperate with the PBGC with respect to
such termination of the Plan. Alternatively, the Administrative Committee may
declare the termination of the Plan to be null and void with respect to the
Participating Company and continue to treat the Plan with respect to such
Company as an ongoing Plan for all purposes under the Act and the Code.
(c) If the PBGC does not issue a notice of noncompliance within 60
days after it receives notice of the termination of the Plan, then the
Administrative Committee will distribute the distributable reserve to Members
employed by the Participating Company in accordance with Section 20.5 of the
Plan and the applicable Regulations issued by the PBGC regarding plan
terminations.
If the PBGC issues revised Regulations regarding plan terminations, such
Regulations will supersede and override any inconsistent provisions of this
Plan, and any termination of the Plan with respect to a Participating Company
will be accomplished under the terms and provisions of such Regulations.
19.5 Termination of the Plan. If the Plan is terminated with respect to all
-----------------------
Participating Companies, the provisions of this Section 19 will be applied to
each of the Participating Companies individually or collectively as determined
by the Administrative Committee in its sole and absolute discretion.
55
<PAGE>
SECTION 20 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
- ---------- ------------------------------------------------------
20.1 Right to Amend. The Board of Directors have the right at any time, to
--------------
modify, alter or amend this Plan, in whole or in part, prospectively or
retroactively. No amendment will reduce any Participant's Retirement Benefit,
calculated as of the date on which the amendment is adopted, except to the
extent as may be appropriate or necessary to enable the Plan and Trust Fund to
continue to satisfy the requirements of section 401(a) and section 501(a) of the
Code or other applicable law. Any such amendment will be evidenced by an
instrument in writing duly executed, acknowledged and delivered to the
Administrative Committee and the Trustee. If the Plan is amended by the Board of
Directors after it is adopted by an Affiliated Company, unless otherwise
expressly provided, it will be treated as so amended by the Affiliated Company
without the necessity of any action on the part of the Affiliated Company.
20.2 Plan Merger or Consolidation. The Board of Directors reserves the
----------------------------
right to merge or consolidate this Plan with any other plan or to direct the
Trustee to transfer the assets held in the Trust Fund and/or the liabilities of
this Plan to any other plan or to accept a transfer of assets and liabilities
from any other plan. In the event of the merger or consolidation of this Plan
and the Trust Fund with any other plan, or a transfer of assets or liabilities
to or from the Trust Fund to or from any other plan, then each Member will be
entitled to a benefit immediately after the merger, consolidation or transfer
(determined as if the Plan was then terminated) that is equal to or greater than
the benefit he or she would have been entitled to receive immediately before
such merger, consolidation or transfer (if this Plan had then terminated).
20.3 Termination of the Plan. The Board of Directors hopes and expects to
-----------------------
continue the Plan indefinitely. Nevertheless, to the full extent permitted by
law, the Board of Directors reserves the right to suspend or terminate the Plan
or to completely discontinue benefit accruals under the Plan. As required by
law, before the termination, the Board of Directors, or its designee, will
notify the Administrative Committee, the Trustee, any other fiduciary or the
PBGC of its intent to terminate the Plan. Upon such termination, the Members'
rights to their Retirement Benefits will become fully vested and nonforfeitable.
On the complete termination of the Plan, LS&CO. and all or any
Participating Companies, as determined by the Board of Directors or its
designee, will receive such amounts, if any, as remain in the Trust Fund after
the satisfaction of all liabilities under the Plan.
20.4 Partial Termination of the Plan. Upon a curtailment of the Plan or a
-------------------------------
discontinuance of the Plan with respect to a group or class of Members that
constitutes a "Partial Termination" as defined under section 411(d)(3) of the
Code, all such Members' rights to their Retirement Benefits under the Plan at
the time of the Partial Termination will become fully vested and nonforfeitable.
If a Partial Termination occurs, the Administrative Committee may instruct the
Actuary to allocate the assets among the Members in accordance with section
4044(a) of the Act. The assets allocated to the Members affected by the Partial
Termination will then be segregated by the Trustee, and the funds so allocated
and segregated will then be used to pay Retirement Benefits under the Plan to
such Members in accordance with Section 20.5 as though the Plan had been
completely terminated. If such funds are insufficient to pay the affected
Members' Retirement Benefits, the Participating Company employing such Members
56
<PAGE>
will be liable for the insufficiency. Alternatively, the Administrative
Committee may postpone Retirement Benefit distributions to such Members until
their subsequent termination of employment with the Company in accordance with
other provisions of the Plan.
20.5 Manner of Distribution. Upon termination of the Plan and the
----------------------
allocation of Plan assets, the Administrative Committee may, in its sole and
absolute discretion, direct the Trustee to convert the Trust Fund into cash and
liquidate it by making Retirement Benefit distributions to Members in accordance
with the modes of distribution provided for in Section 11. Alternatively, with
the consent of the Board of Directors, or its designee, the Administrative
Committee may direct the Trustee to hold the Members' Retirement Benefits in the
Trust Fund until such Members or their Beneficiaries become eligible to receive
Retirement Benefit distributions under the terms and provisions of this Plan.
If the Plan is liquidated, the Administrative Committee will instruct the
Trustee to purchase nontransferable deferred annuities for each person entitled
to Retirement Benefit distributions, with the monthly payment provided by the
annuity, the form of the annuity, and the date on which payments will commence
under the annuity to be determined in accordance with the preceding Sections of
the Plan. If the assets held in the Trust Fund are insufficient to purchase all
of such annuities, the assets will be allocated among the Members in the manner
prescribed by section 4044(a) of the Act. However, the Board of Directors, or
its designee, and the Administrative Committee will not instruct the Trustee to
liquidate the Trust Fund before complying with the Act.
57
<PAGE>
SECTION 21 INALIENABILITY OF BENEFITS.
- ---------- --------------------------
21.1 No Assignment Permitted. Except as may otherwise be required by law,
-----------------------
no amount payable at any time under the Plan and the Trust Agreement will be
used or diverted for purposes other than for the exclusive benefit of Members
and their Beneficiaries. No amount payable under the Plan will be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind nor in any manner be
subject to the debts or liabilities of any Member, contingent annuitant,
Beneficiary, or Alternate Payee, and any attempt to so alienate or subject any
such amount will be void. If any Member, contingent annuitant, Beneficiary, or
Alternate Payee, attempts to, or alienates, sells, transfers, assigns, pledges,
attaches, charges or otherwise encumbers any amount payable under the Plan and
Trust Agreement, or any part of such amount, or if by reason of his or her
bankruptcy or any other event, such amount would be made subject to his or her
debts or liabilities or would otherwise not be enjoyed by him or her, then the
Administrative Committee, if it so elects, may direct that such amount be
withheld and that such amount or any portion of such amount be paid or applied
to or for the benefit of such person, his or her spouse, children or other
dependents, or any of them, in such manner and proportion as the Administrative
Committee may deem proper.
The following arrangements are not prohibited under the Plan:
(a) Arrangements for the withholding of tax from benefit
distributions;
(b) Arrangements for the recovery of benefit overpayments;
(c) Arrangements for the recovery of amounts described in section
4045(b) of the Act in the event of the termination of the Plan and the recapture
of such amounts; or
(d) Arrangements for direct deposit of benefit payments to an account
in a bank, savings and loan association or credit union (provided that such
arrangement is not part of an arrangement constituting an assignment or
alienation).
In addition, the return of Company contributions under Section 21.2 and the
creation, assignment or recognition of a right to all or a portion of a Member's
Retirement Benefit under a Qualified Domestic Relations Order under Section 21.3
will not violate this Section 21.1.
21.2 Return of Contributions. All Company contributions to the Plan are
-----------------------
expressly conditioned upon the deductibility of such contributions under section
404 of the Code. If the deduction of any Company contribution is disallowed,
then the amount for which a deduction is disallowed will be returned to the
appropriate Participating Company within 12 months after the date of the
disallowance. In addition, if any Company contribution is made as a result of a
mistake of fact, such contribution may be repaid to the appropriate
Participating Company within 12 months after it is made. Any Company
contribution so returned will be reduced to reflect losses, but will not be
increased to reflect gains or income.
21.3 Qualified Domestic Relations Orders. The Administrative Committee
-----------------------------------
will honor the terms of a Qualified Domestic Relations Order that satisfies the
following requirements:
58
<PAGE>
(a) Requirements. In accordance with section 414(p) of the Code, a
------------
Domestic Relations Order will not be treated as a Qualified Domestic Relations
Order unless it satisfies all of the following conditions:
---
(i) The Domestic Relations Order clearly specifies the name and
last known mailing address (if any) of the Member and the name and last
known mailing address of each Alternate Payee covered by the order, the
amount or percentage of the Member's Retirement Benefit to be paid to each
Alternate Payee or the manner in which such amount or percentage is to be
determined, and the number of payments or period to which such order
applies.
(ii) The Domestic Relations Order specifically indicates that it
applies to this Plan.
(iii) The Domestic Relations Order does not require this Plan to
provide any type or form of benefit, or any option, not otherwise provided
under the Plan, and it does not require the Plan to provide increased
benefits (determined on the basis of actuarial equivalence factors in
Section 25).
(iv) The Domestic Relations Order does not require the payment
of all or a portion of a Member's Retirement Benefit to an Alternate Payee
which is required to be paid to another Alternate Payee under another order
previously determined to qualify as a Qualified Domestic Relations Order.
(b) Early Commencement of Payments to Alternate Payees. A Domestic
--------------------------------------------------
Relations Order requiring payment to an Alternate Payee before a Member has
separated from employment may qualify as a Qualified Domestic Relations Order as
long as the order does not require payment before the Member's "Earliest
Retirement Age," which is the earliest date on which the Member could elect to
receive a Retirement Benefit under the Plan. If the order requires payments to
begin after a Member's Earliest Retirement Age but before a Member's actual
retirement, the amount of the payments must be determined as if the Member began
receiving benefit payments on the date on which the payments are to begin under
the order, but taking into account only the Equivalent Actuarial Value of the
Member's Retirement Benefit at that time and not taking into account the
Equivalent Actuarial Value of any Company subsidy for Early Retirement Benefits
which may at any time be provided by the Plan under Section 7. The Retirement
Benefit payable to an Alternate Payee will not be recalculated upon the Member's
actual or deemed retirement.
(c) Alternate Payment Forms. The Domestic Relations order may call
-----------------------
for the payment of the Retirement Benefit to an Alternate Payee in any form in
which benefits may be paid under the Plan to the Member, other than in the form
of a Qualified Joint and Survivor Annuity with respect to the Alternate Payee
and his or her subsequent spouse.
(d) Actuarial Calculations. The actuarial factors and assumptions
----------------------
used by the Administrative Committee under Section 25 of the Plan in making
actuarial equivalency determinations for calculating the payment of benefits
before a Member's Normal Retirement
59
<PAGE>
Date will be used for purposes of calculating the Equivalent Actuarial Value of
the Retirement Benefit payable to the Alternate Payee.
(e) Processing of Qualified Domestic Relations Orders. The
-------------------------------------------------
Administrative Committee will promptly notify the Member, and any Alternate
Payee (including any Alternate Payee who may be entitled to benefits under a
previously received Qualified Domestic Relations Order) of the receipt of any
Domestic Relations order which could qualify as a Qualified Domestic Relations
Order. At the same time, the Administrative Committee will advise the Member and
each Alternate Payee of the Plan provisions relating to the determination of the
qualified status of such orders.
Within a reasonable period of time after receipt of a copy of the Domestic
Relations Order, the Administrative Committee will determine whether the order
is a Qualified Domestic Relations Order and notify the Member and each Alternate
Payee of its determination. The determination of the status of a Domestic
Relations Order as a Qualified Domestic Relations Order will be made in
accordance with such uniform and nondiscriminatory rules and procedures as may
be adopted by the Administrative Committee from time to time. If monthly
benefits are presently being paid with respect to a Member named in a Domestic
Relations Order which may qualify as a Qualified Domestic Relations Domestic
Relations Order, or if the Member's Retirement Benefit becomes payable after
receipt of the order, the Administrative Committee will notify the Trustee to
segregate and hold the amounts which would be payable to the Alternate Payee or
payees designated in the order if the order is ultimately determined to be a
Qualified Domestic Relations Order.
If the Administrative Committee determines that the order is a Qualified
Domestic Relations Order within 18 months of receipt of the order, the
Administrative Committee will instruct the Trustee to pay the segregated amounts
(plus any earnings on such amounts) to the Alternate Payee specified in the
Qualified Domestic Relations Order. Conversely, if within the same 18 month
period the Administrative Committee determines that the Domestic Relations Order
is not a Qualified Domestic Relations Order, or if the status of the order as a
Qualified Domestic Relations Order is not resolved, the Administrative Committee
will instruct the Trustee to pay the segregated amounts (plus any earnings on
such amounts) to the person or persons who would have been entitled to such
amounts if the order had not been entered. If the Administrative Committee
determines that a Domestic Relations Order is a Qualified Domestic Relations
Order after the close of the 18 month period mentioned above, the determination
will be applied prospectively only. The determination of the Administrative
Committee as to the status of a Domestic Relations Order as a Qualified Domestic
Relations Order will be binding and conclusive on all interested parties,
present and future, subject to the claims review provisions of Section 18.
(f) Responsibility of Alternate Payee. Any person claiming to be an
---------------------------------
Alternate Payee under a Qualified Domestic Relations Order will be responsible
for supplying the Administrative Committee with a certified or otherwise
authenticated copy of the order and any other information or evidence that the
Administrative Committee deems necessary in order to substantiate the person's
claim or the status of the order as a Qualified Domestic Relations Order.
60
<PAGE>
SECTION 22 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF BATTERY STREET
- ---------- ----------------------------------------------------------
ENTERPRISES, INC. OR ANY OF ITS SUBSIDIARIES.
--------------------------------------------
Unless otherwise required by the Act, the provisions of this Section 22
will apply only in the case of an Employee who was treated as an active employee
of Koracorp Industries, Inc. or any of its subsidiaries on September 10, 1979
(the date such companies were acquired by Diversified Apparel Enterprises, Inc.,
the predecessor of Battery Street Enterprises, Inc. ) and who became an Employee
either by transferring directly to the employ of the Company from Diversified
Apparel Enterprises, Inc. or any of its subsidiaries, or by remaining an active
employee at least until December 1, 1980, when Diversified Apparel Enterprises,
Inc. and certain of its subsidiaries became Participating Companies of the
Terminated Plan. Such an Employee will accrue Service under the Plan under
paragraphs (a) and (b) below.
(a) In addition to Service as defined in Section 2.58, Service will
also include, solely for purposes of determining Years of Service under Section
3, Section 4.1, Section 8, Section 9 and Section 10.2, all years and monthly
fractions of such years of continuous employment with Koracorp Industries, Inc.
or any of its subsidiaries, which was provided before the acquisition of such
companies by Diversified Apparel Enterprises, Inc.
(b) In addition to Benefit Service as defined in Section 2.9, Benefit
Service will also include all years and monthly fractions of such years of
continuous employment with Diversified Apparel Enterprises, Inc. or any of its
subsidiaries after September 10, 1979, and before December 1, 1980.
61
<PAGE>
SECTION 23 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF OBERMAN MANUFACTURING
-----------------------------------------------------------------
COMPANY, TOP-NOTCH MANUFACTURING COMPANY, INCORPORATED AND MILLER
-----------------------------------------------------------------
BELTS LTD., INC.
---------------
In addition to Benefit Service and Service as defined in Sections 2.9 and
2.58, respectively, Benefit Service and Service will also include all years and
monthly fractions of such years of continuous employment with Oberman
Manufacturing Company or Top-Notch Manufacturing Company, Incorporated beginning
after June 1, 1966, and ending before the date such entities were acquired by
LS&CO. and who became an Employee before November 28, 1977, by virtue of being
paid at the equivalent of LS&CO.'s Home Office Salary Grade 12 or above and,
thus, transferring to the LS&CO. Home Office Payroll.
62
<PAGE>
SECTION 24 SPECIAL SERVICE AND BENEFIT PROVISIONS FOR CERTAIN FORMER EMPLOYEES
- ---------- -------------------------------------------------------------------
OF ASIAN PACIFIC INDUSTRIES, INC.
--------------------------------
In the case of a person who became an Employee as a result of the
acquisition of the assets of Asian Pacific Industries, Inc. on December 31,
1986, Service as defined in Section 2.58 will include employment with Asian
Pacific Industries, Inc. and its subsidiaries and affiliates before such
acquisition to the same extent as if such employment had been with the Company.
Employment with Asian Pacific Industries, Inc. and its subsidiaries and
affiliates before such acquisition will not, however, be counted for purposes of
determining a Member's Benefit Service under Section 2.9.
63
<PAGE>
SECTION 25 ACTUARIAL EQUIVALENCE FACTORS.
- ---------- -----------------------------
Unless otherwise specified in the Plan, the following actuarial assumptions
will be used for purposes of calculating various forms of benefit under the
Plan:
(a) Mortality:
---------
(i) Except as provided in paragraph (ii), the Mortality Table
used under the Plan will be the 1983 Group Annuity Mortality Table,
assuming a relevant population that consists of 50% males and 50% females.
(ii) For purposes of determining the Actuarial Equivalent of
benefits which begin to be paid before a Member's Normal Retirement Date
under the Plan, the mortality table used will be the 1951 Group Annuity
table on a female basis. The resulting factors will be rounded to the next
higher percentage.
(b) Interest Rate:
-------------
(i) For purposes of calculating a single sum payment made
after November 1, 1992, under Section 11.3 or Section 11.5, the interest
rate used under the Plan will equal the interest rate or rates that would
be used by the PBGC for purposes of determining the present value of a lump
sum distribution on plan termination, determined as of the first day of the
month during which the notice of the optional forms of benefit payable
under the Plan and election form described in Section 12.2 is distributed
(or would otherwise be distributed to the Member if the single sum
Actuarial Equivalent of his or her Retirement Benefit was not less than
$3,500) which will not be more than 120 days before the Annuity Starting
Date.
(ii) For single sum distributions made during the period
beginning November 1, 1991, and ending on November 1, 1992, the interest
rate used under the Plan will equal whichever of the rates described in (A)
or (B) below which produces the greater single sum benefit:
(A) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the notice of
the optional forms of benefit payable under the Plan and election form
described in Section 12.2 is distributed to the Member (or would
otherwise be distributed to the Member if the lump sum Actuarial
Equivalent of his or her Retirement Benefit was not less than $3,500);
or
(B) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the distribution
occurs.
(iii) For single sum distributions made before November 1,
1991, the interest rate or rates used under the Plan will equal the
interest rate or rates used by the
64
<PAGE>
PBGC for purposes of determining the present value of a lump sum on plan
termination, determined as of the first day of the month in which the
distribution occurs.
(iv) For purposes of calculating all other optional forms of
benefit under the Plan, the interest rate used will be 7%.
(v) For purposes of determining the Equivalent Actuarial Value
of Retirement Benefit payments beginning before a Member's Normal
Retirement Date under the Plan, the interest rate used will be 6%.
65
<PAGE>
SECTION 26 TOP HEAVY BENEFITS.
- ---------- ------------------
If the Plan becomes "Top Heavy," the provisions of this Section 26 will
become operative. The Plan will be Top Heavy for a Plan Year if, on the last day
of the prior Plan Year (the "Determination Date"), more than 60% of the present
value of the "Accrued Benefits" under the Plan are credited to or allocable to
"Key Employees." For purposes of determining the present value of a Member's
Accrued Benefit, turnover is to be ignored. The Plan will be "Super Top Heavy"
if, on the Determination Date, more than 90% of the present value of the Accrued
Benefits under the Plan are credited or allocable to Key Employees.
"Accrued Benefit" means the value of the Member's Retirement Benefit as
determined under Section 5 of the Plan (and the Member's accrued benefit
determined under any other defined benefit plans which are members of a
"Required Aggregation Group" of which this Plan is also a member). The Member's
Accrued Benefit will be increased by any distributions made to the Member during
the 5-year period ending on the Determination Date; except the Accrued Benefit
of a Member who has not performed any services for the Company or an Affiliated
Company during such 5-year period and the Accrued Benefit of any Member who was
formerly a Key Employee will be disregarded. The present value will be
determined as of the most recent "Valuation Date" that is within the 12-month
period ending on the "Determination Date" and as described in the Regulations
under the Code, using an interest rate of 7% per year and the 1983 Group Annuity
Mortality Table, assuming a relevant population that consists of 50% males and
50% females. In determining the present value, benefits not related to
retirement benefits will be excluded, and subsidized Early retirement benefits
and subsidized benefit options will be excluded unless deemed to be
nonproportional subsidies as described in the Regulations under the Code. The
Valuation Date is the same as the valuation date used for determining minimum
funding standards under section 412 of the Code, whether or not a valuation was
performed during the year.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee determines (in its sole and absolute
discretion, but under the provisions of section 416 of the Code) that the Plan
is a constituent in an "Aggregation Group" this Plan will be considered Top
Heavy or Super Top Heavy only if the Aggregation Group is a "Top Heavy Group" or
a "Super Top Heavy Group." An "Aggregation Group" includes:
(a) Each plan intended to qualify under section 401(a) of the Code
sponsored by the Company or an Affiliated Company in which 1 or more Key
Employees participate;
(b) Each other plan of the Company or an Affiliated Company that is
considered in conjunction with such plans in determining whether or not the
discrimination and coverage requirements of section 401(a)(4) and section 410 of
the Code are satisfied; and
(c) In the discretion of the Administrative Committee, any other such
plan of the Company or an Affiliated Company, which, when considered in
conjunction with the plans referred to above, satisfies the nondiscrimination
and coverage requirements of section 401(a)(4) and section 410 of the Code.
66
<PAGE>
A "Top Heavy Group" is an Aggregation Group in which the sum (determined as
of the Determination Date) of the present value of the cumulative Accrued
Benefits for Key Employees (as determined by the Administrative Committee) under
all "defined benefit plans" (as defined in section 414(j) of the Code) included
in such group plus the aggregate of the amounts credited to accounts of Key
Employees under all "defined contribution plans" (as defined in section 414(i)
of the Code) included in such group, exceed 60% of the total of such amounts for
all Employees and Beneficiaries covered by such plans. A "Super Top Heavy Group"
is an Aggregation Group for which the sum so determined for Key Employees
exceeds 90% of the sum so determined for all Employees and Beneficiaries. Such
determination will be made in accordance with section 416 of the Code.
If the Plan becomes Top Heavy, then the Retirement Benefit credited to each
Participant other than a Key Employee will not be less than the product of:
(a) The percentage which is the lesser of:
------
(i) 2% multiplied by the Participant's Years of Service (as
determined in accordance with this Section 26) or
(ii) 20%; and
(b) The Participant's "Average Yearly Compensation."
A Member's Years of Service will not include Years of Service beginning before
January 1, 1984, or Years of Service ending in a Plan Year during which the Plan
is not Top Heavy. The "Average Yearly Compensation" of a Member will be the
average rate of annual Compensation in effect for a Member during the 5
consecutive calendar years in which the Member's Compensation is the greatest,
excluding Plan Years ending before January 1, 1984, and Plan Years beginning
after the last Plan Year during which the Plan was Top Heavy. "Compensation"
means compensation as defined in section 414(q)(7) of the Code.
If the Plan becomes Top Heavy, the Vested Retirement Benefit of a
Member who terminates service with the Company or an Affiliated Company before
his or her Normal Retirement Date or death will be equal to the percentage of
his or her Accrued Benefit determined under the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
If the Plan at any time is Top Heavy and later ceases to be Top Heavy, each
Member who is credited with less than 2 Years of Service as of the last day of
the last Plan Year in which the Plan is Top Heavy will have his or her Vested
Retirement Benefit determined under Section 2.70
67
<PAGE>
(unless and until the Plan again becomes Top Heavy). If a Member has at least 3
Years of Service on the last day of the last Plan Year in which the Plan is Top
Heavy, for each future Plan Year his or her Vested Retirement Benefit will be
calculated in accordance with this Section 26 as though the Plan were Top Heavy.
If a Member does not have at least 3 Years of Service on the last day of the
last Plan Year in which the Plan is Top Heavy, his or her Vested Retirement
Benefit for each future Plan Year will be calculated in accordance with Section
2.70.
68
<PAGE>
SECTION 27 GENERAL LIMITATIONS AND PROVISIONS.
- ---------- ----------------------------------
27.1 No Employment Right. Nothing contained in the Plan will give any
-------------------
employee the right to be retained in the employment of the Company or any
Affiliated Company or affect the right of any such employer to dismiss any
employee. The adoption and maintenance of the Plan will not constitute a
contract between the Company and any employee or consideration for, or an
inducement to or condition of, the employment of any employee.
27.2 Payments from the Trust Fund. The Trust Fund will be the sole source
----------------------------
of benefits under the Plan and, except as otherwise required by the Act, the
Company, the Administrative Committee and the Investment Committee assume no
liability or responsibility for payment of such benefits. Each Member, Surviving
Spouse, Domestic Partner, Beneficiary or other person who will claim the right
to any payment under the Plan will be entitled to look only to the Trust Fund
for such payment and will not have the right, claim or demand against the
Company, the Administrative Committee or the Investment Committee or any member
of the Committees, or any employee or member of the Board of Directors.
27.3 Payments to Minors or Incompetents. If the Administrative Committee
----------------------------------
finds that any person to whom any amount is payable under the Plan is unable to
care for his or her affairs because of illness or accident, or is a minor, or
has died, then any payment due him or her or his or her estate (unless a prior
claim for such amount has been made by a duly appointed legal representative)
may, if the Administrative Committee so elects, be paid to his or her spouse, a
child, a relative, an institution maintaining or having custody of such person,
or any other person deemed by the Administrative Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment will be a complete discharge of the liability of the Plan and the Trust
Fund.
27.4 Lost Members or Beneficiaries. If the Administrative Committee is
-----------------------------
unable to locate a Member, Surviving Spouse, Domestic Partner or Beneficiary who
is entitled to receive any amount payable under the Plan, the Administrative
Committee may (but need not) direct that such amount be applied to reduce the
contributions of the Participating Companies to the Plan. If the Member,
Surviving Spouse, Domestic Partner or Beneficiary later makes a claim for such
amount before the date final distributions are made from the Trust Fund
following termination of the Plan, such amount (without income, gains or other
adjustment) will be reinstated and paid to him or her as provided in Section 11.
However, if any amount would have been lost by reason of escheat under
applicable state law, then such amount will not be subject to reinstatement. If
the Plan is terminated and final distributions are made from the Trust Fund
before the applicable escheat period with respect to a lost Member, Surviving
Spouse, Domestic Partner or Beneficiary has expired, the Administrative
Committee may direct the transfer of any such person's unclaimed benefit to an
individual retirement account.
27.5 Personal Data to the Administrative Committee. Each Member must file
---------------------------------------------
with the Administrative Committee such pertinent information concerning himself
or herself, his or her spouse, his or her Domestic Partner, his or her
Beneficiary or any other person as the Administrative Committee may specify, and
no member, Surviving Spouse, Domestic Partner, Beneficiary or other person will
have any rights to any benefit under the Plan unless such
69
<PAGE>
information is filed by or with respect to him or her. The Administrative
Committee is entitled to rely on personal data given to it by a Member.
27.6 Insurance Contracts. If the payment of any benefit under the Plan is
-------------------
provided for by a contract with an insurance company the payment of such benefit
will be subject to all the provisions of such contract.
27.7 Notice to the Administrative Committee. All elections, designations,
--------------------------------------
requests, notices, instructions and other communications from a Participating
Company, a Member, Beneficiary, Surviving Spouse, Domestic Partner or other
person to the Administrative Committee, required or permitted under the Plan,
will be:
(a) In such form as is prescribed from time to time by the
Administrative Committee;
(b) Mailed by first-class mail or delivered to such location as will
be specified by the Administrative Committee; and
(c) Deemed to have been given and delivered only upon actual receipt
by the Administrative Committee at such location.
27.8 Notices to Members and Beneficiaries. All notices, statements,
------------------------------------
reports and other communications from a Participating Company or the
Administrative Committee or Investment Committee to any employee, Member,
Beneficiary or other person (other than the Administrative Committee) required
or permitted under the Plan will be deemed to have been duly given when
delivered to, or when mailed by first-class mail, postage prepaid and addressed
to, such employee, Member, Beneficiary or other person at his or her address
last appearing on the records of the Administrative Committee.
27.9 Word Usage. Whenever used in the Plan, the masculine gender includes
----------
the feminine, and wherever the context of the Plan dictates, the plural will be
read as the singular and the singular as the plural. Uses of the term "Sections"
as a cross-reference will be to other Sections contained in the Plan and not to
another instrument, document or publication unless specifically stated
otherwise.
27.10 Headings. The titles and headings of Sections are included for
--------
convenience of reference only and are not to be considered in construing the
provisions of the Plan.
27.11 Governing Law. The Plan and all rights under the Plan will be
-------------
governed by and construed in accordance with California law except to the extent
such law is preempted by the Code and the Act.
27.12 Heirs and Successors. All of the provisions of the Plan will be
--------------------
binding upon all persons who will be entitled to any benefits under the Plan,
their heirs and legal representatives.
27.13 Withholding. Payment of benefits under this Plan will be subject to
-----------
applicable law governing the withholding of taxes from benefit payments, and the
Trustee and
70
<PAGE>
Administrative Committee will be authorized to withhold taxes from the payment
of any benefits under the Plan, in accordance with applicable law.
IN WITNESS WHEREOF, LEVI STRAUSS ASSOCIATES INC. has caused this Plan
to be executed and its corporate seal to be hereunto affiliated by its duly
authorized officers, as of this 11 day of February, 1994.
-- --------
LEVI STRAUSS ASSOCIATES INC.
By: /s/
---------------------------------------
Donna Goya
Its: Sr. Vice President
----------------------------------
ATTEST:
By:______________________
71
<PAGE>
REVISED HOME OFFICE PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
_______________
AMENDMENT
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Revised Home Office Pension Plan of Levi Strauss Associates Inc. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors of
the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan to provide an early
retirement program;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to any other officer of the Company the authority to adopt certain amendments to
the Plan;
WHEREAS, on June 1, 1993, Robert D. Haas delegated to Donna J. Goya, Senior
Vice President, the authority to amend the Plan, subject to specified limits,
and such delegation has not been amended, rescinded or superseded as of the date
hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the Plan is amended by the addition of an Addendum, to read
as set forth on the attached exhibit.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on November
22, 1994.
/s/
----------------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
ADDENDUM TO THE
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS ASSOCIATES, INC.
_______________
EARLY RETIREMENT
INCENTIVE PROGRAM
1. Scope. This Addendum to the Plan describes the Early Retirement
-----
Incentive Program (the "Program"), under which eligible Members (as defined in
Section 2 below) may retire and receive benefits under the Plan in addition to
the benefits which would otherwise be payable under the Plan.
2. Eligibility. A Member is eligible for the Program (an "eligible
-----------
Member") if:
a. Such Member is on the Home Office payroll of the Company on
or after November 21, 1994;
b. Such Member has at least (i) 15 Years of Service as of June
1, 1995 and is not a Highly Compensated Employee for the
Plan Year ending in 1994, or (ii) 20 Years of Service as of
November 27, 1994 and is a Highly Compensated Employee for
the Plan Year ending in 1994;
c. Such Member is at least age 50 as of (i) June 1, 1995 for a
Member who is not a High Compensated Employee for the Plan
Year ending in 1994; or (ii) November 27, 1994 for a Member
who is a Highly Compensated Employee for the Plan Year
ending in 1994; and
d. Such Members was laid off or resigned from employment in
the Company's domestic contracting organization, the
Richardson Technology Center or the LSNA Information
Resources Organization on or after February 1, 1994 and
before November 28, 1994, and received severance pay in
connection with such layoff or resignation.
3. Participation. Participation in the Program is completely voluntary.
-------------
In order to participate in the Program, an eligible Member shall elect to
participate in the Program by completing an irrevocable written notice of such
Member's acceptance ("Acceptance Notice") of the Program on the form prescribed
for such purpose by the Administrative Committee. The Acceptance Notice must be
received by the Administrative Committee on or after November 21, 1994 and
before June 1, 1995. In addition, the Acceptance Notice shall be deemed complete
only if it includes a retirement date which occurs on or after the date the
eligible Member attains age 50.
4. Benefits.
--------
<PAGE>
4.1 In General. Any other provision of the Plan notwithstanding, an
----------
eligible Member who elects to participate in the Program (a "Participating
Member") shall be eligible for an immediate benefit under the Program as of the
retirement date described in Section 3 of this Addendum, and such retirement
date shall be deemed to be an Early Retirement Date under the Plan.
4.2 Amount. The benefit payable under the Plan pursuant to the
------
Program is the Benefit payable pursuant to Section 7 of the Plan as of the
applicable early Retirement Date; provided that for purposes of Table A of
Section 7.1, the eligible Member's age shall be deemed to be age 55.
5. Other Plan Provisions.
a. A benefit under this Addendum shall be subject to Section 14.
b. Except as set forth in this Addendum, the provisions of the Plan
shall apply to a benefit payable under the Program
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS ASSOCIATES INC.
____________
AMENDMENT
The Revised Home Office Pension Plan of Levi Strauss Associates Inc. is
hereby amended as set forth below:
1. Effective November 28, 1994, Section 5 is amended by a new Section 5.5.
to read as set forth below:
5.5 Certain Benefits Protected. With respect to any Member whose
--------------------------
current accrued benefit under the Plan as of November 28, 1994 is based on
compensation for Plan Years beginning before such Plan Year that exceeded
$150,000, the Member's accrued benefit, unless otherwise provided in the
Plan, will be the greater of the accrued benefit determined for the Member
under (a) and (b) below:
(a) The Member's accrued benefit determined with respect to the
benefit formula applicable for the Plan Year beginning as of November
28, 1994, as applied to the Member's total years of Benefit Service
taken into account under the Plan for purposes of benefit accruals, or
(b) The sum of:
(i) The Member's accrued benefit as of the last day of the
last Plan Year beginning before January 1, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the Code, and
(ii) The Member's accrued benefit determined under the
benefit formula applicable for the Plan Year beginning as of
November 28, 1994, as applied to the Member's Benefit Service for
Plan Years beginning after 1993.
2. Effective as of the first day of the Plan Year beginning in 1993,
Section 11 is amended by the addition of a new Section 11.7, to read as set
forth below:
11.7 Direct Rollovers. A distributee may elect at the time and in the
----------------
manner prescribed by the Administrative Committee to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. The terms used in this
paragraph are defined as follows:
(a) Eligible rollover distribution. Any distribution of all or any
portion of the balance to the credit of the distributee, except that it
does not include:
(i) Any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the
<PAGE>
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more.
(ii) Any distribution to the extent it is required under section
401(a)(9) of the Code.
(iii) The portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities).
(b) Eligible retirement plan.
(i) An individual retirement account described in section
408(a) of the Code.
(ii) An individual retirement annuity described in section
408(b) of the Code.
(iii) An annuity plan described in section 403(a) of the Code.
(iv) A qualified trust described in section 401(a) of the Code
that accepts the distributee's eligible rollover distribution.
(v) However, in the case of an eligible rollover distribution
to a surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(c) Distributee. A Member or former Member, his or her surviving
spouse, or his or her spouse or former spouse who is the alternate payee
under a Qualified Domestic Relations Order
(d) Direct rollover. A payment by the Plan to the eligible
retirement plan specified by the distributee.
To facilitate installment payments under Section 11.7, the Administrative
Committee, in its sole discretion, may segregate all or any part of the
Participant's Benefit in a separate account.
Dated: November __, 1995.
/s/
----------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
REVISED HOME OFFICE PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised Home
Office Pension Plan of Levi Strauss & Co. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors of
the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan to provide an early
retirement window;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya, Senior
Vice President for Global Human Resources, the authority to amend the Plan,
subject to specified limits, and such delegation has not been amended, rescinded
or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the Plan is amended as of June 3, 1996 by the addition of
an Addendum, to read as set forth on the attached exhibit.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on April
______1997.
/s/
----------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
JUNE 1996
ADDENDUM TO THE
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
EARLY RETIREMENT WINDOW
1. Scope. This Addendum to the Plan describes the Early Retirement
-----
Window (the "Window"), under which Eligible Members (as defined in Section 2
below) may retire and receive benefits under the Plan.
2. Eligibility. A Member is eligible for the Window (an "Eligible
-----------
Member") if:
a. Such Member is on the Home Office payroll of the Company, is
eligible for benefits under a long-term disability program
sponsored by the Company, or is Totally and Permanently Disabled;
b. Such Member has at least 14 Years of Service on or before June 2,
1997; and
c. Such Member is at least age 49 on or before June 2, 1997.
3. Participation. Participation in the Window is completely voluntary. In
-------------
order to participate in the Window, an Eligible Member shall elect to
participate in the Window by completing an irrevocable written notice of such
Member's acceptance ("Acceptance Notice") of the Window on the form prescribed
for such purpose by the Administrative Committee. The Acceptance Notice must be
received by the Administrative Committee on or after June 3, 1996 and on or
before 5:00 p.m. Pacific Standard Time on October 1, 1997. In addition, the
Acceptance Notice shall be deemed complete only if it includes a retirement date
which occurs on or after the date as of which the Eligible Member has at least
14 Years of Service and has attained age 49. For retirement dates August 1, 1996
and thereafter, an eligible Member must execute a release of legal claims in a
form prescribed by the Company.
4. Benefits.
--------
a. In General. Any other provision of the Plan notwithstanding, an
----------
Eligible Member who elects to participate in the Window (a
"Participating Member") shall be eligible for an immediate
benefit under the Window as of the retirement date described in
Section 3 of this Addendum and such retirement date shall be
deemed to be an Early Retirement Date under the Plan.
b. Amount. The benefit payable under the Plan pursuant to the
------
Window is the greater of the following which is applicable:
i. 70% of the Eligible Member's Retirement Benefit; or
<PAGE>
ii. The Benefit based on application of the Percentage Factor
provided in Table A of Section 7.1 opposite the Eligible
Member's actual age (as of the retirement date approved
pursuant to Section 3).
5. Benefits for Alternate Payee. An Alternate Payee with respect to an
----------------------------
Eligible Member may elect to receive benefits during the election period set
forth in Section 3 above to the extent provided in and in accordance with the
applicable Qualified Domestic Relations Order; provided, however, consistent
with Code section 414(p), the benefits for the Alternate Payee shall not reflect
any early retirement subsidies but, rather, shall be subject to reduction in
accordance with the factors set forth on Exhibit 1 to this Addendum.
6. Other Plan Provisions.
---------------------
a. A benefit under this Addendum shall be subject to Section 14.
b. Except as set forth in this Addendum, the provisions of the Plan
shall apply to a benefit payable under the Window.
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Revised Home
Office Pension Plan of Levi Strauss & Co. Retirement Plan (the "HOPP") as the
successor to Levi Strauss Associates Inc.;
WHEREAS, the Company established the HOPP for the benefit of its
employees and amended and restated the HOPP to comply with the Tax Reform Act of
1986, the Unemployment Compensation Amendments of 1992, and the Revenue
Reconciliation Act of 1993;
WHEREAS, the Company requested that the Internal Revenue Service issue
a favorable determination letter regarding the tax-qualified status of the HOPP;
WHEREAS, the Internal Revenue Service conditioned its issuance of a
favorable determination upon the adoption of certain amendments to the restated
HOPP;
WHEREAS, the Company desires to satisfy such conditions and Article 20
of the HOPP provides that the Company may amend the HOPP at any time and for any
reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the HOPP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the HOPP;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
HOPP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of November 27, 1989, the Company amends
the HOPP as set forth below:
1. Section 10.2(b) of the HOPP is amended in its entirety to read as
follows:
(b) If the Member dies after the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or
Domestic Partner will receive a monthly benefit equal to the monthly
benefit the Surviving Spouse or Domestic Partner would have received if
the Member had retired on the first day of the month coincident with or
next following the later of the date of the Member's death or the date
as of which the Surviving Spouse or Domestic Partner elects to receive
the monthly benefit (but not later than the Member's Normal Retirement
Age) (the "Presumed Retirement Date") with
<PAGE>
a 50% Qualified Joint and Survivor Annuity, with his or her Surviving
Spouse or Domestic Partner as contingent annuitant. The payments to the
Surviving Spouse or Domestic Partner will begin no later than the last day
of the month following the Presumed Retirement Date.
2. Section 11.7 of the HOPP is hereby deleted in its entirety.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
May 8, 1997 /s/
- ------------------------------ --------------------------------
Date Donna J. Goya
<PAGE>
REVISED HOME OFFICE PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company amended the Plan effective June 3, 1996, to
provide an early retirement window as set forth on the Addendum to the Plan;
WHEREAS, the Company desires to amend such early retirement window to
provide for participation by certain Members who terminate employment after July
15, 1997 without having elected to participate in the early retirement window as
of the date of termination of employment;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the Plan is amended as of July 15, 1997 by the addition
of an Addendum, to read as set forth on the attached exhibit.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on July
______1997.
/s/
-----------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
JULY 1997
ADDENDUM TO THE
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
EARLY RETIREMENT WINDOW
1. Scope. This Addendum to the Plan describes the Early Retirement
-----
Window (the "Window"), under which Eligible Members (as defined in Section 2
below) may retire and receive benefits under the Plan.
2. Eligibility. A Member is eligible for the Window (an "Eligible
-----------
Member") if:
a. Such Member (i) either is on the Home Office payroll of the Company
or was on the Home Office payroll of the Company as of July 15,
1997, (ii) is eligible for benefits under a long-term disability
program sponsored by the Company or (iii) is Totally and
Permanently Disabled;
b. Such Member has at least 14 Years of Service on or before June 2,
1997; and
c. Such Member is at least age 49 on or before June 2, 1997.
3. Participation. Participation in the Window is completely voluntary. In
-------------
order to participate in the Window, an Eligible Member shall elect to
participate in the Window by completing an irrevocable written notice of such
Member's acceptance ("Acceptance Notice") of the Window on the form prescribed
for such purpose by the Administrative Committee. The Acceptance Notice must be
received by the Administrative Committee on or after June 3, 1996 and on or
before 5:00 p.m. Pacific Standard Time on October 1, 1997. In addition, the
Acceptance Notice shall be deemed complete only if it includes a retirement date
which occurs on or after the date as of which the Eligible Member has at least
14 Years of Service and has attained age 49. For retirement dates August 1, 1996
and thereafter, an eligible Member must execute a release of legal claims in a
form prescribed by the Company. For purposes of the Plan, the term "retirement"
shall include participation in the Window as described in this Addendum even if
the Eligible Member has terminated employment with the Company, providing such
termination occurred after July 15, 1997.
4. Benefits.
--------
a. In General. Any other provision of the Plan notwithstanding, an
----------
Eligible Member who elects to participate in the Window (a
"Participating Member") shall be eligible for an immediate benefit
under the Window as of the retirement date described in Section 3
of this Addendum and such retirement date shall be deemed to be an
Early Retirement Date under the Plan.
<PAGE>
b. Amount. The benefit payable under the Plan pursuant to the
------
Window is the greater of the following which is applicable:
i. 70% of the Eligible Member's Retirement Benefit; or
ii. The Benefit based on application of the Percentage Factor
provided in Table A of Section 7.1 opposite the Eligible
Member's actual age (as of the retirement date approved
pursuant to Section 3).
5. Benefits for Alternate Payee. An Alternate Payee with respect to an
----------------------------
Eligible Member may elect to receive benefits during the election period set
forth in Section 3 above to the extent provided in and in accordance with the
applicable Qualified Domestic Relations Order; provided, however, consistent
with Code section 414(p), the benefits for the Alternate Payee shall not reflect
any early retirement subsidies but, rather, shall be subject to reduction in
accordance with the factors set forth on Exhibit 1 to this Addendum.
6. Other Plan Provisions.
---------------------
a. A benefit under this Addendum shall be subject to Section 14.
b. Except as set forth in this Addendum, the provisions of the Plan
shall apply to a benefit payable under the Window.
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Revised Home
Office Pension Plan of Levi Strauss & Co. Retirement Plan (the "HOPP") as the
successor to Levi Strauss Associates Inc.;
WHEREAS, the Company desires to amend the HOPP to provide for the
maximum involuntary lump sum cash-out permitted by the Uruguay Round of the
General Agreement on Tariffs and Trade ("GATT") legislation, and Article 20 of
the HOPP provides that the Company may amend the HOPP at any time and for any
reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the HOPP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the HOPP;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
HOPP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of December 1, 1997, the Company amends
the HOPP as set forth below:
1. Section 11.5 of the HOPP is amended to replace "$3,500" wherever
it appears with "$5,000."
2. Section 25 of the HOPP is amended as follows:
a. Wherever it appears, "$3,500" is replaced with "$5,000."
b. Existing Section 25(b)(i), (ii), (iii), (iv) and (v), and
all cross-references thereto, are redesignated as Section
25(b)(iii), (iv), (v), (vi) and (vii), respectively.
c. Section 25(b) of the HOPP is amended by the addition of the
following new paragraphs:
(i) For purposes of calculating a single sum payment made
on or after November 30, 1998, under Section 11.3 or
Section 11.5, the interest rate used under the Plan
will equal the rate of interest on 30-year U.S.
Treasury securities as in effect in the October
<PAGE>
preceding the Plan Year in which such distribution is
to commence.
(ii) For single-sum distributions made during the period
beginning December 1, 1997, and ending November 29,
1998, the interest rate used under the Plan will equal
whichever of the rate described in (A) or (B) below
which produces the greater single-sum benefit:
(A) The interest rate equal to the rate of interest on
30-year U.S. Treasury securities as in effect in
the October preceding the Plan Year in which such
distribution is to commence; or
(B) The interest rate equal to the rate of interest on
30-year U.S. Treasury securities as in effect in
the second month preceding the effective date for
such distribution.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
11/25/97 /s/
- ------------------ --------------------------------
Date Donna J. Goya
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company is closing certain facilities;
WHEREAS, the Company desires to amend the Plan to provide for enhanced
early payment factors for certain terminated vested participants whose jobs with
the Company are eliminated by reason of such closings and for certain employees
terminated in connection with a reduction in force;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the Plan is amended as of December 1, 1997, as follows:
1. Existing Section 8.2 is amended by inserting "(a) In General."
----------
immediately after the title "Early Payment of Vested Retirement Benefits."
-------------------------------------------
2. A new subsection 8.2(b) is added to read as set forth below:
(b) Certain Members Terminated in Connection With Facilities
--------------------------------------------------------
Closings or Certain Reductions in Force. A Member described in
---------------------------------------
paragraph (i) or (ii) below may elect to begin receiving benefit
payments at any time on or after the Member attaining 55 and before the
Member's Normal Retirement Date:
(i) A Member (A) who has a right to receive his or her
Vested Retirement Benefit, (B) who was an "Affected Employee" (as
such term is defined in Section 8.2(c)(i) below), (C) whose
employment with the Company was terminated by reason of the shut-
down of the "Closing Facility" (as such term is defined in Section
8.2(c)(ii) below), and (D) who had attained 25 Years of
<PAGE>
Service as of the date the Member's Employment with the Company
terminated; or
(ii) A Member (A) who has a right to receive his or her
Vested Retirement Benefit, (B) whose employment with the Company
was terminated in connection with a layoff as a result of a
reduction in force or reorganization implemented by the Company
in July through September 1997, inclusive, (C) who had attained
25 Years of Service as of the date the Member's employment with
the Company terminated, and (D) was not a Highly Compensated
Employee during 1997.
The amount distributable to the Member will equal a percentage of
the Member's Vested Retirement Benefit based on the Member's age on
the date the Member's benefit payments begin. Such percentage shall be
determined pursuant to Table A set forth in Section 7. 1.
Such an election must be received by the Administrative Committee
at least 30 days before the date on which benefit payments are to
begin. Payment of the Member's Vested Retirement Benefit will begin on
the last day of any month before the Member's Normal Retirement Date
and on or after his or her 55th birthday.
3. A new subsection 8.2(c) is added to read as set forth below:
(c) For purposes of subsection 8.2(b),
(i) the term "Affected Employee" means an Employee in the
U.S. Operations and Sourcing Organization, excluding Employees in the
following organizations:
(A) Latin American Customer Fulfillment Region
(B) Asia Customer Fulfillment Region
(C) Logistics, except for "Transportation Employees."
For purposes of this section, the term "Transportation Employees"
means Employees in the following job classifications:
(I) Manager Assistant Field Transportation
(II) Source Relation Manager
(III) Supervisor Customer Service
(IV) Supervisor Traffic
(V) Transportation Coordinator
(VI) Trucker
<PAGE>
(VII) Administrative Assistant (excluding Customer
Service Centers positions)
(VIII) Office Clerical/Office Information Center
(excluding Customer Service Centers positions)
(IX) Exempt Dispatcher
(ii) the term "Closing Facility" shall mean any of the
following facilities:
El Paso Airways 520M Knoxville, TN (Sewing) 532M
El Paso Eastside 525M Roswell, NM 549M
El Paso Lomaland 522M Albuquerque, NM 501M
Fayetteville, Ark. 527M San Angelo, TX 552M
Harrison, Ark. 530M Centerville, TN 515M
Knoxville, TN (Finishing) 611F
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on June
8, 1998.
/s/
---------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Plan of Levi Strauss & Co. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors
of the company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan, effective November 30,
1998, to provide an early retirement enhancement to certain employees who are
laid off by the Company on or before November 29, 1999;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective November 30, 1998, the Plan is amended by the
as follows:
1. Existing Section 8.2 is amended by the addition of a new
subsection (d) to read as set forth below:
(d) Certain Members Laid Off From November 30, 1998 to November
-----------------------------------------------------------
29, 1999. A Member (i) who has a right to receive his or her Vested Retirement
- --------
Benefit, (ii) who was laid off by the Company effective on or after November 30,
19998 and before November 30, 1999, and (iii) who had attained 25 years of
Service as of the date the member's employment with the Company terminated or
would have had 25 Years of Service as of November 29, 1999, if not for being
laid off by the Company, may elect to begin receiving benefit payments at any
time on or after the Member attaining 55 and before the Member's Normal
Retirement Date. The amount distributable to the Member will equal a percentage
of the Member's Vested Retirement Benefit based on the Member's age on the date
the Member's benefit payment begin. Such percentage shall be determined pursuant
to Table A as set forth in Section 7.1(b). For purposes of this Section 8.2(d),
the term "laid off" shall have the meaning set forth in the November 1998
Addendum to the Plan.
<PAGE>
Such an election must be received by the Administrative Committee at least
30 days before the date on which benefit payments are to begin. Payment of the
Member's Vested Retirement Benefit will begin on the last day of any month
before the Member's Normal Retirement Date and on or before his or her 55/th/
birthday.
2. The Plan is amended by the addition of a new November 1998 Addendum to
read as set forth in the attached exhibit.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on October 5,
1998.
/s/
---------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
NOVEMBER 1998
ADDENDUM TO THE
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
AND THE
LEVI STRAUSS ASSOCIATES INC.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
1998 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This Addendum to the Plan describes the 1998 Enhanced Early
-----
Retirement Program for Laid Off Employees (the "1998 Enhancement"), under which
Eligible Members (as defined in Section 2 below) may retire and receive benefits
under the Plan.
2. Eligibility. A Member is eligible for the 1998 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is laid off by the Company;
b. Such Member has at least 15 Years of Service at the time
of election to retire under the 1998 Enhancement or would
have had 15 Years of Service as of November 29, 1999, if
not for being laid off by the Company and retirement
under the 1998 Enhancement; and
c. Such Member is at least age 50, or will attain age 50 on
or before November 29, 1999;
d. Such Member's salary grade is not Grade 9 or higher.
3. Participation. Participation in the 1998 Enhancement is completely
-------------
voluntary. In order to participate in the 1998 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1998 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be deemed complete only if it includes a retirement date
which occurs not earlier then December 1, 1998, and not later than December 1,
1999.
4. Benefits.
--------
a. In General. Any other provision of the Plan
----------
notwithstanding, an Eligible Member who elects to
participate in the 1998 Enhancement (a "Participating
Member") shall be eligible for an immediate benefit under
the 1998 Enhancement as of the retirement date described
in Section 3 of
<PAGE>
this Addendum and such retirement date shall be deemed to
be an Early Retirement Date under the Plan.
b. Amount. The benefit payable under the Plan pursuant to
------
the 1998 Enhancement is the greater of the following
which is applicable.
i. 70% of the Participating Member's Retirement
Benefit; or
ii. If applicable to the Participating Member, the
Benefit based on application of the Percentage
Factor provided in Table A of Section 7.1 opposite
the Participating Member's actual age (as of the
retirement date approved pursuant to Section 3).
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in and in accordance with
the applicable Qualified Domestic Relations Order; provided, however, consistent
with Code section 414(p), the benefits for the Alternate Payee shall not reflect
any early retirement subsidies but, rather, shall be subject to reduction in
accordance with the factors set forth on Exhibit 1 to this Addendum.
6. Other Plan Provisions.
---------------------
a. A benefit under this Addendum shall be subject to Section 14.
b. Except as set forth in this Addendum, the provisions of the
Plan shall apply to a benefit payable under the 1998
Enhancement.
7. Transferred Eligible Members. An Employee who becomes an Eligible
----------------------------
Member and who is transferred to a new position prior to retirement under the
1998 Enhancement shall no longer be eligible to retire under the 1998
Enhancement unless such Employee is again laid off and eligible to participate
within the period set forth in Section 3 above.
8. Meaning of `Laid Off".
---------------------
An Employee is laid off within the meaning of the Plan if he or she is
involuntarily separated from employment with the Company at the written
direction of the Company due to a lay off.
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan, effective November 30,
1998, to provide an early retirement enhancement and full vesting to certain
employees who are Laid Off by the Company on or before November 29, 1999;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW THEREFORE, any Member who is "Laid Off" (as defined in the attached
Addendum) by the Company and who terminates employment between November 30, 1998
and November 29, 1999 shall be fully vested in his or her Retirement Benefit
effective as of his or her termination of employment; and
FURTHER, effective November 30, 1998, the November 1998 Addendum to the
Plan is hereby revised in its entirety as set forth in the attached exhibit.
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this 19th day of November, 1998.
LEVI STRAUSS & CO.
By: /s/
---------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
NOVEMBER 1998
ADDENDUM TO THE
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the "1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Revised Home Office Pension Plan of
Levi Strauss & Co. (the "Plan"). Benefits that are not paid from the Plan may be
paid from the Levi Strauss & Co. Supplemental Benefit Restoration Plan (the
"Supplemental BRP") and the Levi Strauss & Co. Excess Benefit Restoration Plan
(the "Excess BRP").
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November
29, 1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is
-------------
completely voluntary. In order to participate in the 1999 Enhancement, an
Eligible Member shall complete a written notice ("Acceptance Notice") of the
1999 Enhancement on the form prescribed for such purpose by the Administrative
Committee. The Acceptance Notice must be received by the Administrative
Committee on or before 5:00 p.m. Pacific Standard Time on November 29, 1999. In
addition, the Acceptance Notice shall be deemed complete if it includes a
retirement date that occurs not earlier than December 1, 1998, and not later
than December 1, 1999.
4. Benefits.
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible
for an immediate benefit under the 1999 Enhancement as of the
retirement date described in Section 3 above and such retirement
date shall be deemed to be an Early Retirement Date for purposes
of the Plan.
<PAGE>
b. Amount. The benefit under the 1999 Enhancement is the greater
------
of the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Plan; or
ii. If applicable to the Participating Member, the Benefit
based on the application of the Percentage Factor provided
in Table A of Section 7.1 of the Plan opposite the
Participating Member's actual age (as of the retirement
date approved pursuant to Section 3 above).
c. Method of Payment. The benefits under the 1999 Enhancement shall
-----------------
be paid from the Plan, provided that such payment does not cause
the Plan to violate applicable nondiscrimination rules under the
Code. If the payment of the 1999 Enhancement benefits would
cause the Plan to violate such nondiscrimination rules, benefits
to Members whose 1998 Compensation (as defined in the Plan) is
$125,000 or higher shall not be paid from the Plan.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
6. Transferred Eligible Members. An Employee who is transferred to a
----------------------------
new position prior to retirement under the 1999 Enhancement shall no longer be
eligible to retire under the 1999 Enhancement unless such Employee is Laid Off
and eligible to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off". An Employee is Laid Off if he or she is
--------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a layoff.
<PAGE>
REVISED HOME OFFICE PENSION PLAN OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "Plan");
WHEREAS, pursuant to Section 20.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan, effective November 25,
1998, to add an account described under Section 401(h) of the Internal Revenue
Code of 1986, as amended, to the Plan to provide medical benefits for retired
members of the Plan;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the Plan is amended effective November 25, 1998 by the
addition of an Addendum, to read as set forth in the attached exhibit.
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this 25th day of November, 1998.
LEVI STRAUSS & CO.
By: /s/
------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
ADDENDUM TO THE
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
Section 1 - Establishment of Health Care Account
- ------------------------------------------------
Subject to the provisions of this Addendum, an account (hereinafter referred to
as the "Health Care Account") shall be established under this Plan for the
purpose of funding medical benefits for retired employees, their spouses and
dependents in accordance with section 401(h) of the Code. The provisions of this
Addendum shall be effective as of _____, 1998.
Section 2 - Medical Benefits
- ----------------------------
As used in this Addendum, the phrase "medical benefits" shall mean any medical
expense described in Section 213(d)(1) of the Code deductible under section 213
of the code, and properly reimbursable under the terms and conditions of the
Comprehensive Welfare Plan for Home Office Payroll Employees and retirees
(hereinafter referred to as the "Health Care Plan"), as amended from time to
time. The provisions of the Health Care Plan are incorporated herein by this
reference.
Section 3 - Eligible Individuals
- --------------------------------
The individuals eligible for medical benefits under the Health Care Account
shall include only those retired Members who are eligible for retiree medical
benefits under the Health Care Plan and who are actually covered under the
Health Care Plan, and their spouses and dependents if they are actually covered
under the Health Care Plan. Notwithstanding the foregoing, no retired Member who
is a "key employee" within the meaning of section 401(h)(6) shall be eligible to
receive medical benefits under the Health Care Account.
Section 4 - Separate Account
- -----------------------------
The Health Care Account shall be maintained on the books of the Plan as a
separate account, but shall be maintained only for record-keeping purposes. For
investment purposes, the assets attributable to the Health Care Account may be
commingled with other Plan assets. The separate account shall be credited with
(i) Company contributions specifically designated as contributions to the Health
Care Account, (ii) transfers of excess pension assets, if any, pursuant to
Section 7 of this Addendum, and (iii) gains credited on such contributions and
transferred pension assets. The separate account shall be charged with (A)
losses on Company contributions and transferred pension assets, and (B)
distributions from Health Care Account used to provide medical benefits. Gains
and losses shall be determined under a reasonable accounting system established
by the Committee.
Section 5 - Contributions
- --------------------------
(a) In General. Subject to the limitations of paragraphs (b) and (c),
----------
the Company may make contributions to the Health Care Account as such times and
in such amounts as the Company shall determine; provided, however, that in no
event shall the Company be required to make contributions to the Health Care
Account. If the Company does make contributions to the
<PAGE>
Health Care Account, the Company shall specifically designate the portion of
each contribution to the Plan that is allocable to the Health Care Account. No
contributions to the Health Care Account shall be accepted from Employees or
Members.
(b) Limitation on Contributions. In no event shall the aggregate actual
---------------------------
contributions to the Health Care Account, when added to the actual contributions
for life insurance protection under the Plan, if any, exceed 25 percent of the
total actual contributions to the Plan (excluding contributions used to fund
past service credits), after the date on which the Health Care Account is
established
(c) Contributions Must be Reasonable and Ascertainable. Amounts
--------------------------------------------------
contributed by the Company to the Health Care Account shall be reasonable and
ascertainable. In determining the amount of such contributions, the Company
shall apply assumptions that are reasonable in the aggregate, including the
reasonable assumptions about projected increases in health care costs due to
inflation.
(d) Return of Excess and Nondeductible Contributions. Any contributions
------------------------------------------------
to the Health Care Account in excess of the limitation described in paragraph
(b) (any related earnings) shall be treated as having been contributed pursuant
to a mistake of fact, and shall be returned to the Company within a reasonable
period of time after the mistake is discovered. Similarly, any contributions to
the Health Care Account that are not deductible pursuant to the rules set forth
in Treasury Regulations under section 404 of the Code (and any related earnings)
shall be returned to the Company within a reasonable period of time after it is
determined that such contributions are not deductible.
Section 6 - Distributions
- -------------------------
Medical benefits under the Health Care Plan may be paid from the Health Care
Account, in such amounts and at such times as may be determined by the
Administrative Committee, but only to the extent the Health Care Account is
sufficiently funded to pay such benefits.
Section 7 - Transfers of Excess Pension Assets
- ----------------------------------------------
The Health Care Account is expressly authorized to accept a transfer of excess
assets, so long as any such transfer is a qualified transfer under the
requirements of section 420 of the Code, as in effect at the time of the
transfer.
Section 8 - Impossibility of Diversion
- --------------------------------------
No amounts contributed to the Health Care Account, and no earnings on such
contributions, may be used for, or diverted to, any purpose other than providing
medical benefits under the Health Care Plan prior to the satisfaction of all
Health Care Plan liabilities funded by the Health Care Account. If all such
Health Care Plan liabilities have been satisfied, any amounts remaining in the
Health Care Account shall be returned to the Company.
Section 9 - Amendment and Termination
- -------------------------------------
Subject to the requirements of Section 8 of this Addendum, the Company expressly
reserves the right to amend or terminate the Health Care Account at any time.
The Company has also
<PAGE>
reserved the right to amend or terminate the Health Care Plan and may do so
independently of any decision or action to amend or terminate the Health Care
Account. In addition, the Company may spin off all or a portion of the Health
Care Account and cause the spun-off portion to be merged into a 401(h) account
in another pension plan, merged into a trust described in Section 501(c)(9) of
the Code, or merged into a welfare benefit fund described in Section 419 of the
Code.
Section 10 - Discrimination
- ---------------------------
In accordance with the provisions of Treasury Regulation 1.401-14(b)(2), the
Health Care Account shall be operated in a manner that does not discriminate in
favor of officers, shareholders, supervisory employees or "highly compensated
employees" within the meaning of section 414(q) of the Code.
Section 11 - Administration
- ---------------------------
(a) In General. The Health Care Account shall be administered by the
Administrative Committee, who shall have the sole and exclusive authority to
interpret the provisions of this Addendum. The Administrative Committee shall
have the power to adopt any and all administrative procedures necessary to
accomplish the purposes of the Health Care Account, including the power to
establish financial arrangements for the purpose of paying medical benefits in
accordance with the terms of the Health Care Plan. Nothing in this Addendum
shall preclude the Administrative Committee from causing the Health Care Account
to pay medical benefits directly to health care providers or insurance carriers,
or pay such benefits indirectly through financial institutions, a trust
described in Section 501(c)(9) of the Code, or another account described in
Section 401(h) of the Code.
(b) Administrative Expenses. Administrative expenses associated with
medical benefits provided under the Health Care Plan which are not paid directly
by the Company may be paid from the Health Care Account.
Section 12- Employee Retirement Income Security Act Requirements.
- ----------------------------------------------------------------
Notwithstanding any other provision of this Plan, no amounts contributed the
Health Care Account, and no earnings on such contributions, shall be treated as
party of any Member's accrued benefit for purposes of the minimum vesting rules
of Section 411(a) of the Code and Section 203 of the Act, the minimum accrual
rules of Section 411(b) of the Code and Section 204 of the Act, and the `anti-
cutback" rules of Section 411(d)(6) of the Code and Section 204(g) of the Act.
Nor shall any such amounts be treated as "benefit liabilities" subject to
protection upon termination of the Plan under Title IV of the Act. In addition,
the Health Care Account Section 302 of the Act, shall not be subject to the
joint and survivor annuity requirements of Sections 401(a)(11) and 417 of the
Code and Section 205 of the Act, and shall not be subject to the rules regarding
mergers, spin-offs, and asset transfers under Sections 401(a)(12) and 414(1) of
the Code and Section 208 of the Act.
Section 13 - IRS Approval. This Addendum is expressly conditioned upon the
- -------------------------
receipt of a favorable determination letter from the Internal Revenue Service
holding that the adoption of the Addendum does not adversely affect the
tax-qualified status of the Plan. If the Plan is unable to obtain a favorable
determination letter with respect to this Addendum, any contributions made by
<PAGE>
the Company to the Health Care Account shall be returned to the Company, and
this Addendum shall cease to be effective.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
LEVI STRAUSS & CO.
EMPLOYEE LONG-TERM INVESTMENT AND
SAVINGS PLAN
REVISED HOME OFFICE PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP"), the Levi Strauss & Co. Long-
Term Investment and Savings Plan (the "ELTIS"), and the Revised Home Office
Pension Plan of Levi Strauss & Co. (the "HOPP") (collectively, the "Plans");
WHEREAS, the Company desires to amend the Plans to provide that the
definitions of compensation used under the Plans are as consistent as reasonably
practical and are administratively convenient;
WHEREAS, each Plan provides that the Company may amend the Plan at any
time and any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plans and to
delegate to certain other officers of the Company the authority to adopt certain
amendments to the Plans;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plans, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective December 1, 1997:
1. Section 2.14 of the EIP is amended as set forth on Exhibit A-1
hereto;
2. The final paragraph of Section 2.23 of the EIP is amended as set
forth on Exhibit A-2 hereto;
3. Section 2.68 of the EIP is amended as set forth on Exhibit A-3
hereto;
4. Section 12.1(b) of the EIP is amended as set forth on Exhibit A-4
hereto;
5. Section 2.12 of the ELTIS is amended as set forth on Exhibit B-1
hereto;
<PAGE>
6. The final paragraph of Section 2.20 of the ELTIS is amended as set
forth on Exhibit B-2 hereto;
7. Section 2.57 of the ELTIS is amended as set forth on Exhibit B-3
hereto;
8. Section 10. 1 (b) of the ELTIS is amended as set forth on Exhibit
B-4;
9. Section 2.17 of the HOPP is amended as set forth on Exhibit C-1
hereto; and
10. Section 2.29 of the HOPP is amended as set forth on Exhibit C-2
hereto.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on the
date set forth below.
11/25/98________________ /s/
--------------------------------
Date Donna J. Goya
Senior Vice President
<PAGE>
Exhibit A-1
-----------
2.14 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses (except as excluded in
paragraphs (e) or (f) below), incentive compensation (except as excluded in
paragraphs (e) or (f) below) and overtime pay. "Compensation" also includes the
Member's Member Contributions to the Plan (or any other plan maintained by the
Company under sections 401(k) of the Code) for the Plan Year and any amounts
contributed by the Member to a cafeteria plan maintained by the Company under
section 125 of the Code, and amounts deferred under the Company's Deferred
Compensation Plan for executives. Back pay will be included in Compensation only
for the Plan Year in which the back pay is made and the amount to be included
will be limited to the amount attributable to that Plan Year, regardless of
mitigation of damages.
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
-----------
(a) Matching Contributions, Nonelective Contributions or Profit
Sharing Contributions to the Plan and/or amounts paid to the Member according to
an election under Section 6.2.
(b) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, including contributions to nonqualified deferred compensation plans,
and any matching contribution made under the Company's Capital Accumulation
Plan, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the exercise
of any right granted under a stock option plan maintained by the Company or an
Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan or long-
term incentive plan;
(g) Severance payments or pay in lieu of notice;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
(j) "Perks."
<PAGE>
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section 401(a)(17) of the Code (as adjusted as provided
under section 401(a)(17) of the Code) will be disregarded. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
<PAGE>
Exhibit A-2
-----------
"Compensation" for purposes of this Section 2.23 means Total
Compensation as defined in Section 2.68 of the Plan.
<PAGE>
Exhibit A-3
-----------
2.68 "Total Compensation" for any employee for any Plan Year means the
------------------
amount shown for the Employee for the Plan Year in Box 1 of Form W-2, plus any
amounts which were excluded from the Employee's income pursuant to section 125
of the Code or section 402(a)(8) of the Code.
Total compensation in excess of $200,000 or any successor limitation as
provided for the Plan Years in section 401(a)(17) of the Code (as adjusted as
provided under section 401(a)(17) of the Code) will be disregarded.
<PAGE>
Exhibit A-4
-----------
12.1 ...
(b) 25 % of the Member's compensation for such Plan Year. Compensation
means Total Compensation for Plan Years beginning after December 31, 1997. For
Plan Years beginning prior to January 1, 1998, "Compensation" means Total
Compensation without regard to section 125 of the Code or section 402(a)(8) of
the Code.
<PAGE>
Exhibit B-1
-----------
2.12 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses (except as excluded in
paragraphs (e) or (f) below), incentive compensation (except as excluded in
paragraphs (e) or (f) below) and overtime pay. "Compensation" also includes the
Member's Member Contributions to the Plan (or any other plan maintained by the
Company under section 401 (k) of the Code) for the Plan Year and any amounts
contributed by the Member to a cafeteria plan maintained by the Company under
section 125 of the Code, and amounts deferred under the Company's Deferred
Compensation Plan for executives. Back pay will be included in Compensation only
for the Plan Year in which the back pay is made and the amount to be included
will be limited to the amount attributable to that Plan Year, regardless of
mitigation of damages.
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
--------
(a) Matching Contributions or Special Company Contributions to the
Plan under Section 5.2;
(b) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, including contributions to nonqualified deferred compensation plans,
and any matching contribution made under the Company's Capital Accumulation
Plan, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the exercise
of any right granted under a stock option plan maintained by the Company or an
Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan or long-
term incentive plan;
(g) Severance payments or pay in lieu of notice;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
(j) "Perks."
<PAGE>
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section 401(a)(17) of the Code (as adjusted as provided
under section 401(a)(17) of the Code) will be disregarded. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
<PAGE>
Exhibit B-2
-----------
"Compensation" for purposes of this Section 2.20 means Total
Compensation as defined in Section 2.57 of the Plan.
<PAGE>
Exhibit B-3
-----------
2.57 "Total Compensation for any employee for any Plan Year means the
------------------
amount shown for the Employee for the Plan Year in Box 1 of Form W-2, plus any
amounts which were excluded from the Employee's income pursuant to section 125
of the Code or section 402(a)(8) of the Code.
Total compensation in excess of $200,000 or any successor limitation as
provided for the Plan Year in section 401(a)(17) of the Code (as adjusted as
provided under section 401(a)(17) of the Code) will be disregarded.
<PAGE>
Exhibit B-4
-----------
10.1 ...
(b) 25% of the Member's compensation for such Plan Year. Compensation
means Total Compensation for Plan Years beginning after December 31, 1997. For
Plan Years beginning prior to January 1, 1998, "Compensation" means Total
Compensation without regard to section 125 of the Code or section 402(a)(8) of
the Code.
<PAGE>
Exhibit C-1
-----------
2.17 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses (except as excluded in
paragraphs (e) or (f) below), incentive compensation (except as excluded in
paragraphs (e) or (f) below) and overtime pay. "Compensation" also includes the
Member's contributions to any plan maintained by the Company under section
401(k) of the Code for the Plan Year and any amounts contributed by the Member
to a cafeteria plan maintained by the Company under section 125 of the Code.
Back pay will be included in Compensation only for the Plan Year in which the
back pay is made and the amount to be included will be limited to the amount
attributable to that Plan Year, regardless of mitigation of damages.
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
-----------
(a) Contributions to another plan maintained by the Company (other
than cash or deferred contributions under Section 401(k) of the Code;
(b) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, including contributions to nonqualified deferred compensation plans,
and any matching contribution made under the Company's Capital Accumulation
Plan, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the exercise
of any right granted under a stock option plan maintained by the Company or an
Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan or long-
term incentive plan;
(g) Severance payments or pay in lieu of notice;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
(j) "Perks."
<PAGE>
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section.401(a)(17) of the Code (as adjusted as provided
under section 401(a)(17) of the Code) will be disregarded. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
<PAGE>
Exhibit C-2
-----------
2.29 "High-3 Year Average Compensation" means a Member's average annual
--------------------------------
compensation from the Company or an Affiliated Company for the 3 consecutive
Plan Years during which his or her compensation was highest. If the Member has
not been employed with the Company or an Affiliated Company for 3 Consecutive
Plan Years, "High-3 Year Average Compensation" will mean the Member's average
annual compensation for the actual number of consecutive Plan Years with the
Company or an Affiliate Company during which his or her compensation was the
highest.
For Plan Years beginning prior to January 1, 1998, "Compensation" means
compensation which would be shown in Box 1 of Form W-2, plus any amounts which
were excluded from Box 1 of Form W-2 pursuant to section 125 of the Code or
section 402(a)(8) of the Code. For Plan Years beginning after December 31, 1997,
"Compensation" means compensation which would be shown in Box 1 of Form W-2.
Compensation for any Plan Year in excess of $200,000 or any successor
limitation as provided for the Plan Year in section 401(a)(17) of the Code (as
adjusted under section 401(a)(17) of the Code). (The "401(a)(17) limitation"),
will be disregarded. The adjustment to the 401(a)(17) limitation that takes
effect on January 1 of each year is effective for the Plan Year beginning
____________.
<PAGE>
RESOLUTIONS TO AMEND THE
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
__________________
LEVI STRAUSS & CO.
REVISED EMPLOYEE RETIREMENT PLAN
__________________
LEVI STRAUSS & CO.
RETIREMENT PLAN FOR
OVER-THE-ROAD TRUCK DRIVERS AND DISPATCHERS
___________________
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "HOPP"), the Levi Strauss &
Co. Revised Employee Retirement Plan (the "ERP"), and the Levi Strauss & Co.
Retirement Plan for Over-the-Road Truck Drivers (the "ORTD") (collectively
referred to as the "Plans");
WHEREAS, pursuant to Section 20.1 of the HOPP, Section 21.1 of the ERP,
and Section 20.1 of the ORTD, the Board of Directors of the Company is
authorized to amend the Plans at any time and for any reason;
WHEREAS, the Company desires to amend the Plans, effective February 22,
1999, to provide special benefits to certain employees who are laid off by the
Company as a result of LS&CO.'s shift from manufacturing operations (as
determined by the appropriate Plan Administrator);
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plans and to
delegate to certain other officers of the Company the authority to adopt certain
amendments to the Plans;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plans, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments attached herein are within such limits to the
delegated authority of Donna J. Goya;
<PAGE>
NOW THEREFORE, BE IT RESOLVED, the HOPP is amended as of February 22,
1999 by the addition of a February 1999 Addendum, to read as set forth on the
attached exhibit;
FURTHER RESOLVED, the ERP is amended as of February 22, 1999 by the
addition of an Appendix H, to read as set forth on the attached exhibit; and
FURTHER RESOLVED, the ORTD is amended as of February 22, 1999 by the
addition of an Appendix D to read as set forth on the attached exhibit.
* * *
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on this
3rd day of May, 1999.
LEVI STRAUSS & CO.
By: /s/
------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
FEBRUARY 1999
ADDENDUM
TO THE
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
___________________________
ENHANCED EARLY RETIREMENT PROGRAM
FOR EMPLOYEES LAID OFF
AS A RESULT OF
LS&CO.'S SHIFT FROM MANUFACTURING
1. Introduction. This is the Enhanced Early Retirement Program For
------------
Employees Laid Off as a Result of LS&CO.'s Shift from Manufacturing (the
"Program"). The purpose of the Program is to provide enhanced pension benefits
to certain Members who are "Laid Off" (as defined in paragraph 4) on account of
LS&CO.'s shift from manufacturing operations. The enhanced pension benefits
described herein are provided under the Revised Home Office Pension Plan of Levi
Strauss & Co. (the "Plan").
2. Eligibility. Enhanced pension benefits are limited to "Members" (as
-----------
defined in the Plan). A Member may be eligible for enhanced pension benefits as
described below if such Member is Laid Off as a result of LS&CO.'s shift from
manufacturing operations and his/her "Notice Date" (defined below) is on or
after February 22, 1999, but prior to February 22, 2000. LS&CO. will specify in
writing whether a Member is Laid Off for this reason. The Administrative
Committee, in its capacity as Plan Administrator, or its delegate will have
complete discretion to determine whether a Layoff is on account of LS&CO.'s
shift from manufacturing operations. Eligibility for the 15 Years of Service
Benefit (described below) is also contingent upon the Member executing a valid
General Release Agreement.
3. Benefits. A Member who satisfies the eligibility requirements under
--------
paragraph 2, above, may be entitled to receive the following benefits subject to
any additional eligibility criteria described below and provided that such
Member completes the documents required under paragraph 4:
A. Automatic Full Vesting. Any such Member will be fully vested in
----------------------
his or her Retirement Benefit under the Plan effective as of
his/her Separation Date.
B. Enhanced Pension Benefit. Two Plan enhancements are available.
------------------------
Any such Member who satisfies the additional eligibility
requirements will be entitled to receive the greater of the
following benefits that apply:
. 15 Years of Service Benefit. If a Member has at least 15
---------------------------
Years of Service (as defined in the Plan) at his/her
Separation Date or would have been capable of accruing 15
Years of Service (if not for being Laid Off by LS&CO.) as
of the Determination Date, such Member
<PAGE>
shall be entitled to the greater of the following benefits
if he/she would attain at least age 50 as of the
Determination Date:
i. 70% of the Member's Retirement Benefit under the Plan,
if the Member would be at least age 50 as of the
Determination Date, but is not yet age 56 as of his/her
Retirement Date; or
ii. the Retirement Benefit based on the application of the
Percentage Factor provided in Table A of Section 7.1 of
the Plan opposite the Member's actual age (as of the
Retirement Date), if the Member is 56 or older as of
his/her Retirement Date.
Payment of such benefit will be effective with respect to
the last day of the month in which the Member's Retirement
Date occurs.
. 25 Years of Service Benefit. If a Member has at least 25
---------------------------
Years of Service as of his/her Separation Date, or would
have been capable of accruing 25 Years of Service (if not
for being Laid Off by the Company) as of the Determination
Date, he or she may elect to begin receiving Retirement
Benefit payments at any time on or after the date such
Member attains age 55 and before the Member's Normal
Retirement Date. The amount of the benefit will equal a
percentage of the Member's vested Retirement Benefit based
on the Member's age on the date payments begin. Such
percentage shall be determined pursuant to Table A set
forth in Section 7.1.
4. Defined Terms. The following definitions shall apply for purposes
-------------
of the Program.
A. "Closing Facility." The following are the sole and exclusive
-----------------
"Closing Facilities" for purposes of this Program:
Harlingen Morrilton
Murphy Mountain City
Valdosta Wichita Falls
Warsaw Johnson City
El Paso-Cypress McAllen
The term Closing Facility shall not include the
decommissioning of a plant or facility where the intent is to
transfer some of the jobs from a closing plant or facility to
a geographically proximate worksite and where some employees
from the closing plant or facility are laid off and others are
offered jobs at the new plant or facility.
<PAGE>
B. "Determination Date." The term "Determination Date" may
------------------
have different meanings for different classifications of
Members as follows:
. The Determination Date for any Member whose Notice
Date is February 22, 1999 and whose job is physically
located within one of the Closing Facilities
identified above shall be February 21, 2000.
. The Determination Date for any Member whose Notice
Date is after February 22, 1999 and whose job is not
physically located at one of the Closing Facilities
but who is Laid Off in connection with LS&CO.'s shift
from manufacturing shall be February 21, 2000.
. The Determination Date for any Member whose Notice
Date is after February 22, 1999 and whose job is
physically located at one of the Closing Facilities
shall be the date which is 12 consecutive calendar
months after the Notice Date for such Member.
C. "Laid Off." A Member is Laid Off if he/she is
--------
involuntarily separated from employment with the Company
at the written direction of the Company in connection
with a program specified by the Company as a layoff.
D. "Notice Date." The term "Notice Date" shall mean the date
-----------
which an eligible employee is notified by a Company
representative that he/she is to be terminated from
employment with the Company in conjunction with a Closing
Facility.
E. "Retirement Benefit." The term "Retirement Benefit" means
------------------
the retirement benefit payable to a Member in the form of
a Straight Life Annuity as provided in the Plan.
F. "Retirement Date." The term "Retirement Date" means a
---------------
Member's Normal Retirement Date, Early Retirement Date or
Deferred Retirement Date, or any other Retirement Date as
provided in the Plan.
G. "Separation Date." The term "Separation Date" means the
---------------
date an eligible employee is separated from employment
with the Company and is no longer on the Company payroll.
5. Participation. Participation in the 15 Years of Service
-------------
Benefit and the 25 Years of Service Benefit is completely voluntary. In order to
participate in those Benefits, a Member must complete a written notice
("Acceptance Notice") of the applicable Benefit on a form prescribed for such
purpose by the Administrative Committee. In addition, a Member must execute a
valid General Release Agreement to participate in the 15 Years of Service
Benefit.
<PAGE>
6. Transferred Eligible Members. An Employee who is transferred to a
----------------------------
new position prior to retirement under Subparagraphs 3.A or 3.B, above, shall no
longer be eligible to retire under the Program unless such Employee is Laid Off
and eligible to participate under the terms set forth herein.
7. Program Administration. This Program is part of the Plan. As such,
----------------------
the Plan Administrative Committee will serve as the Plan Administrator. The Plan
Administrator or its delegate has discretionary authority to determine
eligibility for benefits under the Program and to construe the terms of the
Program, including the making of factual determinations. The decisions of the
Plan Administrator or its delegate shall be final and conclusive with respect to
all questions concerning the administration of the Program, including
eligibility under paragraph 2, above.
The Plan Administrator may delegate to other persons or entities
responsibilities for performing certain of the duties of the Plan Administrator
under the terms of the Program and may seek such expert advice as the Plan
Administrator deems reasonably necessary with respect to the Program. The Plan
Administrator shall be entitled to rely upon the information and advice
furnished by such delegates and experts, unless actually knowing such
information and advice to be inaccurate or unlawful.
8. Terms of Governing Plan Document. Except as otherwise provided
--------------------------------
herein, the terms of the Plan shall govern the Program.
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "HOPP");
WHEREAS, pursuant to Section 20.1 of the HOPP, the Board of Directors
of the Company is authorized to amend those Plans at any time and for any
reason;
WHEREAS, the Company desires to revise the eligibility provisions of
the Fiscal 1999 Enhanced Early Retirement Program for Laid Off Employees;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board, to
adopt certain amendments to the Plans and such authorization has not been
amended, rescinded or superseded as of the date hereof; and
WHEREAS, the amendment herein is within the delegated authority of
Robert D. Haas;
NOW, THEREFORE, paragraph 2 of the November 1998 Addendum to the HOPP
is hereby amended, effective as of the adoption of this Amendment, to read as
follows:
"2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company
and terminates employment between November 30, 1998 and
November 29, 1999 or such later date as described below;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of
Service as of November 29, 1999, if not for being Laid Off
by the Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
The Company, in its sole and exclusive discretion, may elect to extend
the employment of a Member (who otherwise would have terminated
employment prior to November 29, 1999) for a reasonable period after
November 29, 1999. A Member will not fail to be eligible for the 1999
Enhancement by virtue of such continued employment, provided that the
continued employment is for bona fide business reasons.
<PAGE>
If a Member is eligible for the Enhanced Early Retirement Program for
Employees Laid off as a Result of LS&CO.'s Shift from Manufacturing,
he/she shall not be eligible for benefits under this 1999 Enhancement."
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this 22nd day of November, 1999.
LEVI STRAUSS & CO.
By: /s/
-------------------------------
Robert D. Haas
Chairman of the Board of Directors
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Revised Home
Office Pension Plan of Levi Strauss & Co. (the "HOPP"); and
WHEREAS, Section 20.1 of the HOPP provides that the Board of Directors
of LS&CO. is authorized to amend the HOPP at any time and for any reason; and
WHEREAS, the HOPP has consistently provided, and been interpreted to
provide, benefits exclusively for persons considered by LS&CO. to be employees
of the "Company" (as defined under Section 2.16 of the HOPP) and to exclude from
coverage individuals who perform services for the Company and who are
categorized as independent contractors or leased employees, or in any other
non-employee category, regardless of whether such persons are determined to be
common law or statutory employees of the Company, and LS&CO. desires to reaffirm
the practice of covering only those individuals whom LS&CO. designates as
employees of the Company; and
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board and Chief
Executive Officer, to adopt certain amendments to the HOPP and to delegate to
certain other officers of LS&CO. the authority to adopt certain amendments to
the HOPP; and
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J.
Goya, Senior Vice President for Global Human Resources, the authority to amend
the HOPP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
<PAGE>
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, Section 2.26 of the HOPP is hereby amended in its
entirety, effective as of November 30, 1998, to read as follows:
"2.26 "Employee" means any person who is employed by the Company
--------
excluding:
---------
(a) Any employee of the Company who is not paid from the
home office payroll of LS&CO.;
(b) Any employee of a Participating Company other than
LS&CO. who is not paid on a salary or commission basis;
(c) Any stocktaker, service representative, Retiree
Coordinator or "Temporary Employee;"
(d) Any employee who is not employed in a state or
territory of the United States or who receives no remuneration from the
Company that constitutes income from sources within the United States
(within the meaning of section 861(a)(3) of the Code);
(e) Any alien who:
(i) Receives remuneration from the Company that
constitutes income from sources within the United States (within
the meaning of section 861(a)(3) of the Code); and
(ii) Has been transferred by the Company from a job
outside the United States to a job within the United States,
during any period with respect to which the alien is benefiting
(by reason of accruing a benefit or making or having
contributions made on the alien's behalf) under:
(A) A retirement plan established or maintained
outside the United States by a foreign subsidiary (including a
domestic subsidiary operating abroad) or a foreign division of
the Company; or
(B) The Levi Strauss International Retirement Plan
for Third Country National Employees or any successor or similar
plan maintained by the Company or an Affiliated Company;
(f) A United States citizen locally hired by a foreign
subsidiary (including a domestic subsidiary operating abroad) or a
foreign division of a Participating Company;
<PAGE>
(g) Any employee who is included in a unit of employees
covered by a negotiated collective bargaining agreement which does not
provide for his or her membership in the Plan;
(h) Any individual who must be treated as an employee of
the Company for limited purposes under the leased employee provisions
of Code Section 414(n);
(i) Any individual providing services to the Company
pursuant to a contract designating him/her as an independent
contractor or consultant;
(j) Any individual providing services to the Company
pursuant to an agreement between the Company and a third party; or
(k) Any employee who is included in a group or
classification of employees on a payroll of a company designated by
the Board of Directors as not being eligible to participate in the
Plan.
A member of the Board of Directors of the Company is not eligible for
membership in the Plan unless he or she is also an Employee of the
Company.
Any "Temporary Employee" and any stocktaker employed by the Company
will not be treated as an Employee, except for the purposes of and in
accordance with receiving benefits computed under the Terminated Plan.
For purposes of this Section 2.26, a "Temporary Employee" means a
person who:
(i) Is hired to fill a position which arises from
either an emergency situation or the temporary absence of an
Employee;
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time; and
(iii) Is designated by LS&CO. as a "Temporary
Employee."
A person's status as an Employee will be determined by the
Administrative Committee and such determination will be conclusive and
binding on all persons notwithstanding any contrary determination of
Employee status by any court or governmental agency including, but not
limited to, the Internal Revenue Service."
* * *
<PAGE>
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
November 22, 1999.
LEVI STRAUSS & CO.
/s/
--------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS & CO.
AMENDMENT
_________________________
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Revised
Home Office Pension Plan of Levi Strauss & Co. (the "HOPP");
WHEREAS, pursuant to Section 20.1 of the HOPP, the Board of Directors
of the Company is authorized to amend the HOPP at any time and for any reason;
WHEREAS, the Company desires to amend the HOPP, effective November 29,
1999, to adjust the calculation of single sum payments under the HOPP made
pursuant to the Company's Enhanced Early Retirement Program For Employees Laid
Off as a Result of LS&CO.'s Shift from Manufacturing;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the HOPP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the HOPP;
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J.
Goya, Senior Vice President for Global Human Resources, the authority to amend
the HOPP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein is within such limits to the delegated
authority of Donna J. Goya;
NOW THEREFORE, effective as of November 29, 1999, paragraph (i) of
Section 25(b) of the HOPP is hereby amended in its entirety to read as follows:
"(i) For purposes of calculating a single sum payment made on or
after November 30, 1998, under Section 11.3 or Section 11.5,
the interest rate used under the Plan will equal the rate of
interest on 30-year U.S. Treasury securities as in effect in
the October preceding the Plan Year in which such distribution
is to commence; except that, for purposes of calculating a
single sum payment made on or after November 29, 1999, under
the February 1999 Addendum hereto (i.e., the "Enhanced Early
Retirement Program For Employees Laid Off as a Result of
LS&CO.'s Shift From Manufacturing"), the interest rate used
under the Plan will equal whichever of the rate described in
(A) or (B) below which produces the greater single-sum
benefit:
<PAGE>
(A) The interest rate equal to the rate of interest on 30-
year U.S. Treasury securities as in effect in the October
preceding the Plan Year in which such distribution is to
commence; or
(B) The interest rate equal to the rate of interest on 30-
year U.S. Treasury securities as in effect in October,
1998."
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this 22nd day of November, 1999.
LEVI STRAUSS & CO.
By: /s/
--------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Revised Home
Office Pension Plan of Levi Strauss & Co. (the "HOPP"); and
WHEREAS, Section 20.1 of the HOPP provides that the Board of Directors
of LS&CO. is authorized to amend the HOPP at any time and for any reason; and
WHEREAS, LS&CO. desires to amend the HOPP to impose a time limit in
which a Member must submit proof of continuing disability status in order to
continue accruing additional benefit service and years of service under the
HOPP; and
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board and Chief
Executive Officer, to adopt certain amendments to the HOPP and to delegate to
certain other officers of LS&CO. the authority to adopt certain amendments to
the HOPP; and
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J.
Goya, Senior Vice President for Global Human Resources, the authority to amend
the HOPP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the HOPP is hereby amended as follows, effective as of
the dates set forth below:
1. Section 2.65 of the HOPP is hereby amended, effective as of the date
this amendment is adopted, by adding the following sentence to the end
thereof to read as follows:
"The Administrative Committee may require a Member who is
receiving disability benefits under the Federal Social
Security Act to provide proof of continuing disability status
from the Social Security Administration. In instances where
the Administrative Committee determined that the Member is
Totally and Permanently Disabled based on competent medical
evidence, the Administrative Committee may require such Member
to provide additional competent medical evidence as proof of
continuing disability status."
2. Paragraph (a) of Section 9.1 of the HOPP is hereby amended, effective
as of the date this amendment is adopted, by adding a new subparagraph
(v) to the end thereof to read as follows:
<PAGE>
(v) The Member fails to provide proof of his/her continuing
disability status under Section 2.65 within ninety (90) days of the
Administrative Committee's request."
3. Section 9.2 of the HOPP is hereby amended, effective as of the date
this amendment is adopted, by adding the following paragraph to the end
thereof to read as follows:
"In the case of a former Member who fails to timely submit
proof of continuing disability to the Administrative Committee
upon request in accordance with Section 9.1(a)(v), such former
Member shall forfeit the right to receive any Disability
Service under Section 9.1 with respect to that time period
beginning as of the ninety-first (91st) day after the
Administrative Committee requests such proof and ending on the
date such Member furnishes proof satisfactory to the
Administrative Committee."
* * *
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
November 22, 1999.
LEVI STRAUSS & CO.
/s/
-------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
EXHIBIT 10.20
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27,
1989, with main text reflecting certain changes as of
September 1, 1994)
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27,
1989, with main text reflecting certain changes as of
September 1, 1994)
TABLE OF CONTENTS
-----------------
<TABLE>
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<S> <C>
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES................................................. 1
1.1 Introduction.................................................................................. 1
1.2 Persons to Whom Plan Applies.................................................................. 1
SECTION 2 DEFINITIONS................................................................................... 3
2.1 "Accounts".................................................................................... 3
2.2 "Act"......................................................................................... 3
2.3 "Administrative Committee".................................................................... 3
2.4 "Affiliated Company".......................................................................... 3
2.5 "Alternate Payee"............................................................................. 4
2.6 "Annual Additions"............................................................................ 4
2.7 "Annuity Starting Date"....................................................................... 4
2.8 "Beneficiary"................................................................................. 4
2.9 "Board of Directors".......................................................................... 4
2.10 "Break in Service"............................................................................ 5
2.11 "Code"........................................................................................ 5
2.12 "Committee"................................................................................... 5
2.13 "Company"..................................................................................... 5
2.14 "Compensation"................................................................................ 5
2.15 "Domestic Relations Order".................................................................... 7
2.16 "Effective Date".............................................................................. 7
2.17 "Employee".................................................................................... 7
2.18 "ESP"......................................................................................... 9
2.19 "Fair Market Value"........................................................................... 9
2.20 "Forfeiture".................................................................................. 9
2.21 "FPSP"........................................................................................ 9
2.22 "Fund"........................................................................................ 9
2.23 "Highly Compensated Employee"................................................................. 9
2.24 "Highly Compensated Former Employee".......................................................... 11
2.25 "Home Office Salary Grade".................................................................... 11
2.26 "Hour of Service"............................................................................. 11
2.27 "Inactive Member"............................................................................. 11
2.28 "Insider"..................................................................................... 11
2.29 "Investment Committee"........................................................................ 11
2.30 "Investment Manager".......................................................................... 11
2.31 "IRS"......................................................................................... 11
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<TABLE>
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2.32 "Labor Department"............................................................................ 11
2.33 "LSAI Stock".................................................................................. 11
2.34 "LS&CO."...................................................................................... 12
2.35 "Matching Account"............................................................................ 12
2.36 "Matching Contribution"....................................................................... 12
2.37 "Member"...................................................................................... 12
2.38 "Member Contributions"........................................................................ 12
2.39 "Membership Date"............................................................................. 12
2.40 "Misconduct".................................................................................. 12
2.41 "Mutual Fund"................................................................................. 12
2.42 "Nonelective Account"......................................................................... 12
2.43 "Nonelective Contribution".................................................................... 13
2.44 "Normal Retirement Age"....................................................................... 13
2.45 "Participating Company"....................................................................... 13
2.46 "Plan"........................................................................................ 13
2.47 "Plan Benefit"................................................................................ 13
2.48 "Plan Year"................................................................................... 13
2.49 "Post-Tax Account"............................................................................ 13
2.50 "Post-Tax Contributions"...................................................................... 13
2.51 "Pre-Tax Account"............................................................................. 13
2.52 "Pre-Tax Contributions"....................................................................... 13
2.53 "Profit Sharing 401(k) Account"............................................................... 13
2.54 "Profit Sharing Regular Account".............................................................. 13
2.55 "Profit Sharing Contribution"................................................................. 14
2.56 "PSP"......................................................................................... 14
2.57 "Qualified Domestic Relations Order".......................................................... 14
2.58 "Qualified Member"............................................................................ 14
2.59 "Quarter"..................................................................................... 14
2.60 "Registration Rights Agreement"............................................................... 14
2.61 "Regulations"................................................................................. 14
2.62 "Required Beginning Date"..................................................................... 14
2.63 "Retiree Coordinator"......................................................................... 14
2.64 "Rollover Account"............................................................................ 14
2.65 "Rollover Contributions"...................................................................... 15
2.66 "Service"..................................................................................... 15
2.67 "Surviving Spouse"............................................................................ 16
2.68 "Total Compensation........................................................................... 16
2.69 "Totally and Permanently Disabled"............................................................ 17
2.70 "Trust Agreement"............................................................................. 17
2.71 "Trust Fund".................................................................................. 18
2.72 "Trustee"..................................................................................... 18
2.73 "Valuation Date".............................................................................. 18
2.74 "Vested Interest"............................................................................. 18
2.75 "Year of Service"............................................................................. 18
SECTION 3 MEMBERSHIP AND TRANSFER....................................................................... 19
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.1 Commencement of Membership.................................................................... 19
3.2 Rehired and Transferred Employees............................................................. 19
3.3 Suspension of Membership...................................................................... 19
3.4 Termination of Membership..................................................................... 19
3.5 Highly Compensated Employees.................................................................. 19
SECTION 4 MEMBER CONTRIBUTIONS.......................................................................... 21
4.1 Election to Make Contributions................................................................ 21
4.2 Maximum Pre-Tax Contributions................................................................. 21
4.3 Change or Suspension of Contributions......................................................... 21
4.4 Resumption of Contributions................................................................... 21
4.5 Withholding and Deposit With Trustee; Crediting Accounts...................................... 21
4.6 Distribution of Excess Contributions and Deferrals............................................ 22
4.7 Rollover Contributions........................................................................ 22
SECTION 5 MATCHING AND NONELECTIVE CONTRIBUTIONS........................................................ 24
5.1 Matching Contribution......................................................................... 24
5.2 Nonelective Contribution...................................................................... 24
5.3 Deposit with Trustee; Crediting Accounts...................................................... 25
5.4 Curtailment or Distribution from Plan of Excess Aggregate Contributions....................... 26
SECTION 6 PROFIT SHARING CONTRIBUTION................................................................... 27
6.1 Amount and Form............................................................................... 27
6.2 Cash Election by Members...................................................................... 27
6.3 Deposit With Trustee; Crediting Accounts...................................................... 27
6.4 Distribution of Excess Contributions and Deferrals............................................ 28
SECTION 7 TRUST FUND, INVESTMENTS AND INVESTMENT DIRECTIONS............................................. 29
7.1 Trust Fund.................................................................................... 29
7.2 Investment of Contributions................................................................... 29
7.3 Reinvestment of Accounts...................................................................... 30
7.4 Investment by Alternate Payees................................................................ 31
7.5 Allocation of Voting Rights................................................................... 31
7.6 Exercise of Voting Rights..................................................................... 32
7.7 Other Instructions by Members................................................................. 33
7.8 Participant Directed Accounts................................................................. 34
SECTION 8 VALUATIONS AND STATEMENTS..................................................................... 35
8.1 Valuation of Accounts......................................................................... 35
8.2 Statements.................................................................................... 35
SECTION 9 WITHDRAWALS................................................................................... 36
9.1 Withdrawals from Post-Tax Accounts............................................................ 36
9.2 Withdrawals from Rollover Accounts............................................................ 36
9.3 Hardship Withdrawals.......................................................................... 36
9.4 Withdrawals From Stock Fund................................................................... 38
</TABLE>
<PAGE>
<TABLE>
<S> <C>
9.5 Payment of Withdrawals........................................................................ 39
9.6 Valuation Date................................................................................ 39
9.7 Source of Withdrawals......................................................................... 39
9.8 Limitation on Withdrawals by Insiders......................................................... 39
9.9 Additional Limitations on Withdrawals......................................................... 40
9.10 Withdrawals by Alternate Payees............................................................... 40
SECTION 10 LOANS......................................................................................... 41
10.1 Amount of Loans............................................................................... 41
10.2 Terms of Loans................................................................................ 42
10.3 Source of Loans; Application of Loan Payments................................................. 43
10.4 Default....................................................................................... 44
SECTION 11 PLAN BENEFITS................................................................................. 45
11.1 Vesting in Accounts........................................................................... 45
11.2 Amount of Plan Benefit........................................................................ 45
11.3 Valuation of Plan Benefit..................................................................... 45
11.4 Rehire Before Five One-Year Breaks in Service................................................. 45
11.5 Form of Payment............................................................................... 45
11.6 Time of Payment............................................................................... 48
11.7 Death Benefit................................................................................. 49
11.8 Limitation on Time of Payment................................................................. 49
11.9 Undeliverable Checks.......................................................................... 49
SECTION 12 ALLOCATION LIMITATIONS........................................................................ 50
12.1 Limitation on Annual Additions................................................................ 50
12.2 Combined Limitation on Benefits and Contributions............................................. 50
12.3 Disposition of Excess Annual Additions........................................................ 50
SECTION 13 FUNDING POLICY AND METHOD..................................................................... 52
13.1 Contributions................................................................................. 52
13.2 Trust Fund.................................................................................... 52
13.3 Expenses of the Plan.......................................................................... 52
13.4 Cash Requirements............................................................................. 52
13.5 Independent Accountant........................................................................ 52
13.6 Loans from Parties-In-Interest................................................................ 53
SECTION 14 BENEFICIARIES................................................................................. 54
SECTION 15 ADMINISTRATION AND OPERATION OF THE PLAN...................................................... 55
15.1 Plan Administrator............................................................................ 55
15.2 Control and Management of Plan Assets......................................................... 55
15.3 Trustees and Investment Managers.............................................................. 55
15.4 Committee Membership.......................................................................... 56
15.5 Reports to Board of Directors................................................................. 56
15.6 Employment of Advisers........................................................................ 56
</TABLE>
<PAGE>
<TABLE>
<S> <C>
15.7 Limitations on Committee Actions.............................................................. 56
15.8 Committee Meetings............................................................................ 57
SECTION 16 CLAIMS AND REVIEW PROCEDURES.................................................................. 53
16.1 Applications for Benefits..................................................................... 58
16.2 Denial of Applications........................................................................ 58
16.3 Requests for Review........................................................................... 58
16.4 Decisions on Review........................................................................... 59
16.5 Exhaustion of Administrative Remedies......................................................... 59
SECTION 17 TERMINATION OF EMPLOYER PARTICIPATION......................................................... 53
17.1 Termination by Participating Company.......................................................... 60
17.2 Effect of Termination......................................................................... 60
17.3 IRS Termination Procedure..................................................................... 60
17.4 Termination of the Plan....................................................................... 60
SECTION 18 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST........................................ 61
18.1 Right to Amend................................................................................ 61
18.2 Plan Merger or Consolidation.................................................................. 61
18.3 Termination of the Plan....................................................................... 61
18.4 Partial Termination of the Plan............................................................... 61
18.5 Manner of Distribution........................................................................ 61
18.6 Restrictions on Liquidation of Trust Upon Termination......................................... 62
SECTION 19 INALIENABILITY OF BENEFITS.................................................................... 63
19.1 No Assignment Permitted....................................................................... 63
19.2 Return of Contributions....................................................................... 63
19.3 Qualified Domestic Relations Orders........................................................... 64
SECTION 20 TOP-HEAVY PROVISIONS.......................................................................... 66
20.1 Determination of Top-Heavy Status............................................................. 66
20.2 Minimum Allocations........................................................................... 66
20.3 Minimum Vesting............................................................................... 67
20.4 Effect of Change in Top-Heavy Status on Vesting............................................... 67
20.5 Impact on Maximum Benefits.................................................................... 67
SECTION 21 GENERAL LIMITATIONS AND PROVISIONS............................................................ 53
21.1 No Employment Rights.......................................................................... 68
21.2 Payments from the Trust Fund.................................................................. 68
21.3 Payments to Minors or Incompetents............................................................ 68
21.4 Lost Members or Other Persons................................................................. 68
21.5 Personal Data to the Administrative Committee................................................. 68
21.6 Insurance Contracts........................................................................... 69
21.7 Notice to the Administrative Committee........................................................ 69
21.8 Notices to Members and Beneficiaries.......................................................... 69
</TABLE>
<PAGE>
<TABLE>
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21.9 Word Usage.................................................................................... 69
21.10 Headings...................................................................................... 69
21.11 Governing Law................................................................................. 69
21.12 Heirs and Successors.......................................................................... 69
21.13 Withholding................................................................................... 69
APPENDIX A PRIOR PLAN PROVISIONS................................................................A-1
APPENDIX B BLACKOUT PROVISIONS..................................................................B-1
APPENDIX C FUNDS................................................................................C-1
APPENDIX D ADDITIONAL ELIGIBLE WITHDRAWALS AND LOANS............................................D-1
</TABLE>
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of September 1, 1994)
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
- --------- ---------------------------------------------
1.1 Introduction. Effective November 27, 1953, the Profit Sharing
------------
Plan of Levi Strauss & Co. (the "PSP") was established to provide eligible
employees ("Employees") with a beneficial interest in the profits of Levi
Strauss & Co. Effective August 6, 1985, the Frozen Profit Sharing Plan of Levi
Strauss & Co. (the "FPSP") was established to hold certain accounts previously
held under the Stock Purchase and Investment Plan of Levi Strauss & Co. (the
"SPIP"). Effective August 6, 1985, the Employee Savings Plan of Levi Strauss &
Co. (the "ESP") was established to provide Employees with a program of regular
savings supplemented by Matching Contributions that was similar to aspects of
the SPIP.
Effective October 1, 1988, the PSP and the FPSP were merged into the
ESP. Effective August 1, 1989, the ESP was amended, restated and renamed the
Employee Investment Plan of Levi Strauss Associates Inc. (the "EIP"). The EIP
was amended from time to time after August 1, 1989, to comply with certain
provisions of relevant law or implement other changes desired by Levi Strauss
Associates Inc.
By this amendment and restatement (the "Plan"), Levi Strauss Associates
Inc. intends to amend the EIP (1) to comply with the Tax Reform Act of 1986 and
other applicable legislation and (2) effective September 1, 1994, to effect
certain plan design changes, including changes relating to a change in
recordkeeper. Levi Strauss Associates Inc. intends that the Plan continue to
qualify as a profit sharing plan under section 401(a) and related sections of
the Code and as a cash or deferred arrangement under section 401(k) of the Code
and that the trust established under the Plan continue to qualify as a
tax-exempt trust under section 501(a) of the Code.
This amended and restated Plan is generally effective on November 27
1989. Certain provisions of the Plan which were in effect on or after November
27, 1989, but which were amended before September 1, 1994 are included in
Appendix A.
1.2 Persons to Whom Plan Applies. This Plan document is not a new Plan
----------------------------
which succeeds the Plan as previously in effect, but is an amendment and
restatement of the Plan as in effect before the Effective Date. The amount,
right to and form of any benefits under the Plan, of each Member who is an
Employee on and after the Effective Date, or of persons claiming benefits
through such a Member will be determined under this Plan. The amount, right to
and form of any benefits under this Plan, of each Member who has separated from
Service with Levi Strauss Associates Inc. or an Affiliated Company, or of
persons who are claiming benefits through such a Member, will be determined in
accordance with the provisions of the Plan in effect on the date of the Member's
separation from Service, except as may otherwise be expressly
<PAGE>
provided under this Plan, or unless the Member again becomes an Employee on or
after the Effective Date. This amended and restated Plan will not reduce any
Member's Plan Benefit under the Plan, as determined on the date immediately
preceding the Effective Date, and this Plan will be construed accordingly.
2
<PAGE>
SECTION 2 DEFINITIONS.
- --------- -----------
When used in this Plan document the following terms will have the
following meanings:
2.1 "Accounts" means, to the extent applicable to a Member, one or
--------
more of the following accounts:
(a) Matching Account;
(b) Nonelective Account;
(c) Post-Tax Account;
(d) Pre-Tax Account;
(e) Profit Sharing 401(k) Account;
(f) Profit Sharing Regular Account; and
(g) Rollover Account.
2.2 "Act" means the Employee Retirement Income Security Act of 1974, as
---
amended, and any Regulations or rulings issued under the Act.
2.3 "Administrative Committee" means the committee appointed to
-------------------------
administer the Plan as described in Section 0.
2.4 "Affiliated Company" means:
------------------
(a) A corporation that is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes Levi
Strauss Associates Inc.;
(b) Any trade or business (whether or not incorporated) that is in
common control (as defined in section 414(c) of the Code) with Levi Strauss
Associates Inc.;
(c) An organization (whether or not incorporated) that is a member
of an affiliated service group (as defined in section 414(m) of the Code) which
includes Levi Strauss Associates Inc.;
(d) Any other entity required to be aggregated with Levi Strauss
Associates Inc. under section 414(o) of the Code; or
(e) Any other entity designated as an Affiliated Company by the
Board of Directors.
3
<PAGE>
2.5 "Alternate Payee" means the spouse, former spouse, child or other
---------------
dependent of a Member who is recognized by a Domestic Relations Order as having
a right to receive all, or a portion, of a Member's Plan Benefit.
2.6 "Annual Additions" means the sum of the following additions to
-----------------
the Member's Accounts for the Plan Year:
(a) The amount of employer contributions and forfeitures allocated
to the Member under any qualified defined contribution plan maintained by the
Company and any Affiliated Company, including Profit Sharing Contributions,
Matching Contributions, Nonelective Contributions and Forfeitures under this
Plan;
(b) The aggregate employee contributions which the Member
contributes to all qualified retirement plans maintained by the Company and all
Affiliated Companies, including Post-Tax Contributions to this Plan;
(c) The amount of contributions made on behalf of the Member to any
qualified defined contribution plan maintained by the Company and all Affiliated
Companies under an election by the Member under a qualified cash or deferred
arrangement, including Pre-Tax Contributions to this Plan; and
(d) Contributions allocated to any individual medical benefit
account (within the meanings of sections 415(l) and 419A(d)(2) of the Code) that
is established for the Member.
Employee contributions will be determined without regard to any
rollover contributions (as defined in sections 402(a)(5), 403(a)(4), 403(b)(8)
and 403(d)(3) of the Code) and without regard to any employee contributions to a
simplified employee pension plan which are excludable from income under section
408(k)(6) of the Code. In addition, the 25% of compensation limitation described
in section 415(c)(1)(B) of the Code will not apply to any contribution for
medical benefits (within the meaning of section 419A(f)(2) of the Code) after
the Member's separation from Service which is treated as an Annual Addition.
2.7 "Annuity Starting Date" means the first day of the first month for
---------------------
which an amount is payable as an annuity. The Annuity Starting Date for a Member
who elects (with the consent of his or her spouse if the Member is legally
married) to receive his or her Plan Benefit in a form other than an annuity in
accordance with Section 11.5, is the first day on which all events (including
the passing of the day on which benefit payments are scheduled to begin) have
occurred which entitle the Member to receive his or her first benefit payment
from the Plan.
2.8 "Beneficiary" means the beneficiary or beneficiaries designated by
-----------
a Member under Section 0 and Section 0 (or any other person or persons
designated as such under applicable law) to receive the amount, if any, payable
under the Plan upon the Member's death.
2.9 "Board of Directors" means the Board of Directors of Levi Strauss
------------------
Associates Inc. The Board of Directors may delegate to any committee,
subcommittee or any of its members, or to
4
<PAGE>
any agent, its authority to perform any act under the Plan, including without
limitation those matters involving the exercise of discretion. Any such
delegation of discretion will be subject to revocation at any time at the
discretion of the Board of Directors. Any reference to the Board of Directors in
connection with such delegated authority will be deemed a reference to the
delegate or delegates.
2.10 "Break in Service" means a period of at least 12 consecutive
----------------
months, beginning on the date Service ends, during which a person has not
performed 1 Hour of Service (or been treated as performing Service) under
Section 0, as determined by the Administrative Committee.
2.11 "Code" means the Internal Revenue Code of 1986, as amended, and
----
any Regulations or rulings issued under the Code.
2.12 "Committee" means the Administrative Committee or Investment
---------
Committee, as applicable.
2.13 "Company" means Levi Strauss Associates Inc., LS&CO. and each
-------
other Participating Company or any of them.
2.14 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses, incentive
compensation and overtime pay. "Compensation" also includes the Member's Member
Contributions to the Plan for the Plan Year and any amounts contributed by the
Member to a cafeteria plan maintained by the Company under section 125 of the
Code. Back pay awards will be included in Compensation only for the Plan Year in
which the back pay award is made and the amount to be included will be limited
to the amount attributable to that Plan Year, regardless of mitigation of
damages.
If a Member is a territory manager, an account manager or an account
executive, or any of the 3, for the entire Plan Year (or portion of the Plan
Year during which he or she is a Member), his or her Compensation for purposes
of determining the Member's share of any allocation of Matching Contributions,
Profit Sharing Contributions and Forfeitures will not exceed the following
limits, as determined by the Administration Committee:
(a) The Compensation of a territory manager at the time as of
which the allocation is made will not exceed the maximum for the Home Office
Salary Grade 5 salary range in effect at the end of such Plan Year;
(b) The Compensation of an account manager at the time as of which
the allocation is made will not exceed the maximum for the Home Office Salary
Grade 6 salary range in effect at the end of such Plan Year; and
(c) The Compensation of an account executive at the time as of
which the allocation is made will not exceed the maximum for the Home Office
Salary Grade 7 salary range in effect at the end of such Plan Year.
5
<PAGE>
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
-----------
(a) Matching Contributions, Nonelective Contributions or
Profit Sharing Contributions to the Plan under Sections 0 and 0 or amounts paid
to the Member according to an election under Section 0;
(b) Amounts paid or contributed to any group insurance plan or
other employee benefit plan established or maintained by the Company or an
Affiliated Company, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the
exercise of any right granted under a stock option plan maintained by the
Company or an Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company
as a nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan;
(g) Severance payments;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
(j) "Perks."
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section
6
<PAGE>
401(a)(17) of the Code (as adjusted as provided under section 401(a)(17) of the
Code) will be disregarded. In determining the Compensation of a Member, the
family aggregation rules of section 414(q)(6) of the Code will apply, except
that in applying these rules, the term "family" will include only the spouse of
the Member and any lineal descendants of the Member who have not reached age 19
before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
2.15 "Domestic Relations Order" means any judgment, decree or order
------------------------
(including approval of a property settlement agreement) that:
(a) Relates to the provision of child support, alimony payments or
marital property rights to a spouse, former spouse, child or other dependent of
a Member; and
(b) Is entered or made under the domestic relations or community
property laws of any state.
2.16 "Effective Date" means November 27, 1989, except as expressly
--------------
stated otherwise in this document or as required to comply with the Tax Reform
Act of 1986, as amended, and other applicable legislation.
2.17 "Employee" means any person who is employed by the Company
--------
excluding:
- ---------
(a) Any employee of LS&CO, who is not paid from the home office of
Levi Strauss Associates Inc.
(b) Any employee of a Participating Company other than LS&CO. who
is not paid on a salary or commission basis; or
(c) Any stocktaker, service representative, Retiree Coordinator or
"Temporary Employee;"
(d) Any employee who is not employed in a state or territory of
the United States or who receives no remuneration from the Company that
constitutes income from sources within the United States (within the meaning of
section 861(a)(3) of the Code);
(e) Any alien who:
(i) Receives remuneration from the Company which constitutes
income from sources within the United States (within the meaning of
section 861(a)(3) of the Code); and
(ii) Has been transferred by the Company from a job outside
the United States to a job within the United States, during any period
with respect to which the alien is
7
<PAGE>
benefiting (by reason of accruing a benefit or making or having
contributions made on the alien's behalf) under:
(A) A retirement plan established or maintained outside
of the United States by a foreign subsidiary (including a
domestic subsidiary operating abroad) or foreign division of
the Company; or
(B) The Levi Strauss International Retirement Plan for
Third Country National Employees or any successor or similar
plan maintained by the Company or any Affiliated Company;
(f) A United States citizen locally hired by a foreign
subsidiary (including a domestic subsidiary operating abroad) or foreign
division of the Company;
(g) Any employee who is included in a unit of employees
covered by a negotiated collective-bargaining agreement which does not provide
for his or her membership in the Plan;
(h) A "leased employee" (as defined in section 414(n) or
section 414(o) of the Code) who is providing services to the Company or an
Affiliated Company;
(i) Any employee who is covered by an individual employment
contract that expressly provides he or she will not be eligible for membership
in the Plan;
(j) An employee who is included in a group or classification
of employees on the payroll of a company designated by the Board of Directors as
not being eligible to participate in the Plan; or
(k) A Highly Compensated Employee, with respect to the
eligibility to make Member Contributions or receive an allocation of Matching
Contributions, Nonelective Contributions, Profit Sharing Contributions and
Forfeitures only.
A member of the board of directors of the Company is not eligible for membership
in the Plan unless he or she is also an Employee of the Company. The Board of
Directors may on a nondiscriminatory basis, designate as an Employee a person
described in (c), (d), (f) or (j) above. Such designation must be made in
writing after receiving the advice of counsel.
A "Temporary Employee" means a person who:
(i) Is hired to fill, for a period not to exceed 6
calendar months, a position which arises from either an emergency
situation or the temporary absence of an Employee; or
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time.
8
<PAGE>
A person's status as an Employee will be determined by the
Administrative Committee, and such determination will be conclusive and binding
on all persons.
2.18 "ESP" means the Employee Savings Plan of Levi Strauss & Co. as in
---
effect before August 1, 1989.
2.19 "Fair Market Value" means the value of a share of LSAI Stock,
-----------------
determined by the latest independent appraisal of the value of LSAI Stock
obtained by the Investment Committee. If LSAI Stock is offered to the public
under the Registration Rights Agreement, "Fair Market Value" will mean the net
proceeds realized by the Trustee in selling shares of LSAI Stock under such
offering until LSAI Stock is reappraised or until a public market for LSAI Stock
arises.
2.20 "Forfeiture" means the portion of a Member's Matching Account and
----------
Profit Sharing Regular Account which is forfeited under Section 0. The term
"Forfeiture" also includes that portion of a Member's Profit Sharing Account
that was forfeited on account of the Member's separation from service before
November 26, 1990, and amounts forfeited under the ESP and PSP before August 1,
1989.
2.21 "FPSP" means the Frozen Profit Sharing Plan of Levi Strauss & Co.
----
as in effect before October 1, 1988.
2.22 "Fund" means any of the investment funds described in Section 7.1.
----
2.23 "Highly Compensated Employee" means an Employee who:
---------------------------
(a) During the preceding Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code);
(ii) Received "compensation" from the Company or an
Affiliated Company in excess of $75,000 (as adjusted under Regulations
or rulings issued by the IRS);
(iii) Received "compensation" from the Company or an
Affiliated Company in excess of $50,000 (as adjusted under Regulations
or rulings issued by the IRS) and was in the top 20% of employees of
the Company and all Affiliated Companies when ranked on the basis of
"compensation" paid during such Plan Year (referred to as the "Top Paid
Group" under IRS Regulations); or
(iv) Was at any time an officer of the Company or an
Affiliated Company and received "compensation" greater than 50% of the
amount in effect under section 415(b)(1)(A) of the Code; or
(b) During the Plan Year:
9
<PAGE>
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code); or
(ii) Satisfies the requirements of paragraphs (ii), (iii), or
(iv) of Section 0(a) and is a member of the group consisting of the 100
employees of the Company and all Affiliated Companies paid the greatest
"compensation" during the Plan Year.
For purposes of determining the number of employees in the Top Paid
Group for a Plan Year, the following employees, as described in section
414(q)(8) and section 414(q)(11) of the Code, will be excluded:
(i) Those who have not completed 6 months of service;
(ii) Those who normally work less than 17-1/2 hours per week;
(iii) Those who normally work less than 6 months during any
year;
(iv) Those who have not attained age 21;
(v) Those subject to a collective bargaining agreement; and
(vi) Nonresident aliens who receive no earned income from
sources within the United States.
The Administrative Committee will determine whether an employee is an
officer based on the responsibilities of the employee with the Company or an
Affiliated Company. Of those employees determined to be officers, no more than
50 employees (or, if less, the greater of 3 employees or 10% of the employees,
excluding all employees described in section 414(q)(8) and section 414(q)(11) of
the Code) will be treated as officers. Further, if no officer receives the level
of "compensation" described in Section 0(a)(iv), the highest paid officer of the
Company and all Affiliated Companies will be treated as a Highly Compensated
Employee described in Section 0(a)(iv).
For purposes of determining whether an employee is a Highly Compensated
Employee only, any person who is a member of the family of a 5% owner or of a
Highly Compensated Employee in the group consisting of the 10 Highly Compensated
Employees paid the greatest "compensation" during the Plan Year:
(i) Will not be considered a separate employee; and
(ii) Any "compensation" paid to the person and any Company or
Employee contributions made on behalf of the person will be treated as
if it were paid to or on behalf of the 5% owner or Highly Compensated
Employee.
10
<PAGE>
For purposes of the immediately preceding sentence, the term "family" means,
with respect to any employee, the employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
"Compensation" for purposes of this Section 0 means Total Compensation
as defined in Section 0 of the Plan, determined without regard to section 125 of
the Code (regarding contributions to a cafeteria plan); section 402(a)(8) of the
Code (regarding contributions to a 401(k) plan) and section 402(h)(1)(B) of the
Code (regarding contributions to a simplified employee pension plan); and in the
case of employer contributions made under a salary reduction agreement, without
regard to section 403(b) (regarding annuity contracts).
2.24 "Highly Compensated Former Employee" means a former employee who
----------------------------------
separates from Service before the beginning of the Plan Year and who was a
Highly Compensated Employee for either:
(a) The employee's year of separation from Service; or
(b) Any Plan Year ending on or after the employee's 55th birthday.
An employee who performs no services for the Company or an Affiliated Company
during the Plan Year will be treated as a former employee.
2.25 "Home Office Salary Grade" means the LS&CO. job classification
------------------------
system for home office employees as in effect from time to time.
2.26 "Hour of Service" means an hour of employment for which an
---------------
Employee is paid or is entitled to payment for the performance of duties as
determined under the Labor Department Regulations governing the computation of
hours of service.
2.27 "Inactive Member" means an individual participating in the Plan
---------------
under Sections 3.3, 3.5 and 4.7.
2.28 "Insider" means a Member who is subject to Section 16(a) of the
-------
Securities Exchange Act of 1934, as amended.
2.29 "Investment Committee" means the committee appointed to manage and
--------------------
and control the Plan's assets as described in Section 0.
2.30 "Investment Manager" means a person who is appointed to direct the
------------------
investment of all or any part of the Trust Fund under Section 0 and is either a
bank, an insurance company or a registered investment adviser under the
Investment Advisers Act of 1940 and who has acknowledged in writing that it is a
fiduciary with respect to the Plan.
11
<PAGE>
2.31 "IRS" means the United States Internal Revenue Service.
---
2.32 "Labor Department" means the United States Department of Labor.
----------------
2.33 "LSAI Stock" means shares of common or preferred stock of Levi
----------
Strauss Associates Inc. that have been authorized for issuance to or ownership
by the Trustee.
2.34 "LS&CO." means Levi Strauss & Co., a Delaware corporation.
------
2.35 "Matching Account" means the account maintained for a Member to
-----------------
hold the Member's Matching Contributions.
2.36 "Matching Contribution" means the contribution made by the
---------------------
Company under Section 0.
2.37 "Member" means a person who is either an "Active Member" who
------
participates in all features of the Plan or an "Inactive Member" who only
participates in certain features of the Plan under Sections 0, 0 or 4.7.
2.38 "Member Contributions" means Post-Tax Contributions and/or
--------------------
Pre-Tax Contributions.
2.39 "Membership Date" means the first day of each payroll period.
---------------
2.40 "Misconduct" means that a person:
----------
(a) Has committed an act of embezzlement, fraud or theft with
respect to the property of the Company or an Affiliated Company or any person
with whom the Company or an Affiliated Company does business;
(b) Has deliberately disregarded the rules of the Company or an
Affiliated Company in such a manner as to cause material loss, damage or injury
to, or otherwise endanger the property or employees of the Company or an
Affiliated Company;
(c) Has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or an Affiliated Company;
(d) Has engaged in any conduct that constitutes unfair competition
with the Company or an Affiliated Company;
(e) Has induced any person to breach any contract with the Company
or an Affiliated Company; or
(f) Has sold Company or an Affiliated Company products to an
unauthorized
12
<PAGE>
account or has assisted an authorized account in wholesaling Company or an
Affiliated Company products.
2.41 "Mutual Fund" means a regulated investment company, as defined in
-----------
section 851 of the Code.
2.42 "Nonelective Account" means the account maintained for a Member to
-------------------
hold the Member's Nonelective Contributions.
2.43 "Nonelective Contribution" means the contribution made by the
------------------------
Company under Section 0.
2.44 "Normal Retirement Age" means age 65.
---------------------
2.45 "Participating Company" means LS&CO. or any Affiliated Company,
---------------------
the board of directors or equivalent governing body of which adopts the Plan and
the Trust Agreement by appropriate action with the written consent of the Board
of Directors. Any Affiliated Company which so adopts the Plan will be deemed to
appoint Levi Strauss Associates Inc., the Administrative Committee, the
Investment Committee and the Trustee as its exclusive agents to exercise on its
behalf all of the power and authority conferred under this Plan, or by the Trust
Agreement, upon the Company. The authority of Levi Strauss Associates Inc., the
Committees and the Trustee to act as such agents will continue until the Plan is
terminated as to the Affiliated Company and the relevant portion of the Trust
Fund has been distributed by the Trustee as provided in Section 0.
2.46 "Plan" means this Employee Investment Plan of Levi Strauss
----
Associates Inc., as amended from time to time.
2.47 "Plan Benefit" means the benefit distributable to a Member or
------------
Beneficiary under Section 0.
2.48 "Plan Year" means the annual period corresponding to LS&CO.'s
---------
fiscal year for federal income tax purposes.
2.49 "Post-Tax Account" means the account maintained for a Member to
----------------
hold the Member's Post-Tax Contributions.
2.50 "Post-Tax Contributions" means the post-tax contributions made by
----------------------
a Member under Section 0.
2.51 "Pre-Tax Account" means the account maintained for a Member to
---------------
hold the Member's Pre-Tax Contributions.
2.52 "Pre-Tax Contributions" means the contributions made to the Plan
---------------------
on behalf of a Member under Section 0.
13
<PAGE>
2.53 "Profit Sharing 401(k) Account" means the account maintained for
-----------------------------
the Member consisting of Profit Sharing Contributions which the Member could
have elected to receive in cash under Section 0.
2.54 "Profit Sharing Regular Account" means the account maintained for
------------------------------
a Member consisting of Profit Sharing Contributions which the Member could not
have elected to receive in cash under Section 0.
2.55 "Profit Sharing Contribution" means the contribution made by the
---------------------------
Company under Section 0.
2.56 "PSP" means the Profit Sharing Plan of Levi Strauss & Co. as in
---
effect before October 1, 1988.
2.57 "Qualified Domestic Relations Order" means a Domestic Relations
----------------------------------
Order that satisfies the requirements described in Section 0.
2.58 "Qualified Member" means a Member who has reached age 63, or who
----------------
has reached age 53 and completed at least 13 Years of Service.
2.59 "Quarter" means each quarter of the calendar year.
-------
2.60 "Registration Rights Agreement" means the registration rights
-----------------------------
agreement entered into by Levi Strauss Associates Inc. and the Trustee, as
amended from time to time, under which the Trustee may require Levi Strauss
Associates Inc. under certain circumstances to register LSAI Stock under the
Securities Act of 1933.
2.61 "Regulations" means the applicable regulations issued under the
-----------
Code or the Act by the IRS or the Labor Department or any other governmental
authority and any temporary rules promulgated by such authorities pending the
issuance of such regulations.
2.62 "Required Beginning Date" generally means April 1 of the calendar
-----------------------
year following the calendar year in which the Member attains age 70-1/2.
However, the Required Beginning Date for a Member who is not a 5% owner, within
the meaning of section 416(i)(1)(B)(i) of the Code, who attained age 70-1/2
during 1988 and had not retired by the Effective Date, will be April 1, 1990. In
addition, the Required Beginning Date for a Member who attained age 70-1/2
before January 1, 1988, and who was not a 5% owner, within the meaning of
section 416(i)(1)(B)(i) of the Code, during any Plan Year ending with or within
the Plan Year in which he or she reached age 66-1/2, or any subsequent year, is
the April 1 following the later of the calendar year in which the Member reaches
-----
age 70-1/2 or retires. Lastly, the Required Beginning Date for a Member who
filed a written election under section 242(b) of the Tax Equity and Fiscal
Responsibility Act of 1982 before January 1, 1984, will be the date specified in
such election if the election satisfies all of the applicable requirements
specified by the IRS, as determined by the Administrative Committee.
14
<PAGE>
2.63 "Retiree Coordinator" means a retired Employee of the Company who
-------------------
resumes employment with the Company or an Affiliated Company on a temporary
basis for the purpose of providing personal relations type services to other
retired employees of the Company or an Affiliated Company.
2.64 "Rollover Account" means the account maintained for a Member to
----------------
hold the Member's Rollover Contributions.
2.65 "Rollover Contributions" means the rollover contributions made by
----------------------
a Member under Section 0.
2.66 "Service" means employment (whether or not as an Employee) with
-------
the Company or an Affiliated Company. Service will begin on the date an Employee
first performs 1 Hour of Service for the Company or an Affiliated Company.
Service will end on the earlier of:
-------
(a) The date the Employee retires;
(b) The date the Employee dies;
(c) The date the Employee terminates employment; or
(d) The first anniversary of the date the Employee is absent from
Service for any other reason (e.g. an authorized leave of absence as described
in paragraphs (i) and (ii), etc. below).
Subject to any applicable rules of the Administrative Committee (which
rules will be uniformly applicable to all Employees similarly situated), Service
includes:
(i) Periods of vacation;
(ii) Periods of absence whether or not the Employee is paid,
not to exceed 12 calendar months, authorized by the Company for
sickness, temporary disability or personal reasons;
(iii) Periods of service in the Armed Forces of the United
States, if and to the extent required by the Military Selective
Services Act, as amended, or any other federal law of similar import;
provided that the Employee returns to Service with the Company or an
Affiliated Company within the time his or her employment rights are
protected by such law; and
(iv) Any period of 12 consecutive months or less, beginning on
the first day of a month after a Member terminates employment and
ending on the last day of the month preceding the Member's reemployment
date, if the Member performs at least 1 Hour of Service within the
first month of reemployment.
15
<PAGE>
If an Employee is on a leave of absence for more than 12 months, the
Employee will be deemed to have quit and terminated Service as of the end of
such 12 month period if the Employee fails to abide by the terms and conditions
of such leave (which may include a requirement of reemployment), as established
from time to time by the Administrative Committee. If an Employee retires, dies
or terminates employment while on leave of absence, vacation, holiday or jury
duty or while disabled or sick, his or her Service will terminate on the earlier
-------
of:
(i) The date of such retirement, death or termination; or
(ii) 12 months after the start of a leave, vacation or holiday
or onset of disability or sickness.
All Service will be aggregated, whether or not such Service is
performed consecutively, and every partial month will be deemed to be one full
month of Service.
An Employee's Period of Service will be determined by the
Administrative Committee and such determination will be conclusive and binding
on all persons.
2.67 "Surviving Spouse" means, with respect to any deceased member, the
----------------
individual (if any) who is considered to be the spouse of such Member under
local law at the time of such Member's death.
2.68 "Total Compensation" means all wages, salaries, and fees for
------------------
professional services and other amounts received during the Plan Year for
personal services actually rendered in the course of employment with the Company
or an Affiliated Company (including, but not limited to, commissions paid sales
representatives, account executives and account managers, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, reimbursements and other expenses
under a nonaccountable plan as described in section 1.62 of the Code) determined
without regard to any exclusions from income under section 931 and section 933
of the Code. "Total Compensation" will also include:
-------
(a) In the case of a Member who is an employee within the meaning
of section 401(c) of the Code, the Member's earned income (as described under
section 401(c)(2) of the Code) determined without regard to any exclusions from
gross income similar to those under section 931 and section 933 of the Code;
(b) Any foreign earned income as defined under section 911(b) of
the Code, regardless of whether such income is excludable from the gross income
of the Member under section 911 of the Code;
(c) Amounts described in sections 104(a)(3), 105(a) and 105(b) of
the Code, but only to the extent that such amounts are includable in the gross
income of the Member;
(d) Amounts paid or reimbursed by the Company or an Affiliated
Company for moving expenses incurred by the Member, but only to the extent that
such amounts are not
16
<PAGE>
deductible by the Member under section 217 of the Code;
(e) The value of a nonqualified stock option granted to the Member
by the Company or an Affiliated Company, but only to the extent that the value
of the option is includable in the gross income of the Member for the taxable
year when granted; and
(f) The amount includable in the gross income of the Member upon
making an election described in section 83(b) of the Code.
"Total Compensation" will not include:
-----------
(a) Company contributions to a plan of deferred compensation that,
to the extent that before the application of the limitations under section 415
of the Code to that plan, the contributions are not includable in the Member's
gross income for federal income tax purposes in the taxable year of the Member
in which the contributions are made;
(b) Company contributions under a simplified employee pension
plan described in section 408(k) of the Code to the extent that such
contributions are not considered as compensation for the taxable year in which
contributed;
(c) Any distributions from a plan of deferred compensation
regardless of whether such amounts are includable in gross income of the Member
for federal income tax purposes in the taxable year of distribution;
(d) Amounts realized from the exercise of a nonqualified stock
option;
(e) Amounts realized when restricted stock (or property) held by
the Member either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(f) Amounts realized from the sale, exchange or other distribution
of stock acquired under an incentive stock option; and
(g) Other amounts that receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the premiums
are not includable in the gross income of the Member) or contributions made by
an employer (whether or not under a salary reduction arrangement) towards the
purchase of an annuity contract described in section 403(b) of the Code (whether
or not the contributions are excluded from the gross income of the Member.
For Plan Years beginning on and after the Effective Date, Total
Compensation in excess of $200,000 or any successor limitation as provided for
the Plan Year in Section 401(a)(17) of the Code, (as adjusted as provided under
section 401(a)(17) of the Code) will be disregarded. In determining the Total
Compensation of a Member, the family aggregation rules under section 414(q) of
the Code will apply, except that in applying those rules, the term "family" will
only include the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
17
<PAGE>
2.69 "Totally and Permanently Disabled" means the Member is eligible to
--------------------------------
receive disability benefits under the Federal Social Security Act or,
alternatively, has been determined to be totally and permanent disabled by the
Administrative Committee based on competent medical evidence.
2.70 "Trust Agreement" means the trust agreement or agreements between
----------------
Levi Strauss Associates Inc. and a Trustee under which the assets of the Plan
are managed.
2.71 "Trust Fund" means the trust fund or funds consisting of the
----------
assets of the Plan and maintained by the Trustee under the Plan and Trust
Agreement.
2.72 "Trustee" means the trustee or trustees of the Trust Fund.
-------
2.73 "Valuation Date" means any business day.
--------------
2.74 "Vested Interest" means the nonforfeitable interest of a Member in
---------------
a particular Account, determined in accordance with Section 0.
2.75 "Year of Service" means a 12 month period of Service in which the
---------------
Member has Service under Section 0. A Member's Years of Service will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
18
<PAGE>
SECTION 3 MEMBERSHIP AND TRANSFER.
- --------- -----------------------
3.1 Commencement of Membership. Each Employee who was a Member in the
--------------------------
Plan on the Effective Date will continue to be a Member. Each Employee who was
not a Member in the Plan on the Effective Date, will become a Member in the Plan
on the first day of the pay period coinciding with or next following the day on
which he or she completes a Year of Service. Upon becoming a Member, an Employee
will designate a Beneficiary under Section 0 and Section 0.
3.2 Rehired and Transferred Employees. A former Employee who is
---------------------------------
rehired, will be eligible to begin or resume membership in the Plan on the first
day of the first pay period coinciding with or next following the date he or she
attains or returns to the status of an Employee and has completed a Year of
Service. Similarly, an employee of the Company or an Affiliated Company who
becomes an Employee after the Membership Date following his or her completion of
a Year of Service, will be eligible to begin or resume membership in the Plan on
the first day of the first pay period coinciding with or next following the date
he or she attains or returns to the status of an Employee.
3.3 Suspension of Membership. A Member's membership in the Plan will be
------------------------
suspended under the applicable paragraph (a) or (b) below.
(a) Change in Employment Status. A Member's membership in the Plan
---------------------------
will be suspended for any period during which the Member is an employee of the
Company or an Affiliated Company but not an Employee. A Member whose
participation is suspended under this Section 0 may not make Member
Contributions or receive any allocation of Nonelective Contributions, Profit
Sharing Contributions or Forfeitures with respect to the period of suspension.
(b) Withdrawals from Post-Tax Account. A Member's membership in the
---------------------------------
Plan will be suspended for at least 3 fiscal months following certain
withdrawals from his or her Post-Tax Account as provided in Section 0. A Member
whose Membership is suspended under this Section 0 may not make Member
Contributions, but may receive an allocation of Nonelective Contributions,
Profit Sharing Contributions or Forfeitures with respect to the period of
suspension.
A suspended Member's Accounts will continue to share in the income, gains,
losses and expenses of the Trust Fund.
3.4 Termination of Membership. A Member's membership in the Plan will
-------------------------
end when his or her Plan Benefit has been distributed or on the date of his or
her death, whichever occurs first.
3.5 Highly Compensated Employees. Any Employee who is a Highly
----------------------------
Compensated Employee will only be eligible for membership in the Plan as an
Inactive Member, provided that he or she otherwise satisfies the eligibility
requirements of Section 0. An Inactive Member will not be eligible to make
Member Contributions under Section 0 of the Plan or to receive any allocation of
Matching Contributions, Nonelective Contributions, Profit Sharing Contributions
or Forfeitures under Section 0 and Section 0 of the Plan. An Inactive Member
will, however, be eligible to:
19
<PAGE>
(a) Make Rollover Contributions to the Plan under Section 0;
(b) Direct the investment of his or her Accounts under Section
0;
(c) Make withdrawals from his or her Accounts under Section 0;
and
(d) Obtain Plan loans under Section 0.
An Inactive Member will continue to be subject to the remaining provisions of
the Plan. The Administrative Committee will periodically determine whether
Members in the Plan are Highly Compensated Employees and any such Member's
status will change from an Active Member to an Inactive Member as soon as
practicable after the Administration Committee makes such determination.
20
<PAGE>
SECTION 4 MEMBER CONTRIBUTIONS.
- --------- --------------------
4.1 Election to Make Contributions. A Member whose membership is not
------------------------------
suspended under Section 0 or Section 0 may elect, as of the first day of any pay
period in any month, to begin making Member Contributions to the Plan in 1%
increments, up to a maximum of 10% of his or her Compensation. The Member may
elect to make such Member Contributions either as Pre-Tax Contributions or as
Post-Tax Contributions. A Member's election to make Pre-Tax Contributions will
constitute an election (for federal tax purposes and, wherever permitted, for
state and local tax purposes) to have his or her taxable Compensation reduced by
the amount of all Pre-Tax Contributions.
4.2 Maximum Pre-Tax Contributions. The sum of a Member's Pre-Tax
-----------------------------
Contributions to the Plan for any calendar year and the portion of the Member's
Profit Sharing Contribution which the Member could have received in cash during
such calendar year (if the Member does not elect to receive such portion under
Section 0) will not exceed $7,000 (as adjusted under section 402(g)(5) of the
Code for cost of living increases). If any Member's Pre-Tax Contributions are
affected by this limitation, the Member will continue to make such contributions
as Post-Tax Contributions to the Plan unless the Member elects to suspend such
Contributions as provided in Section 0.
4.3 Change or Suspension of Contributions. A Member, at any time, may
-------------------------------------
change the rate of his or her Member Contributions within the percentage
limitation described in Section 0 or may change the nature of such Member
Contributions as Pre-Tax Contributions or Post-Tax Contributions by filing the
prescribed form with the Administrative Committee, or by utilizing such other
notification procedure as is prescribed by the Administrative Committee. A
Member may suspend all Member Contributions by filing the prescribed form with
the Administrative Committee, or by utilizing such other notification procedure
as is prescribed by the Administrative Committee. Such changes in rate or nature
of contributions or suspension will be effective as soon as reasonably
practicable after the date the form is filed with or notice is received by the
Administrative Committee.
4.4 Resumption of Contributions. A Member who has suspended all Member
---------------------------
Contributions under Section 0 may resume Member Contributions at any time by
filing the prescribed advance notice with the Administrative Committee. The
resumption in contributions will be effective as soon as reasonably practicable
after the applicable notice is received by the Administrative Committee.
4.5 Withholding and Deposit With Trustee; Crediting Accounts. All
--------------------------------------------------------
Member Contributions to the Plan will be withheld through payroll deductions
from the Member's Compensation and will be paid to the Trustee as soon as
reasonably practicable following the end of the pay period in which they are
withheld. A Member's Pre-Tax Contributions will be credited to his or her
Pre-Tax Account and the Member's Post-Tax Contributions will be credited to his
or her Post-Tax Account.
21
<PAGE>
4.6 Distribution of Excess Contributions and Deferrals.
--------------------------------------------------
(a) Excess Contributions. If a Member who is a Highly Compensated
--------------------
Employee makes Pre-Tax Contributions which constitute "Excess Contributions" (as
defined in section 401(k)(8)(B) of the Code and the Regulations issued under
such Code section which are expressly incorporated by this reference) with
respect to a Plan Year, such Excess Contributions (and the earnings on such
contributions) will be distributed to the Member after the end of such Plan
Year. Such distribution will be made as soon as administratively practicable,
but in no event later than the end of the next Plan Year. Pre-Tax Contributions
and any earnings on such contributions directed by the Highly Compensated
Employees having the highest rate of Pre-Tax Contributions (as a percentage of
Compensation) will be refunded first under the provisions of the applicable
Regulations. Any refund of Pre-Tax Contributions and earnings on such
contributions will be limited to the amount that, in the judgment of the
Administrative Committee, will result in the Plan satisfying the requirements of
section 401(k)(3)(A) of the Code. Nonelective Contributions which are considered
elective contributions under section 1.401(k)-1(g)(7)(i) of the Code shall be
handled as Pre-Tax Contributions under this Section 4.6(a).
(b) Excess Deferrals. If a Member makes Pre-Tax Contributions which
----------------
constitute "Excess Deferrals" (as defined in section 402(g)(2)(A) of the Code
and the Regulations issued under such Code section which are expressly
incorporated by this reference) to one or more plans with respect to a calendar
year, the Member may allocate the Excess Deferrals among the plans to which such
deferrals were made and notify the Administrative Committee in writing by March
1 of the next calendar year of the Excess Deferrals allocated to the Plan. Upon
the Administrative Committee's receipt of such notice, the amount of the Excess
Deferrals designated by the Member (and any earnings on such amount) will be
distributed to the Member by April 15 of such year.
(c) Excess Aggregate Contributions. If a Member who is a Highly
------------------------------
Compensated Employee makes Post-Tax Contributions which constitute "Excess
Aggregate Contributions" (as defined in section 401(m)(6)(B) of the Code and the
Regulations issued under such Code section which are expressly incorporated by
this reference) with respect to a Plan Year, such Excess Aggregate Contributions
(and any earnings on such contributions) will be distributed to the Member by
the end of the next Plan Year. Post-Tax Contributions and any earnings on such
contributions directed by the Highly Compensated Employees having the highest
rate of Post-Tax Contributions (as a percentage of Compensation) will be
refunded first under the provisions of applicable Regulations. Any refund of
Post-Tax Contributions and earnings will be limited to the amount that, in the
judgment of the Administrative Committee, will result in the Plan satisfying the
requirements of section 401(m)(3) of the Code.
4.7 Rollover Contributions. An Employee may make a Rollover
----------------------
Contribution to the Plan in an amount equal to all or part of a previous
distribution from a plan that, at the time of the distribution, met the
requirements of section 401(a) of the Code. The Rollover Contribution must be
made in cash within 60 days after its receipt by the Employee either from the
qualified plan or from an individual retirement account which meets the
requirements of section 408 of the Code and
22
<PAGE>
has only been used to hold qualified plan distributions. A Rollover Contribution
will be permitted only if the Employee establishes that:
(a) The Rollover Contribution includes no assets other than those
attributable to employer contributions, earnings on employer contributions and
earnings on employee contributions under plans qualified under section 401(a) of
the Code; and
(b) If the amount was received by the Employee from a qualified
plan, the Rollover Contribution qualifies as an "eligible rollover distribution"
under section 402(c)(4) of the Code; or
(c) If the amount was received by the Employee from an individual
retirement account, which contains funds described in Section 4.7(a) only, the
distribution from such account represented a total distribution of such account.
The Rollover Contribution will be paid to the Trustee as soon as practicable,
credited to the Employee's Rollover Account and invested as described in Section
7. If it is determined that a Member's Rollover Contribution mistakenly failed
to qualify under the Code as a tax-free rollover, then the balance in the
Member's Rollover Account attributable to the mistaken contribution immediately
will be segregated from all other Plan assets, treated as a nonqualified trust
established by and for the benefit of the Member, and distributed to the Member.
Such a mistaken contribution will be deemed never to have been a part of the
Plan.
23
<PAGE>
SECTION 5 MATCHING AND NONELECTIVE CONTRIBUTIONS.
- --------- --------------------------------------
5.1 Matching Contribution. Except as provided below, for each period
---------------------
(an "Accumulation Period") during a Plan Year with respect to which a transfer
of Member Contributions to the Stock Fund is permitted in accordance with
Section 7.2(b), the Company will make a Matching Contribution to the Plan in an
amount equal to 50% of each Member's Member Contributions for the Accumulation
Period. The Matching Contribution will be reduced by any amount which cannot be
allocated to the Member because of the contribution limitation described in
Section 0, or with respect to territory managers, account executives and account
managers only, the limit on Compensation under Section 0. The Board of Directors
may determine in its sole discretion that:
(a) No Matching Contribution will be made for a particular Plan
Year or portion of a Plan Year;
(b) A lesser Matching Contribution will be made, in view of Company
performance, and economic and financial conditions prevailing and anticipated at
the time; or
(c) A greater Matching Contribution will be made for a particular
Plan Year or portion of a Plan Year.
No Matching Contribution will be made for a Member unless he or she:
(a) Is an Employee on the last day of the final preceding payroll
period with respect to which a Member may make a Contribution which would be
matched by a portion of such Matching Contribution; or
(b) Ceased to be an Employee during the Plan Year:
(i) After attaining age 55 and completing 15 years of
Service;
(ii) After attaining Normal Retirement Age;
(iii) By reason of death; or
(iv) By reason of Total and Permanent Disability,
and his or her Accounts have not been distributed under Section 0.
The Matching Contribution may be made in the form of cash or in the
form of shares of LSAI Stock, or a combination of both.
5.2 Nonelective Contribution. In order to enable the Plan to satisfy
------------------------
the provisions of section 401(k) or section 401(m) of the Code, the Company may
elect to make a Nonelective Contribution to the Plan for each Plan Year in an
amount, if any, as the Board of Directors in its
24
<PAGE>
sole discretion may determine. Except to the extent necessary to satisfy the
requirements of section 401(k) or section 401(m) of the Code, no Nonelective
Contribution will be made for a Member unless he or she:
(a) Is an Employee on the date as of which a Nonelective
Contribution is allocated; or
(b) Ceased to be an Employee during the Plan Year:
(i) After attaining age 55 and completing 15 years of
Service;
(ii) After attaining age 65;
(iii) By reason of death; or
(iv) By reason of Total and Permanent Disability,
and his or her Accounts have not been distributed under Section 0.
The Nonelective Contribution may be made in the form of cash or in the
form of shares of LSAI Stock, or a combination of both.
5.3 Deposit with Trustee; Crediting Accounts. The Matching Contribution
----------------------------------------
for any Accumulation Period will be paid to the Trustee at the time when Member
Contributions designated for investment in the Stock Fund may be transferred to
the Stock Fund under Section 0 and will be allocated among Members in proportion
to their Member Contributions during the Accumulation Period to any Fund. A
Member's share of the Matching Contribution will be allocated and credited to
the Member's Matching Account as of the earlier of:
-------
(a) The date the Matching Contribution is made to the Plan; or
(b) The end of the Plan Year during which the Member Contributions
with respect to which such Matching Contribution is made.
Forfeitures arising under Section 0 with respect to any Member's Matching
Account during a Plan Year will be allocated among other Members as an
additional Matching Contribution for such Plan Year and credited to such
Members' Matching Accounts.
The Nonelective Contribution will be paid to the Trustee after such
contribution is authorized by the Board of Directors, but no later than 12
months after the end of the Plan Year in which such contribution is made. The
amount allocated to each Member's Nonelective Account will be determined by the
Board of Directors, or if the Board declines to make such determination, the
Administrative Committee. A Member's Nonelective Contribution will be allocated
and credited to the Member's Nonelective Account as of the end of the Plan Year
with respect to which the Nonelective Contribution is made. Nothing in this
Section 0 will be construed as requiring an
25
<PAGE>
allocation of a Nonelective Contribution to be made on behalf of any Highly
Compensated Employee within the meaning of section 401(k) or section 401(m) of
the Code.
5.4 Curtailment or Distribution from Plan of Excess Aggregate
---------------------------------------------------------
Contributions. If any Matching Contribution and/or Nonelective Contribution
- -------------
otherwise allocable to a Member who is a Highly Compensated Employee would
constitute an "Excess Aggregate Contribution" (as defined in section
401(m)(6)(B) of the Code and the Regulations issued under such Code section
which are expressly incorporated by this reference) with respect to the Plan
Year, then:
(a) The Matching Contribution and/or Nonelective Contribution will
not be made to the Plan, if the Matching Contribution and/or Nonelective
Contribution has not been made to the Plan as of the date on which the Matching
and/or Nonelective Contributions are determined to constitute an Excess
Aggregate Contribution; or
(b) The Matching Contribution and/or Nonelective Contribution (and
any earnings on such contributions) will be distributed to the Member by the end
of the next Plan Year, if the Matching Contribution and/or Nonelective
Contribution has been made to the Plan before the date on which the Matching
and/or Nonelective Contributions are determined to constitute an Excess
Aggregate Contribution.
The Matching Contribution and/or Nonelective Contribution made on
behalf of Highly Compensated Employees having the highest rate of Matching
Contribution and/or Nonelective Contribution will be reduced and/or distributed
first, under the terms of the applicable Regulations. Any reduction and/or
distribution of a Matching Contribution and/or Nonelective Contribution made
will be limited to the amount which, in the judgment of the Administrative
Committee, is expected to meet the requirements of section 401(m)(6)(B) of the
Code.
26
<PAGE>
SECTION 6 PROFIT SHARING CONTRIBUTION.
- --------- ---------------------------
6.1 Amount and Form. The Company may make a Profit Sharing Contribution
---------------
to the Plan for each Plan Year in such amount as may be determined by the Board
of Directors. The Profit Sharing Contribution will be reduced by:
-------
(a) An amount equal to the Forfeitures attributable to Members'
Profit Sharing Accounts that were allocated to Members for the preceding Plan
Year; and
(b) The amount which Members elect to receive directly in cash
under Section 0.
No Profit Sharing Contribution will be made for any Plan Year if such
contribution would result in the Plan failing to satisfy the requirements of
section 410(b) of the Code. The Profit Sharing Contribution may be made in the
form of cash, in the form of other property acceptable to the Trustee, or a
combination of both.
6.2 Cash Election by Members. Each Member who is an Employee may elect
------------------------
to receive as a direct cash payment from the Company an amount the
Administrative Committee estimates would equal 1/3 of the Profit Sharing
Contribution and Forfeitures, if any, otherwise allocable to the Member's Profit
Sharing Account for such Plan Year under Section 0. A Member must make an
election to receive a cash payment by filing the prescribed form with the
Administrative Committee by a date determined by the Administrative Committee
which is no later than the last day of a Plan Year. No cash payment will be made
to a Member who does not make a timely election to receive such payment. A
Member will be deemed to have elected to have received a cash payment if the
Member ceases to be an employee after the last working day of the Plan Year but
before the date such cash payment is made or, alternatively, is receiving no
Compensation from the Company or an Affiliated Company for services as an
employee on such date.
6.3 Deposit With Trustee; Crediting Accounts. The Profit Sharing
----------------------------------------
Contribution for any Plan Year will be paid to the Trustee on or before the due
date (including extensions) for filing the Company's consolidated federal income
tax return for such Plan Year. The Profit Sharing Contribution for a Plan Year
will be allocated among Members who are Employees on the last working day of
such Plan Year in proportion to each such Member's Compensation for such Plan
Year including, in the case of a Member who was a Member for only part of the
Plan Year, amounts that would have been Compensation if the Member had been a
Member for the full Plan Year. Subject to Section 0, a Member's share of the
Profit Sharing Contribution will be credited to the Member's Profit Sharing
401(k) Account and/or Profit Sharing Regular Account, as appropriate.
Except as provided in the next following sentence, forfeitures arising
under Section 0 with respect to any Member's Profit Sharing Account during a
Plan Year will be allocated among other Active Members who are Employees on the
last working day of such Plan Year as a Profit Sharing Contribution for such
Plan Year and, will be credited to such Active Members' Profit Sharing 401(k)
Account or Profit Sharing Regular Account, as appropriate. However, in the Plan
Year
27
<PAGE>
ending in 1994, forfeitures under Section 11.1 as of June 30, 1994, will be
allocated among Active Members who are employees on June 30, 1994 (and credited
as provided in the immediately preceding sentence), and forfeitures under
Section 11.1 with respect to a Member's Profit Sharing Account as of the end of
the Plan Year ending in 1994 will be allocated among Active Members who are
employees on the last working day of the Plan Year (and credited as provided in
the immediately preceding sentence).
6.4 Distribution of Excess Contributions and Deferrals.
--------------------------------------------------
(a) Excess Contributions. To the extent that a Member who is a
--------------------
Highly Compensated Employee does not elect to receive a portion of the Profit
Sharing Contribution for a Plan Year in cash under Section 0 and such portion
would constitute an "Excess Contribution" (as defined in section 401(k)(8)(B) of
the Code and the Regulations under such Code section which are expressly
incorporated by this reference) with respect to such Plan Year, the amount of
the Member's Profit Sharing Contribution as may constitute an Excess
Contribution will be paid directly to the Member after the end of such Plan Year
as if the Member had elected to receive such portion in cash under Section 0.
Such distribution will be made as soon as administratively practicable, but in
no event later than the end of the next Plan Year. The Profit Sharing
Contribution and any earnings on such contribution allocated to Highly
Compensated Employees having the highest rate of Profit Sharing Contribution (as
a percentage of Compensation) will be distributed first under the provisions of
the applicable Regulations. Any distribution of the Profit Sharing Contribution
and earnings will be limited to the amount that, in the judgement of the
Administrative Committee, will result in the Plan satisfying the requirements of
section 401(k)(8)(B) of the Code.
(b) Excess Deferral. To the extent that a Member does not elect to
---------------
receive a portion of the Profit Sharing Contribution otherwise payable directly
to the Member during a calendar year under Section 0 and such portion would
constitute an "Excess Deferral" (as defined in section 402(g)(2)(A) of the Code)
with respect to such calendar year, such portion as may constitute an Excess
Deferral will be paid directly to the Member as if the Member had elected to
receive such portion in cash under Section 0. Such distribution will be made by
April 15 of the next calendar year.
28
<PAGE>
SECTION 7 TRUST FUND, INVESTMENTS AND INVESTMENT DIRECTIONS.
- --------- -------------------------------------------------
7.1 Trust Fund.
----------
(a) In General. All contributions to the Plan will be held by the
----------
Trustee for investment and reinvestment as part of the Trust Fund under the
Trust Agreement. The Trust Fund will consist of the Funds designated on Appendix
C to the Plan. One of such Funds will be designated as the Fund which will hold
Member Contributions designated for potential investment in the Stock Fund (the
"Holding Account").
(b) Stock Fund. One of the Funds available for investment of the
----------
Trust Funds will be the Stock Fund. The Stock Fund will be invested and
reinvested in LSAI Stock to the extent LSAI Stock is available for purchase by
the Trustee in accordance with Section 0, and in cash or interest-bearing short-
term debt obligations of any kind (i) pending investment in LSAI Stock or (ii)
to the extent required to pay expenses of the Plan or meet anticipated cash
distributions to Members and Beneficiaries, as determined and directed by the
Administrative Committee. The Stock Fund will consist of all Stock Fund
investments held by the Trustee and all cash held by the Trustee which is
derived from dividends, interest or other income from Stock Fund investments,
contributions to be invested in the Stock Fund and proceeds from the sale or
redemption of Stock Fund investments.
7.2 Investment of Contributions. A Member's share of any Profit Sharing
---------------------------
Contribution and Forfeitures under Section 5.3 allocated to his or her Profit
Sharing 401(k) Account and Profit Sharing Regular Account and all Member
Contributions will be deposited in the Fund designated by the Member for such
investment in 1% increments (provided, however that these allocations will be in
20% increments until the end of the Blackout Period commencing on August 1,
1994) of such contribution as directed by the Member in accordance with
procedures established by the Administrative Committee. A Member's investment
directions will remain in effect until changed by the Member. If the Member
fails to file any investment directions, his or her share of any Profit Sharing
Contribution allocated to his or her Profit Sharing 401(k) Account and Profit
Sharing Regular Account and his or her Member Contributions will be deposited in
the Fund designated in Appendix C for investment of contributions for which no
investment direction has been received. All Matching Contributions and
Forfeitures under Section 6.3, if any, and Nonelective Contributions will be
deposited in the Stock Fund.
Generally, twice each Plan Year, the Investment Committee will obtain
an independent appraisal of the Fair Market Value of LSAI Stock. The Investment
Committee will notify the Trustee of such Fair Market Value promptly after
completion of the appraisal.
(a) If Fair Market Value of LSAI Stock Exceeds Adequate
---------------------------------------------------
Consideration. If the Trustee determines that the Fair Market Value of LSAI
- -------------
Stock exceeds "Adequate Consideration" for such LSAI Stock within the meaning of
section 3(18) of the Act, all Member Contributions that are held in the Holding
Account and any earnings on such contributions will be transferred to an
alternative Fund as designated by the Member, and no Matching Contribution will
be made with respect to such Member Contributions unless the Investment
Committee effects a "Suspension" as
29
<PAGE>
described below.
The Investment Committee will effect a Suspension, in its sole
discretion, by determining that the Member Contributions held in the Holding
Account and earnings on such contributions will remain in the Holding Account
rather than be transferred to another Fund. If the Investment Committee effects
a Suspension, the Administrative Committee, in such manner and under such
procedures as it deems appropriate, will promptly provide Members whose Member
Contributions and earnings are subject to the Suspension the opportunity to
elect whether such amounts will remain held in the Holding Account. If the
Member fails to file an election on the prescribed form by the date determined
by the Administrative Committee, such amounts will remain in the Holding Account
subject to the remaining provisions of the Plan. If a Member elects to have such
amounts transferred to another Fund, such amounts will be transferred to such
other Fund.
(b) If Fair Market Value of LSAI Stock Does Not Exceed Adequate
-----------------------------------------------------------
Consideration. Conversely, if the Trustee determines that the Fair Market Value
- -------------
of LSAI Stock does not exceed Adequate Consideration for such stock, the
Administrative Committee will notify Members of such Fair Market Value. Each
Member who has Member Contributions held in the Holding Account will have the
opportunity to elect to have such Member Contributions and any earnings on such
contributions transferred to any Fund in 1% increments of such Member
Contributions and earnings. If a Member files such an election in the prescribed
manner by the date determined by the Administrative Committee, the Member's
Member Contributions that are invested in the Holding Account and any earnings
on such contributions will be transferred to the Fund or Funds elected by the
Member. If a Member fails to file such an election by the date determined by the
Administrative Committee, the Member's Member Contributions that are held in the
Holding Account and any earnings on such contributions automatically will be
transferred to the Stock Fund. At the time when Member Contributions and
earnings are transferred to the Stock Fund, the Company will make a Matching
Contribution under Section 0 unless the Board of Directors determines that no
Matching Contribution will be made.
The Trustee will seek to acquire LSAI Stock for the Stock Fund at a
price no greater than Fair Market Value, to the extent that any cash Matching
Contributions and Forfeitures and Nonelective Contributions deposited in the
Stock Fund and Member Contributions transferred to Stock Fund exceed the cash
requirements of the Stock Fund as determined by the Administrative Committee.
The Trustee may acquire LSAI Stock from a "Party-in-Interest" (as defined in
section 3(14) of the Act) or a "Disqualified Person" (as defined in section
4975(e)(2) of the Code) for no more than Adequate Consideration in accordance
with the requirements of section 408(e) of the Act.
7.3 Reinvestment of Accounts. A Member may elect to change the
------------------------
investment of his or her Accounts under the applicable paragraph (a) or (b),
subject to the limitations of paragraphs (c) and (d).
(a) General Rules Regarding Reinvestment of Accounts. On any
------------------------------------------------
business day, a Member may elect to transfer amounts invested in any Fund other
than the Stock Fund among such Funds in 1% increments of the balance credited to
the Member's Accounts invested in such
30
<PAGE>
Funds as of such day. A Member's election must be made in a manner prescribed by
the Administrative Committee.
(b) Rules Regarding Reinvestment of Accounts by Qualified Members.
-------------------------------------------------------------
As of any business day, a Qualified Member (i.e., any Member who has reached age
----
63, or attained age 53 and completed at least 13 Years of Service) may elect to
have amounts credited to his or her Accounts invested in the Stock Fund
transferred to any other Fund in 1% increments by filing the notice prescribed
by the Administrative Committee. A Qualified Member may make only 1 such
election in any Plan Year.
(c) Certain Limitations on Reinvestments by Insiders. A Qualified
------------------------------------------------
Member who is an Insider may reinvest amounts credited to his or her Accounts
invested in the Stock Fund only by making an irrevocable election to reinvest
within the period beginning on the 3rd business day following the date for the
release of the financial data specified in paragraph (e)(1)(ii) of Rule 16b-3
under the Securities Exchange Act of 1934 and ending on the 12th business day
following such date.
(d) Certain Limitations on Reinvestments Due to Liquidity of the
------------------------------------------------------------
Trust Fund. The Investment Committee may determine that it is not feasible for
- ----------
the Trustee to prudently liquidate and transfer the necessary amount from one
Fund to another in accordance with Members' reinvestment elections. If the
Investment Committee so determines, it will advise the Administrative Committee
which will direct that such steps be taken as it considers necessary or
desirable for the protection of Members' Accounts, including a pro rata
reduction in the amount transferred with respect to each Member, or the
scheduling of transfers over a period consistent with prudent liquidation.
7.4 Investment by Alternate Payees. The Administrative Committee will
------------------------------
determine, in its sole and absolute discretion, if an Alternate Payee is
entitled to a portion of a Member's Accounts under the terms of a Qualified
Domestic Relations Order. If the Administrative Committee so determines, it will
segregate the Alternate Payee's portion of the Member's Accounts into a separate
Matching Account, Nonelective Account, Post-Tax Account, Pre-Tax Account, Profit
Sharing Account and Rollover Account as appropriate. The Alternate Payee will
only be entitled to direct the investment of his or her Accounts under the
provisions of this Section 0 in the same manner, at the same times, and subject
to the same conditions as Members in the Plan.
7.5 Allocation of Voting Rights. Except as specifically authorized in
---------------------------
this Section 0, the Trustee will vote all shares of LSAI Stock held in the Trust
Fund at the direction of the Investment Committee.
If the stockholders of Levi Strauss Associates Inc. are entitled to
vote with respect to any of the following matters, then only in connection with
such matters, the Trustee will vote the shares of LSAI Stock held in the Trust
Fund in accordance with the Members' directions to the Trustee as provided in
Section 0:
(a) Any merger or consolidation of Levi Strauss Associates
Inc. with any other
31
<PAGE>
corporation, unless the stockholders of Levi Strauss Associates Inc. immediately
before the merger or consolidation would own (immediately after the merger or
consolidation) equity securities of the surviving corporation or acquiring
corporation or a parent entity possessing more than 5/6 of the voting power of
the surviving corporation or acquiring corporation or parent entity;
(b) Any plan of complete liquidation of Levi Strauss Associates
Inc.;
(c) Any dissolution of Levi Strauss Associates Inc.; or
(d) Any plan or agreement for the sale or disposition by Levi
Strauss Associates Inc. of all or substantially all of its assets, unless the
stockholders of Levi Strauss Associates Inc. immediately before the sale or
disposition would own (immediately after the sale or disposition) equity
securities of the acquiring entity or a parent entity possessing more than 5/6
of the voting power of the acquiring entity or parent entity.
7.6 Exercise of Voting Rights. When Members are entitled to direct the
-------------------------
voting of LSAI Stock under Section 0, each Member will be entitled to direct the
Trustee with respect to the voting of all whole and fractional shares of LSAI
Stock which are allocated to his or her Accounts (or represented by units
allocated to such Accounts) as of the last Valuation Date coinciding with or
preceding the applicable record date. The Administrative Committee will
conclusively determine the number of the shares of LSAI Stock that are subject
to each Member's voting instructions and will advise the Trustee accordingly.
Before any annual or special meeting at which LSAI Stock will be voted
on the matters described in Section 0, the Board of Directors will cause to be
delivered to each Member the proxy statement and any related materials prepared
for holders of LSAI Stock, a request for written voting instructions, and the
voting instructions form prescribed by the Board of Directors for this purpose.
Each Member who wishes to exercise his or her voting rights must complete and
return such form to the Trustee before the date prescribed by the Board of
Directors. Once received by the Trustee, a Member's voting instructions may be
revoked, subject to such conditions as the Trustee may impose.
Any shares of LSAI Stock with respect to which the Trustee receives
timely, written voting instructions from Members will be voted by the Trustee in
accordance with such instructions on the matters described in Section 0. The
Trustee also will determine the ratio of affirmative votes, negative votes and
abstentions with respect to each matter described in Section 0 for which it has
received timely voting instructions from Members. The Trustee will then vote on
such matters all shares of LSAI Stock allocated to Members' Accounts with
respect to which it has not received timely voting instructions in accordance
with the ratios so determined. If the Trustee determines that voting such shares
in accordance with such ratios would violate its fiduciary responsibilities
under the Act, it will vote such shares of stock in accordance with such
fiduciary requirements. The Trustee will aggregate any fractional shares and,
after rounding down to the next lower integer if the total is not a whole
number, will vote an equivalent number of whole shares of LSAI Stock.
For purposes of this Section 0, each Member will be a "Named Fiduciary"
as defined under
32
<PAGE>
section 402(a) of the Act with respect to the shares of LSAI Stock allocated to
his or her Accounts.
7.7 Other Instructions by Members.
-----------------------------
(a) Sale to Levi Strauss Associates Inc. of LSAI Stock. Except
--------------------------------------------------
as provided in this Section 0 and in the Registration Rights Agreement, the
Trustee may sell LSAI Stock held in the Trust Fund only to Levi Strauss
Associates Inc.
(b) Acquisition Offers. If any person or group makes an offer to
------------------
acquire all or part of the outstanding LSAI Stock ("Acquisition Offer"), the
Trustee will tender the LSAI Stock held in the Trust Fund to such person or
group only to the extent that it has been directed to do so by Members.
"Acquisition Offers" will not include:
-----------
(i) Any offer to purchase LSAI Stock by Levi Strauss
Associates Inc.;
(ii) Any offer to purchase less than 5% of all of the
outstanding shares of common stock of Levi Strauss Associates Inc.,
including LSAI Stock held in the Trust Fund; or
(iii) Any public offering of LSAI Stock under the Registration
Rights Agreement.
In the event of an Acquisition Offer, each Member will be entitled to
instruct the Trustee confidentially (on a form to be prescribed by the
Administrative Committee) with respect to the disposition of those shares of
LSAI Stock which then would be subject to the Member's voting instructions under
Section 0. If the Trustee receives such an instruction by a date determined by
the Trustee and communicated to Members, the Trustee will tender such LSAI Stock
in accordance with such instruction. Any LSAI Stock as to which the Trustee does
not receive instructions within such period will not be tendered by the Trustee.
The Trustee will obtain and distribute to each Member all appropriate
materials pertaining to the Acquisition Offer, including any statement of the
position of Levi Strauss Associates Inc. with respect to such offer issued under
Regulation 14e-2 promulgated under the Securities Exchange Act of 1934, as soon
as practicable after such materials are issued. If Levi Strauss Associates Inc.
is not required to or fails to issue such statement within 5 business days after
the commencement of such offer, the Trustee will distribute such materials to
each Member without such statement by Levi Strauss Associates Inc. and will
separately distribute such statement, if any, as soon as practicable after it is
issued. Levi Strauss Associates Inc. may require verification of the Trustee's
compliance with the Members' confidential voting instructions by an independent
auditor selected by Levi Strauss Associates Inc.
For purposes of this Section 0, each Member will be a "Named Fiduciary"
as defined under section 402(a) of the Act with respect to the shares of LSAI
Stock allocated to his or her Accounts.
(c) Acquisitions by Levi Strauss Associates Inc. If Levi Strauss
--------------------------------------------
Associates Inc.
33
<PAGE>
makes an offer to purchase LSAI Stock the Investment Committee will determine
whether, and to what extent, the Plan will sell LSAI Stock to Levi Strauss
Associates Inc. in connection with such offer.
7.8 Participant Directed Accounts. It is intended that transactions by
-----------------------------
Members pursuant to this Section 7 satisfy the conditions set forth in
Department of Labor Regulation Section 2550.404c-1, except to the extent that
such transactions are not covered by such regulation.
34
<PAGE>
SECTION 8 VALUATIONS AND STATEMENTS.
- --------- -------------------------
8.1 Valuation of Accounts. As of each Valuation Date, the
---------------------
Administrative Committee will value each Member's Accounts at fair market value
and will adjust such Accounts to reflect the Member's share of any realized or
unrealized investment income, gains, losses and expenses of the Fund or Funds in
which the Accounts were invested which have accrued since the preceding
Valuation Date. For this and all other purposes under the Plan, LSAI Stock will
be taken into account at its Fair Market Value.
8.2 Statements. The Administrative Committee will prepare and
----------
distribute a statement to each Member at least annually. Such statement will
reflect the status of the Member's Accounts (including the fair market value
thereof) and will contain such other information as the Administrative Committee
may prescribe.
35
<PAGE>
SECTION 9 WITHDRAWALS.
- --------- -----------
9.1 Withdrawals from Post-Tax Accounts. A Member may withdraw all or
----------------------------------
part of the balance credited to his or her Post-Tax Account invested in any Fund
or combination of such Funds. In addition, unless the withdrawal is for:
(a) The purchase of the Member's primary residence; or
(b) The payment of expenses relating to the post-secondary
education of the Member or the Member's spouse or children, including expenses
for tuition fees, room, board or books,
the Member will be suspended from making Member Contributions for at least 3
fiscal months following any such withdrawal. The Member may resume making Member
Contributions following the suspension period as of the first pay period
following the suspension period by filing the prescribed form with the
Administrative Committee in advance.
9.2 Withdrawals from Rollover Accounts. A Member may withdraw all or
----------------------------------
part of the balance credited to his or her Rollover Account invested in any Fund
or combination of such Funds. The Member will not be suspended from making
Member Contributions for making any withdrawal under this Section 0.
9.3 Hardship Withdrawals. A Member may make withdrawals from his or
--------------------
her Accounts for reasons of hardship as specified in paragraphs (a), (b), and
(c) below.
(a) Post-Tax Account, Rollover Account, Pre-Tax Account and Profit
--------------------------------------------------------------
Sharing 401(k) Account. A Member may withdraw all or part of the Member's Post-
- ----------------------
Tax Account, Rollover Account, Pre-Tax Account (excluding earnings credited to
such Account after November 27, 1988) and Profit Sharing 401(k) Account
(excluding earnings credited to such Account after November 27, 1988) invested
in any Fund or any combination of such Funds (excluding contributions made with
respect to any period during which the Member was a resident of the United
Kingdom), if the Member becomes Totally and Permanently Disabled or if the
amount of the withdrawal is needed to meet an "Immediate and Heavy Financial
Need" of the Member arising solely from one or more of the following:
(i) Expenses for extraordinary and unreimbursed medical or
hospital expenses incurred by the Member, the Member's spouse, any
dependent of the Member or a nondependent parent or child of the
Member;
(ii) Amounts necessary for the Member, the Member's spouse,
any dependent of the Member, or a nondependent parent or child of the
Member to obtain medical or hospital care;
(iii) The payment of tuition and related educational expenses
for the next 12 months of post-secondary education for the Member, the
Member's spouse or child, or
36
<PAGE>
any dependent of the Member;
(iv) The payment of expenses incurred by the Member in
purchasing his or her primary residence;
(v) The need to prevent the eviction of the Member from his
or her primary residence or foreclosure on the Member's primary
residence;
(vi) The payment of funeral expenses for a family member or
relative of the Member;
(vii) The loss of income resulting from an abbreviated work
schedule required by the Member's health, the loss of employment by the
Member's working spouse, garnishment of the Member's wages or material
reduction in the compensation of the Member or the Member's working
spouse from such Member's or spouse's primary employer;
(viii) The loss of income, real property or personal property
as a result of any natural disaster as specified on Appendix D to the
Plan by any individual or entity empowered to amend the Plan; or
(ix) Effective July 1, 1995, the need to pay attorney's fees,
fines, penalties, judgments, assessments or other costs related to
legal proceedings on behalf of the Member or the Member's spouse or
dependents.
(b) Matching Account and Profit Sharing Regular Account. In
---------------------------------------------------
addition, a Member may withdraw:
(i) All or part of the Member's Matching Account and the
Vested Interest in his or her Profit Sharing Regular Account (excluding
contributions made with respect to any period during which the Member
was a resident of the United Kingdom) invested in any Fund or any
combination of such Funds, if the amount of the withdrawal is needed to
meet an Immediate and Heavy Financial Need of the Member due to:
(A) Funeral Expenses for a family member or relative
of the Member;
(B) An abbreviated work schedule required by the
Member's health, a loss of income due to health, the loss of
employment by the Member's working spouse or garnishment of the
Member's wages;
(C) The payment of extraordinary and unreimbursed
medical or hospital expenses incurred by a nondependent parent or
child of the Member; or
(D) Effective July 1, 1995, the need to pay attorney's
fees, fines,
37
<PAGE>
penalties, judgments, assessments or other costs related to legal
proceedings on behalf of the Member or the Member's spouse or
dependents.
(ii) All or part of the Member's Vested Interest in his or her
Profit Sharing Regular Account (excluding any Profit Sharing
Contributions made with respect to any period during which the Member
was a resident of the United Kingdom) invested in any Fund or any
combination of such Funds, if the amount of the withdrawal is needed to
meet Immediate and Heavy Financial Needs of the Member arising from:
(A) Foreclosure on the primary residence of the Member; or
(B) The loss of income, real property or personal property
as a result of any other natural disaster as specified on Appendix
D to the Plan by any individual or entity empowered to amend the
Plan.
(c) General Limits on Hardship Withdrawals. A Member will not be
--------------------------------------
suspended from making Member Contributions for making any such withdrawal. An
amount will be considered necessary to satisfy the Member's Immediate and Heavy
Financial Need only if the Administrative Committee determines that the need
cannot be relieved by any of the following:
---
(i) Reimbursement or compensation by insurance or otherwise;
(ii) Reasonable liquidation of the Member's assets, including
assets of the Member's spouse and minor children that are reasonably
available to the Member, to the extent such liquidation would not
itself cause an immediate and heavy financial need;
(iii) Cessation of Member Contributions; or
(iv) A loan from the Member's Accounts under Section 0 or a
loan from a commercial source on reasonable commercial terms.
Unless the Member requests otherwise, the amount of the Member's
hardship withdrawal will include the amount of any federal, state or local taxes
or any penalties reasonably anticipated to result from the withdrawal. Such sums
will be withheld at the time such hardship withdrawal is distributed to the
Member.
9.4 Withdrawals From Stock Fund. The portion of a Member's Accounts
---------------------------
invested in the Stock Fund (except for amounts credited to the Member's
Nonelective Account) may be withdrawn under Section 0 or 0 upon receipt of the
prescribed notice by the Administrative Committee (except that no such
withdrawal will be permitted on and from the date the Company is advised of the
new value for LSAI Stock under Section 7 and until either the Trustee confirms
that such new value does not exceed Adequate Consideration pursuant to Section
7.2(a) or the Investment Committee instructs that the new value shall be
utilized), but only to the extent the Administrative Committee determines that
there is sufficient cash available in the Stock Fund to
38
<PAGE>
permit such withdrawal.
9.5 Payment of Withdrawals. A Member may request a withdrawal by
----------------------
providing the prescribed notice with the Administrative Committee. A withdrawal
will be paid to the Member in cash as soon as reasonably practicable after the
Administrative Committee receives the prescribed notice and determines that the
withdrawal request meets the requirements of Section 0 (regarding withdrawals
from Post-Tax Accounts), Section 0 (regarding withdrawals from Rollover
Accounts), Section 0 (regarding hardship withdrawals) or Section 0 (regarding
withdrawals from the Stock Fund), as applicable.
9.6 Valuation Date. The value of a Member's Accounts will be
--------------
determined as of the Valuation Date which occurs on or most recently prior to
the effective date of the withdrawal.
9.7 Source of Withdrawals. A Member's Accounts, to the extent available
---------------------
with respect to such Hardship withdrawal, will be liquidated to the extent
necessary to fund a hardship withdrawal under Section 0 in the following order
of priority:
--------
(a) Post Tax-Account;
(b) Rollover Account;
(c) Pre-Tax Account;
(d) Profit Sharing 401(k) Account;
(e) Profit Sharing Regular Account; and
(f) Matching Account.
Except as provided above, within any Account, amounts invested in each Fund will
be liquidated in order from the lowest risk Fund to the highest risk Fund. The
determination of the relative risk of each Fund shall be made by the Investment
Committee, in its sole discretion, from time to time.
If the Investment Committee determines that it is not feasible for the
Trustee to prudently liquidate the necessary amount invested in any Fund in
accordance with Members' withdrawal requests, the Investment Committee will so
advise the Administrative Committee which will direct that such steps be taken
as it considers necessary or desirable for the protection of Members' Accounts,
including the reordering of liquidation priorities or a pro rata reduction in
the amount of each Member's withdrawal.
9.8 Limitation on Withdrawals by Insiders. A Member who is an Insider
-------------------------------------
may withdraw as of any date amounts credited to his Accounts invested in the
Stock Fund only by making an irrevocable election to make such a withdrawal at
least 6 months before the last day on which a Member other than an Insider must
submit an election to make a withdrawal as of such date.
39
<PAGE>
9.9 Additional Limitations on Withdrawals. In no event may a Member
-------------------------------------
withdraw any amount under this Section 0 which at the time of the intended
withdrawal funds a loan under Section 0.
9.10 Withdrawals by Alternate Payees. An Alternate Payee who is
-------------------------------
entitled to a portion of a Member's Accounts under the terms of a Qualified
Domestic Relations Order may withdraw amounts from his or her Accounts under
this Section 0 in the same manner, at the same times and subject to the same
conditions as Members in the Plan.
40
<PAGE>
SECTION 10 LOANS.
- ---------- -----
10.1 Amount of Loans.
---------------
(a) Profit Sharing Regular Account. A Member may borrow up to
------------------------------
100% of the Member's Vested Interest in his or her Profit Sharing Regular
Account to the extent that such amount may be used to secure the promissory note
with respect to such loan under Section 0(a). Such a loan will be permitted only
if the Administrative Committee determines that:
(i) The proceeds of the loan will be used to acquire,
construct or rehabilitate the Member's primary residence, or to
refinance any loan or loans previously made to the Member by a third
party for any of these purposes;
(ii) The loan is required by the Member for the payment of
expenses relating to the post-secondary education of the Member or the
Member's spouse or children, including expenses for tuition, fees,
room, board or books; or
(iii) The loan is required by the Member due to the loss of
income, real property or personal property as a result of any natural
disaster as specified on Appendix D to the Plan by any individual or
entity empowered to amend the Plan.
(b) Profit Sharing 401(k) Account. A Member may borrow up to
-----------------------------
100% of the balance credited to his or her Profit Sharing 401(k) Account for
expenses relating to the post-secondary education of the Member or the Member's
spouse or children, including expenses for tuition, fees, room, board or books.
(c) Post-Tax, Pre-Tax, Matching and Rollover Accounts.
-------------------------------------------------
(i) Effective on and after a date determined by the
Administrative Committee and announced to Members, a Member may borrow
up to 100% of the balance credited to his or her Matching Account
and/or Pre-Tax Account. A loan from the Member's Pre-Tax Account will
be permitted only if the Administrative Committee determines that the
Member is Totally and Permanently Disabled or that the proceeds will be
used to satisfy a hardship described in Section 0(i) through Section
0(viii).
(ii) A Member may borrow up to 100% of the balance credited
to his or her Post-Tax Account and/or Rollover Account. Such loans will
be permitted for any reason, but will be subject to Section 0
(regarding the maximum loan amount), Section 0 (regarding loan terms),
Section 0 (regarding source of loans) and Section 0 (regarding events
of default), in addition to other applicable provisions of the Plan. In
no case will a Member be permitted to borrow any portion of such
Accounts invested in the Stock Fund or the Holding Account.
(d) Additional Limitations. No loan will be permitted from the
----------------------
portion of any Account invested in the Stock Fund. No loan will be granted to
the extent it would cause the
41
<PAGE>
aggregate balance of all loans a Member has outstanding under the Plan to exceed
the lesser of:
------
(i) $50,000, less the amount by which such aggregate balance
has been reduced by repayments of principal during the one-year period
ending on the day before the new loan is made; or
(ii) 50% of the Member's Vested Interest in all of the Member's
Accounts.
The amount of any loan must be a multiple of $100 and may not be less than
$1,000. Only 4 loans to a Member may be outstanding at any time (no more than 2
of which may be for the acquisition, construction or rehabilitation of the
Member's primary residence, or to refinance any loan or loans previously made by
a third party for these purposes).
(e) Vested Interest and Value of Accounts. The Member's Vested
-------------------------------------
Interest in an Account and the value of the balance credited to such Account
will be determined as of the latest Valuation Date preceding the date the loan
application is submitted for which information is then available.
10.2 Terms of Loans. All loans will be on such terms and conditions
--------------
as the Administrative Committee may determine, and must satisfy the following
requirements:
(a) Adequate Security. All loans will be made under a promissory
-----------------
note secured by:
(i) The residence of the Member, in the case of a loan under
Section 0(i) (regarding the acquisition, construction or rehabilitation
of the Member's primary residence);
(ii) The residence of the Member to the extent agreed upon by
the Member and the Administrative Committee, in the case of a loan for
expenses for the post-secondary education of the Member or the Member's
spouse or children which is made from the Member's Profit Sharing
Regular Account under 0(ii), or the Member's Post-Tax Account or the
Member's Rollover Account under Section 0(ii); and
(iii) The Account or Accounts that funded the loan to the
extent that such Account or Accounts fund the loan.
No loans will be secured by the Member's Account or Accounts in an amount
greater than 50% of the Vested Interest and value of the balance of the Account
of such Member at the time such loan was made.
(b) Substantially Level Payment. All loans will be subject to a
---------------------------
substantially level payment schedule, as determined by the Administrative
Committee, with payments to be made at least quarterly and whenever possible to
be made through semi-monthly payroll
42
<PAGE>
deductions. If loan payments are not made for a period of up to 365 days due to
the Member's temporary absence from active work, such missed payments may be
made:
(i) In a single sum after the Member returns to active work;
(ii) Ratably over the remaining period of the loan;
(iii) In a single sum together with the final payment provided
for under the note; or
(iv) In another manner mutually agreed upon by the Member and
the Administrative Committee.
However, loan repayments by a Member who has been absent temporarily must
recommence by the end of the one-year period following the date the Member's
temporary absence began or, if earlier, upon the first paycheck after the
Member's return to active work.
(c) Reasonable Rate of Interest. All loans will bear interest at a
---------------------------
fixed rate determined by the Administrative Committee based upon the prime
interest rate in effect at a commercial bank as of the first day of the month
immediately preceding the date on which the loan application is received plus
1%, unless such rate would not be "reasonable" as defined by section 408(b)(3)
of the Act, in which case a "reasonable" rate of interest will be used.
(d) Repayment in Full. All loans will provide for repayment in
-----------------
full, whether from the Member's Accounts or otherwise, on or before the earlier
-------
of:
(i) 5 years after the date the loan is made (15 years after
the date the loan is made if the loan is used to acquire the Member's
principal residence); or
(ii) The date the Member's Plan Benefit is distributed under
Section 0.
10.3 Source of Loans; Application of Loan Payments. As soon as
---------------------------------------------
administratively practical following the approval of a loan by the
Administrative Committee, the amount of the loan will be distributed to the
Member from the vested portion of the Member's Accounts that are being used to
fund the loan, in the following order of priority:
(a) Post-Tax Account;
(b) Rollover Account;
(c) Pre-Tax Account;
(d) Profit Sharing 401(k) Account;
(e) Profit Sharing Regular Account; and
43
<PAGE>
(f) Matching Account.
If less than the entire amount of any Account is required to fund the
loan, amounts invested in the Funds will be liquidated to fund the loan in order
from the lowest risk Fund to the highest risk Fund. The determination of the
relative risk of each Fund shall be made by the Investment Committee, in its
sole discretion, from time to time.
If the Investment Committee determines that it is not feasible for the
Trustee to prudently liquidate the necessary amount invested in any Fund in
accordance with Members' loan requests, the Investment Committee will so advise
the Administrative Committee. The Administrative Committee will direct that such
steps be taken as it considers necessary or desirable for the protection of
Members' Accounts, including the reordering of liquidation priorities or a pro
rata reduction in the amount of each Member's loan. The promissory note executed
by the Member will be reflected in reporting the balance of the Member's Account
or Accounts that funded the loan. Principal and interest payments will be
credited to the Member's Account or Accounts in proportion to the extent that
such Account or Accounts funded the loan. Such principal and interest payments
shall be invested in Funds in proportion to the extent that the funds loaned to
the Member were invested in such Funds at the time such loan was made to the
Member.
10.4 Default. If the Administrative Committee determines that a
-------
Member's loan obligation is in default, it will take such actions as it deems
necessary or appropriate to cause the Plan to realize on its security for the
loan. Those actions may include, without limitation, a demand for payment in
full, and a distribution of the Member's promissory note to the Member, which
will be deemed an involuntary withdrawal from the Member's Accounts in an amount
equal to the principal balance of the loan, whether or not the withdrawal would
otherwise be permitted on a voluntary basis. No distribution of a Member's
promissory note and involuntary withdrawal will occur with respect to a loan
from the Member's Pre-Tax Contributions Account or Nonelective Account before
the earliest of the events specified in Section 18.6. Any loss caused by the
nonpayment or other default on a Member's loan obligation will be borne solely
by the Member's Accounts. A Member who is temporarily absent from work will not
be considered to be in default for the period which is the lesser of (i) 365
days from the date the Member begins the temporary leave of absence on (ii) the
date the Member is no longer considered to be temporarily absent from work.
44
<PAGE>
SECTION 11 PLAN BENEFITS.
- ---------- -------------
11.1 Vesting in Accounts. A Member's Vested Interest in his or her
-------------------
Accounts shall be 100% at all times.
11.2 Amount of Plan Benefit. If a Member ceases to be an Employee for
----------------------
any reason or becomes Totally and Permanently Disabled while an Employee, the
Member (or, in the event of a Member's death, the Member's Beneficiary) will be
entitled to receive a Plan Benefit equal to the Member's Vested Interest in his
or her Accounts.
11.3 Valuation of Plan Benefit. The value of the Vested Interest in a
-------------------------
Member's Accounts to be distributed as a Plan Benefit will be determined as of
the Valuation Date which occurs on or most recently prior to the later of the
date of termination of the Member's employment or the date on which the
distribution is requested.
11.4 Rehire Before Five One-Year Breaks in Service. If a Member who
---------------------------------------------
suffered a Forfeiture of his or her Profit Sharing Regular Account before the
Effective Date for reasons other than Misconduct, or suffered Forfeiture of
amounts accumulated under the ESP or PSP, is rehired as an Employee before the
date on which the Member incurs a 60 consecutive month Break in Service, an
amount equal to the amount which became a Forfeiture will be restored to the
Member's Profit Sharing Account or Matching Account, as appropriate. In the case
of a Member who ceased to be an Employee and suffered a Forfeiture due to the
Employee's pregnancy, the birth of the Employee's child, the placement of a
child with the Employee in connection with the adoption of the child by the
Employee or the care of the Employee's child immediately following the child's
birth or adoption, "84" will be substituted for "60" in the preceding sentence.
The first source for amounts restored under this Section 0 will be recent
Forfeitures of other Members which have not yet been reallocated under Section 0
or Section 0. To the extent such Forfeitures are insufficient, the Participating
Company that employed the Member will make a special contribution in the amount
required.
11.5 Form of Payment. Unless a Member (or Beneficiary) elects
---------------
otherwise, the Member's Plan Benefit will be paid in the form of a lump sum in
cash. If the value of the Member's Plan Benefit exceeds $3,500, the Member (or
Beneficiary) may elect to have all or a portion of such Plan Benefit paid in one
of the following forms by filing the prescribed form with the Administrative
Committee:
(a) Installments. The Member (or Beneficiary) may elect to have
------------
the Member's Plan Benefit paid in the form of monthly or annual installments, as
determined under Section 0(i) or Section 0 below:
(i) Monthly Installments. The Member's Plan Benefit will be
--------------------
paid in monthly installments over a period not exceeding the reasonable
life expectancy of the Member (or Beneficiary), as determined under the
mortality table specified in Section 25 of the Revised Home Office
Pension Plan of Levi Strauss Associates Inc. The amount of each monthly
installment will be determined by dividing the value of the portion of
the
45
<PAGE>
Member's Plan Benefit remaining in the Trust Fund by the number of
installments elected less the number of installments already paid.
(ii) Annual or Monthly Installments. The Member's Plan Benefit
------------------------------
will be paid in annual installments over the life expectancy of the
Member (or Beneficiary) or the joint life expectancy of the Member and
the Member's Beneficiary, where the amount of each annual installment
is determined by dividing the value of the Member's Plan Benefit
remaining in the Trust Fund by the applicable life expectancy.
Alternatively, such payment may be made in monthly installments not
exceeding the life expectancy of the Member (or Beneficiary) or the
joint life expectancy of the Member and the Member's Beneficiary at the
request of the Member (or Beneficiary). The applicable life expectancy
for purposes of this Section 0 will be determined annually in a manner
consistent with section 401(a)(9)(D) of the Code.
(b) Annuity Contract. The Member (or Beneficiary) may elect to have
----------------
the Member's Plan Benefit paid in the form of a single premium annuity contract
purchased from an insurer. The normal form of annuity contract for a single
Member will be a life annuity contract which will provide the Member with a
monthly income for his or her life. The normal form of annuity contract for a
married Member will be a joint and survivor annuity contract which will provide
the Member with a monthly income for his or her life, and upon his or her death,
a monthly income to his or her spouse, in an amount not less than 50% nor more
than 100% of the amount that was payable to the Member. If the Member dies
before the Annuity Starting Date, his or her spouse will be entitled to a
survivor's annuity contract which will provide the spouse with a monthly income
for his or her life equal to 50% of the amount that would have been paid to the
Member if his or her annuity payments had begun on the date of the Member's
death.
If the Member elects that only a portion of his Plan Benefit be paid in
the form of installments or an annuity, then the remainder of such benefit will
be paid in a lump sum.
A married Member may elect another form of annuity or may designate
another joint annuitant with his or her spouse's consent. The spouse's consent
must:
(i) Be in writing;
(ii) Acknowledge the effect of the alternate form of annuity
or specifically identify the alternate joint annuitant;
(iii) Be witnessed by a notary public; and
(iv) Be given within 90 days before the Annuity Starting Date.
The spouse's consent to receive an alternate form of annuity or the designation
of a Beneficiary will not be binding on a subsequent spouse if the Member
remarries. The Member may revoke such an election at any time before the Annuity
Starting Date in which case the Member's benefit will be paid in the form of a
joint and survivor annuity to the Member and his or her spouse, unless the
46
<PAGE>
Member elects an alternate form of benefit or Beneficiary designation with his
or her spouse's consent. If benefits are payable to a joint annuitant other than
the Member's spouse, the present value of the benefits payable to the joint
annuitant will not exceed 50% of the present value of the benefits payable to
the Member (determined as of the Annuity Starting Date).
The Administrative Committee will provide to each Member who elects to
receive an annuity a written explanation in nontechnical language containing the
following information:
(i) A description of the terms and conditions of the joint
and survivor annuity and the single life annuity;
(ii) A statement that the Member may elect during the
Election Period described below to waive the joint and survivor annuity
or life annuity by electing any optional form of benefit provided under
the Plan;
(iii) A statement that the Member may revoke the
waiver of the joint and survivor annuity or life annuity during the
Election Period and the effect of such revocation;
(iv) Notice of the requirement that the Member's spouse must
consent to the waiver of the joint and survivor annuity and election of
any optional form of benefit;
(v) A general explanation of the financial effect of
election of each of the optional forms of benefit provided under the
Plan; and
(vi) A statement that the Member may request an explanation
of the specific financial effect, in terms of monthly payments, on the
Member's Plan Benefit of making an election.
The Election Period will begin 90 days before the Annuity Starting Date
and end on the Annuity Starting Date, unless the Member requests additional
information from the Administrative Committee, in which case it will end no
later than 90 days after the Member receives such additional information. During
the Election Period any election not to take the joint and survivor annuity or
life annuity will be revocable. Upon the expiration of the Election Period, any
election made will be irrevocable and the Member will not be required nor
eligible to make an election if no election had been made.
(c) Direct Transfer. Effective January 1, 1993, a Member (or
---------------
eligible Beneficiary) may elect to have the Member's Plan Benefit paid by a
direct transfer to a plan qualified under section 401(a) of the Code which
accepts direct transfer contributions, an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code (other than an endowment contract), or
an annuity plan described in section 403(a) of the Code. The Member (or
Beneficiary) may elect to have his or her Plan Benefit paid in the form of a
direct transfer at any time after the Administrative Committee provides the
Member with notice of the direct transfer option as required by section 402(f)
of the Code (the "Section 402(f) Notice").
47
<PAGE>
11.6 Time of Payment. A Member's Plan Benefit will be paid in full or
---------------
will begin to be paid on the Member's Required Beginning Date. However, subject
to the rules stated in paragraphs (a), (b), and (c) below, a Member may elect to
receive his or her Plan Benefit earlier, on or as soon as reasonably practicable
after the Member ceases to be an Employee.
The following rules will govern benefit payments from the Plan.
(a) Mandatory Cashout of Benefits Less than $3,500. Except as
----------------------------------------------
provided in Section 0, a Member's Plan Benefit will be paid in a lump sum cash
payment as soon as reasonably practicable after the Member ceases to be an
Employee if the value of his or her Plan Benefit does not exceed $3,500.
Alternatively, effective January 1, 1993, a Member may elect to have his or her
Plan Benefit paid by a direct transfer to a plan qualified under section 401(a)
of the Code which accepts direct transfer contributions, an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code (other than an
endowment contract), or an annuity plan described in section 403(a) of the Code.
The Member may elect to have his or her Plan Benefit paid in the form of a
direct transfer at any time after the Administrative Committee provides the
Member with notice of the direct transfer option as required by section 402(f)
of the Code (the "Section 402(f) Notice").
(b) Insufficient Cash in the Stock Fund. If the Administrative
-----------------------------------
Committee determines that the cash available in the Stock Fund is insufficient
for the payment of a Member's Plan Benefit, the payment will be delayed until
the Administrative Committee determines that sufficient cash is available.
Except as provided in Section 0 (regarding Code section 401(a)(9) compliance)
and in Section 0 (regarding limitations on the time of distribution), no benefit
payment delayed under the Plan will be made later than:
-----
(i) 1 year after the last day of the Plan Year in which the
Member ceases to be an Employee by reason of reaching Normal Retirement
Age, Total and Permanent Disability or death;
(ii) 5 years after the last day of the Plan Year in which
the Member ceases to be an Employee for any other reason; or
(iii) The Member's Required Beginning Date.
If a payment with respect to an Account invested in the Stock Fund has
been delayed to the Member's Required Beginning Date and the Administrative
Committee determines that the cash in the Stock Fund is insufficient to make
such payment, LSAI Stock will be paid to the Member or Beneficiary unless the
Company redeems sufficient shares of LSAI Stock at Fair Market Value to make
such payment in cash.
(c) Section 401(a)(9) Compliance. All benefit payments under the
----------------------------
Plan will be made in accordance with the minimum distribution and incidental
benefit requirements of section 401(a)(9) of the Code, which require generally
that certain minimum amounts be paid to the
48
<PAGE>
Member each calendar year, beginning with the calendar year in which the
Member's Required Beginning Date occurs, in order to assure that certain minimum
amounts be paid to the Member and that only "incidental" benefits be provided to
the Member's Beneficiaries. Furthermore, any payment option required by section
401(a)(9) of the Code will override and supersede any inconsistent payment
provision provided for in the Plan.
11.7 Death Benefit. If a Member dies before the payment of his or her
-------------
Plan Benefit has begun, then the Member's Beneficiary will be entitled to
receive the Member's Plan Benefit as soon as reasonably practicable after the
Beneficiary files a claim with the Administrative Committee on the prescribed
form. If the Beneficiary fails to file the prescribed claim form, the Member's
Plan Benefit will be paid in full to the Beneficiary no later than the last day
of the calendar year which is 5 years after the Member's death. If the Member
dies after installment payments have begun under Section 0, the remainder of the
Member's Plan Benefit will be paid to the Member's Beneficiary in a single lump
sum as soon as reasonably practicable after the Member's death.
11.8 Limitation on Time of Payment. Unless a Member elects otherwise,
-----------------------------
payment of his or her Plan Benefit will occur or begin not later than 60 days
after the latest of the following:
------
(a) The last day of the Plan Year in which the Member reaches
Normal Retirement Age;
(b) The last day of the Plan Year in which the Member ceases to be
an Employee;
(c) The earliest date on which the Administrative Committee can
reasonably ascertain the amount of the Member's Plan Benefit; or
(d) The earliest date on which the Administrative Committee can
reasonably locate the Member (or his or her Beneficiary).
In no event, however, will the payment of a Member's Plan Benefit begin later
than the Member's Required Beginning Date.
11.9 Undeliverable Checks. In the event that a Benefit cannot be
--------------------
delivered, the Account of the Member (or Beneficiary, as applicable) shall be
recredited with the amount of the Benefit which cannot be delivered, but such
Account shall be allocated to the money market fund referenced in Appendix C, or
in such fund referenced in Appendix C as the Administrative Committee, in its
sole discretion, determines is most similar to a money market fund with respect
to its risk characteristics.
49
<PAGE>
SECTION 12 ALLOCATION LIMITATIONS.
- ---------- ----------------------
12.1 Limitation on Annual Additions. The Annual Additions allocated to
------------------------------
a Member for any Plan Year will not exceed the lesser of the following:
------
(a) $30,000 (or, if greater, 1/4 of the dollar limitation for
defined benefit plans in effect under section 415(b)(1)(A) of the Code) as
adjusted to take into account changes in the cost of living;
(b) 25% of the Member's Total Compensation for such Plan Year.
If a Member's Annual Additions would exceed the above limitation, then
such Annual Additions will be reduced by reducing the components of such
additions, as necessary, in the order in which they are listed in Section 0.
The Plan Year will be the "limitation year" (as defined under section
415 of the Code) unless the Board of Directors designates another 12 consecutive
month period as the limitation year under a written resolution adopted by the
Board of Directors.
12.2 Combined Limitation on Benefits and Contributions. If a Member
-------------------------------------------------
also participates in one or more qualified defined benefit plans (as defined in
section 414(j) of the Code) maintained by the Company or any Affiliated Company,
the Member's benefits under any of the qualified defined benefit plans will be
reduced to the extent necessary to ensure that the sum of the "Defined Benefit
Fraction" (as defined in section 415(e)(2) of the Code) for the Plan Year plus
the "Defined Contribution Fraction" (as defined in section 415(e)(3) of the
Code) for the Plan Year does not exceed 1.0.
12.3 Disposition of Excess Annual Additions. Any Annual Additions
--------------------------------------
under this Plan that cannot be allocated to a Member because of the limitation
in Section 0 will be processed as follows:
(a) Any Profit Sharing Contribution and Forfeitures attributable
to Profit Sharing Accounts that cannot be allocated to the Member will be
deducted from the amount of the Profit Sharing Contribution which otherwise
would be made under Section 0, but such reduction will not affect the amounts
allocable under Section 0 to Members whose Profit Sharing Contribution component
of Annual Additions is not reduced.
(b) Any Matching Contribution and Forfeitures attributable to
Matching Accounts that cannot be allocated to the Member will be deducted from
the amount of the Matching Contribution which otherwise would be made under
Section 0, but such reduction will not affect the amounts allocable under
Section 0 to Members whose Matching Contribution component of Annual Additions
is not reduced.
(c) Any Nonelective Contribution that cannot be allocated to
the Member will be deducted from the amount of any Nonelective Contribution
which otherwise would be made
50
<PAGE>
under Section 0, but such reduction will not affect the amounts allocable under
Section 0 to Members whose Nonelective Contribution portion of Annual Additions
is not reduced.
(d) Any Post-Tax Contributions made by the Member (increased by
any income or reduced by any losses allocable to such Contributions) will be
returned to the Member in cash.
(e) Any Pre-Tax Contributions will be credited to a suspense
account on behalf of the Member. All amounts credited to such account will be
treated as Pre-Tax Contributions for successive Plan Years and will be allocated
annually to the Member under Section 0 (to the extent such allocation is not
prohibited by Section 0) until exhausted. No gains or losses will be credited to
the suspense account and no additional Pre-Tax Contributions, or any Matching
Contribution, Nonelective Contribution or Profit Sharing Contribution will be
made by or on behalf of the Member so long as any amount remains in the suspense
account.
51
<PAGE>
SECTION 13 FUNDING POLICY AND METHOD.
- ---------- -------------------------
13.1 Contributions. The Administrative Committee will make arrangements
-------------
for the collection of Member Contributions as provided in Section 0. The Company
will make Matching Contributions, Nonelective Contributions and Profit Sharing
Contributions to the Plan as provided in Sections 0 and 0.
13.2 Trust Fund. All monies, securities or other property received as
----------
contributions under the Plan will be delivered to the Trustee under the Trust
Fund, to be managed, invested, reinvested and distributed in accordance with the
Plan, the Trust Agreement, and any agreement with an insurance company or other
financial institution constituting a part of the Plan and Trust Agreement.
13.3 Expenses of the Plan. The expenses of administering the Plan will
--------------------
include but not be limited to:
(a) The fees and expenses of any employee and of the Trustee for
the performance of their duties under the Trust Agreement;
(b) The expenses incurred by the members of the Administrative
Committee and of the Investment Committee in the performance of their duties
under the Plan (including reasonable compensation for any legal counsel,
certified public accountants and actuaries and any outside agents and cost of
services provided for the Plan); and
(c) All other proper charges and disbursements of the Trustee or
the members of the Administrative Committee and of the Investment Committee
(including settlements of claims or legal actions approved by counsel to the
Plan).
The expenses of administering the Plan may be paid out of the Trust
Fund if the Participating Companies do not pay such expenses directly in such
proportions as determined by the Administrative Committee. An election by the
Participating Companies to pay all or a part of the above expenses directly will
not bind such companies as to their rights to elect, with respect to the same or
other expenses, at any other time to have such expenses paid from the Trust Fund
or to have the Trustee reimburse the Participating Companies for expenditures
already made. In estimating costs under the Plan, administrative costs may be
anticipated.
13.4 Cash Requirements. From time to time the Administrative Committee
-----------------
will estimate the Plan Benefits, withdrawals and administrative expenses to be
paid out of the Trust Fund during the period for which the estimate is made and
will also estimate the contributions to be made to the Plan during that period.
The Administrative Committee will inform the Trustee and each Investment Manager
of the estimated cash needs of, and contributions to, the Plan during the
periods for which the estimates are made. The estimates will be made on an
annual, quarterly, monthly or other basis, as the Administrative Committee may
determine.
13.5 Independent Accountant. The Administrative Committee will engage
----------------------
an
52
<PAGE>
independent qualified public accountant to conduct such examinations and to
express such opinions as may be required by section 103(a)(3) of the Act. The
Administrative Committee may remove and discharge the person so engaged, in
which event it will engage a successor independent qualified public accountant
to perform such examinations and to express such opinions.
13.6 Loans from Parties-In-Interest. The Investment Committee, in its
------------------------------
sole discretion, may borrow money or receive credit from a party-in-interest
(within the meaning of Section 3(14) of ERISA), providing such loan or extension
of credit satisfies the applicable conditions of Department of Labor Prohibited
Transactions Class Exemption No. 80-26, or such successor exemption which may
from time to time be applicable, and otherwise satisfies the prohibited
transactions provisions of ERISA and the Code. The proceeds of such a loan shall
be allocated to such investment fund or funds as the Investment Committee deems
appropriate. In connection with such a loan or extension of credit, the
Investment Committee or its designee may execute such promissory notes or loan
or other documents as it deems appropriate.
53
<PAGE>
SECTION 14 BENEFICIARIES.
- ---------- -------------
If no Beneficiary designation is in effect under Section 0 at the time
of a Member's death, or if no designated Beneficiary survives the Member, the
payment of the Member's Plan Benefit, if any, will be made to the following
persons in the order listed:
(a) To the Member's Surviving Spouse, if any;
(b) If the Member has no Surviving Spouse, then to his or her
living children;
(c) If the Member has no living children, then to his or her
living parents;
(d) If the Member has no living parents, then to his or her
living brothers and sisters; or
(e) If the Member has no living brothers and sisters, then to
his or her estate.
The Administrative Committee will, in its sole and absolute discretion,
determine the right of such persons to receive the Member's Plan Benefit, if
any. If the Administrative Committee is in doubt as to the right of any person
to receive such benefit, the Administrative Committee may direct the Trustee to
retain such benefit, without liability for any interest, until the rights to
such benefit are determined, or, alternatively, may direct the Trustee to pay
such benefit into any court of appropriate jurisdiction and such payment will be
a complete discharge of the liability of the Plan and the Trust Fund.
54
<PAGE>
SECTION 15 ADMINISTRATION AND OPERATION OF THE PLAN.
- ---------- ----------------------------------------
15.1 Plan Administrator. The Administrative Committee is the "Plan
------------------
Administrator" of the Plan (as such term is defined in the Act) and the "Named
Fiduciary" as defined in section 402(a) of the Act with respect to the operation
and administration of the Plan. The Administrative Committee will make such
rules and regulations and take any other actions to administer the Plan as it
may deem appropriate. The Administrative Committee may adopt periods in which
advance notice required under the Plan must be given and will communicate such
periods to Employees. The Administrative Committee will have sole discretion to
interpret the terms of the Plan and to determine eligibility for benefits under
the objective criteria described in the Plan. The Administrative Committee's
rules, interpretations, computations and actions will be conclusive and binding
on all persons.
In administering the Plan, the Administrative Committee (a) will act in
a nondiscriminatory manner to the extent required by section 401(a) and related
sections of the Code, and (b) will at all times discharge its duties in
accordance with the standards described in section 404(a)(1) of the Act.
15.2 Control and Management of Plan Assets. The Investment Committee is
-------------------------------------
the "Named Fiduciary" as defined in section 402(a) of the Act with respect to
the management and control of the assets of the Plan, but only to the extent
that it will have the authority to:
(a) Appoint 1 or more trustees to hold the assets of the Plan
in trust and to enter into a trust agreement with each trustee it appoints;
(b) Appoint 1 or more Investment Managers for any assets of
the Plan and to enter into an investment management agreement with each
Investment Manager it appoints;
(c) Direct the investment of any Plan assets not assigned to
an Investment Manager or to the Trustee; and
(d) Perform such other functions as are specifically assigned
to the Investment Committee under the Plan.
15.3 Trustees and Investment Managers. Each trustee appointed under
--------------------------------
Section 0 will have the exclusive authority and discretion to manage and control
the Plan assets held in trust by it, except to the extent that:
(a) The Investment Committee directs how those assets will be
invested;
(b) The Investment Committee allocates the authority to manage
those assets to one or more Investment Managers; or
(c) The Plan prescribes how those assets will be invested.
55
<PAGE>
Each Investment Manager appointed under Section 13.2 will have the
exclusive authority to manage, including the power to acquire and dispose of,
the Plan assets assigned to it by the Investment Committee, except to the extent
that the Plan prescribes how those assets will be invested. The Trustee and each
Investment Manager will be solely responsible for diversifying the investment,
in accordance with section 404(a)(1)(C) of the Act, of the Plan assets assigned
to them by the Investment Committee, except to the extent that the Investment
Committee directs or the Plan prescribes how those assets will be invested.
15.4 Committee Membership. Both the Administrative Committee and the
--------------------
Investment Committee will consist of at least 3 members. Each member will be
appointed by, will remain in office at the will of, and may be removed, with or
without cause, by, the Board of Directors. Any member of either Committee may
resign at any time. The Board of Directors will designate the chairman of each
Committee.
To the maximum extent permitted by law, no member of either Committee
will be personally liable by reason of any contract or other instrument executed
by him or her or on his or her behalf in his or her capacity as a member of such
Committee nor for any mistake of judgment made in good faith. The Company will
indemnify and hold harmless, directly from its own assets (including the
proceeds of any insurance policy the premiums of which are paid from the
Company's own assets), each member of the Administrative Committee and
Investment Committee and each other officer, employee or director of the Company
to whom any duty or power relating to the administration or interpretation of
the Plan or to the management and control of the assets of the Plan may be
delegated or allocated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Company) arising out of any act or omission to act in connection with the
Plan, unless arising out of such person's own fraud or willful misconduct.
15.5 Reports to Board of Directors. Each Committee will report to the
-----------------------------
Board of Directors, or to its designee for this purpose, annually and at such
other times specified by the Board of Directors or such designee, concerning the
matters for which it is responsible under the Plan.
15.6 Employment of Advisers. The Administrative Committee and the
----------------------
Investment Committee may make use of employees of the Company or outside agents
as they require or may deem advisable for purposes of performing their
respective duties under the Plan. Either Committee may rely upon the written
opinion or advice of counsel provided by the Company, fairness opinions provided
by investment bankers and written opinions or advice by actuaries or accountants
engaged by the Administrative Committee. Either Committee may delegate to any
such agent or to any subcommittee or member of the Committee its authority to
perform any act under the Plan, including, without limitation, those matters
involving the exercise of discretion. Any such delegation of discretion will be
subject to revocation at any time at the discretion of the appropriate
Committee.
15.7 Limitations on Committee Actions. No member of either Committee
--------------------------------
will be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights
56
<PAGE>
or benefits under the Plan. The members of the Administrative Committee and of
the Investment Committee will not receive any special compensation for serving
in their capacities as members of such Committees but will be reimbursed for any
reasonable expenses incurred in performing their Committee duties. Except as
otherwise required by the Act, no bond or other security will be required of
either Committee or any Committee member in any jurisdiction. Any person may
serve on both Committees, and any member of either Committee, any subcommittee
or agent to whom either Committee delegates any authority, and any other person
or group of persons, may serve in more than one fiduciary capacity (including
service both as a trustee and an administrator) with respect to the Plan.
15.8 Committee Meetings. Each Committee will establish its own
------------------
procedures and the time and place for its meetings, and provide for the keeping
of minutes of all meetings. A majority of the members of a Committee will
constitute a quorum for the transaction of business at a meeting of the
Committee. Any action of a Committee may be taken upon the affirmative vote of a
majority of the members of the Committee at a meeting or, at the direction of
its Chairman, without a meeting by "mail," telegraph or telephone, provided that
all of the members of the Committee are informed by mail, telegraph or telephone
of their right to vote on the proposal and of the outcome of the vote. "Mail"
will include any written or electronic interoffice communication.
57
<PAGE>
SECTION 16 CLAIMS AND REVIEW PROCEDURES.
- ---------- ----------------------------
16.1 Applications for Benefits. Any application for a Plan Benefit must
-------------------------
be submitted to the Administrative Committee at the Company's principal office.
Such application must be in writing on the prescribed form and must be signed by
the applicant.
16.2 Denial of Applications. In the event that any application for a
----------------------
Plan Benefit is denied in whole or in part, the Administrative Committee will
notify the applicant in writing of the right to a review of the denial. The
written notice will state, in a manner reasonably calculated to be understood by
the applicant:
(a) The specific reasons for the denial;
(b) The specific references to the Plan provisions on which the
denial was based;
(c) A description of any information or material necessary to
perfect the application;
(d) An explanation of why such material is necessary; and
(e) An explanation of the Plan's review procedure.
The written notice will be given to the applicant within 90 days after the
Administrative Committee receives the application, unless special circumstances
require an extension of time for processing the application. In no event will
the extension exceed a period of 90 days from the end of the initial 90-day
period. If an extension is required, written notice of the need for the
extension will be given to the applicant before the end of the initial 90-day
period. The notice will indicate the special circumstances requiring an
extension of time and the date by which the Administrative Committee expects to
give a decision. If written notice is not given to the applicant within the
initial 90-day period, then the application will be deemed to have been denied
(for purposes of Section 0) upon the expiration of such period.
16.3 Requests for Review. Any person whose application for a Plan
-------------------
Benefit is denied in whole or in part (or such person's duly authorized
representative) may appeal the denial by submitting to the Administrative
Committee a request for a review of such application within 60 days after
receiving written notice of the denial. The Administrative Committee will give
the applicant or such representative an opportunity to review pertinent
documents (except legally privileged materials) in preparing such request for
review and to submit issues and comments in writing. The request for review must
be in writing and must be addressed to the Company's principal office. The
request for review must state all of the grounds on which it is based, all facts
in support of the request and any other matters which the applicant deems
pertinent. The Administrative Committee may require the applicant to submit such
additional facts, documents or other material as it may deem necessary or
appropriate in making its review.
58
<PAGE>
16.4 Decisions on Review. The Administrative Committee will act upon
-------------------
each request for review within 60 days after it receives the request, unless
special circumstances require an extension of time for processing, but in no
event will the decision on review be given more than 120 days after the
Administrative Committee receives the request for review. If an extension is
required, written notice of the need for the extension will be given to the
applicant before the end of the initial 60-day period. The Administrative
Committee will give prompt, written notice of its decision to the applicant. If
the Administrative Committee confirms the denial of the application for benefits
in whole or in part, the notice will state, in a manner calculated to be
understood by the applicant, the specific reasons for the denial and specific
references to the Plan provisions on which the decision is based. To the extent
that the Administrative Committee overrules the denial of the application for a
Plan Benefit, such benefit will be paid to the applicant.
16.5 Exhaustion of Administrative Remedies. No legal or equitable
-------------------------------------
action for a Plan Benefit will be brought unless and until the claimant has:
(a) Submitted a written application for a Plan Benefit in
accordance with Section 0;
(b) Been notified that the application is denied;
(c) Filed a written request for a review of the application in
accordance with Section 0; and
(d) Been notified in writing that the Administrative Committee
has affirmed the denial of the application.
A Member may bring an action without completing the above steps after the
Administrative Committee has failed to act on the claim within the time
prescribed in Section 0 and Section 0.
59
<PAGE>
SECTION 17 TERMINATION OF EMPLOYER PARTICIPATION.
- ----------
17.1 Termination by Participating Company. Any Participating Company
------------------------------------
may terminate its participation in the Plan by giving the Board of Directors
prior written notice specifying a termination date which will be the last day of
a month at least 60 days after the date such notice is received by the Board of
Directors. If the specified termination date is not at least 60 days after the
date the notice of termination is received by the Board of Directors, the
specified termination date will automatically be changed to the last day of the
first month which is at least 60 days after the date the notice is received. The
Board of Directors may waive such 60 day notice requirement and terminate the
Participating Company's participation in the Plan as of any earlier date. The
Board of Directors may also terminate any Participating Company's participation
in the Plan, as of any termination date specified by the Board of Directors, for
the failure of the Participating Company to make proper contributions, to comply
with any other provision of the Plan, or for any other reason the Board of
Directors deems appropriate. In any event, the Administrative Committee will
promptly notify the IRS and other appropriate governmental authorities under
Sections 0 and 0 of the Plan.
17.2 Effect of Termination. Upon termination of the Plan as to any
---------------------
Participating Company, the interest in the Accounts of any Members who were or
are currently employed by such Participating Company will become fully vested
and nonforfeitable and no amount will subsequently be payable under the Plan to
or with respect to such Members except as provided in this Section 0. Subject to
any conditions which the IRS or any other governmental authority may impose, the
Administrative Committee will direct the Trustee to segregate that portion of
the Trust Fund attributable to the Members' Accounts of that Participating
Company. To the maximum extent permitted by the Code and the Act, any rights of
Members or former Members of that Participating Company and their Beneficiaries
and other eligible survivors will be unaffected by a termination of the Plan as
to such Participating Company.
17.3 IRS Termination Procedure. If the Plan is terminated with respect
-------------------------
to a Participating Company, the Administrative Committee or the appropriate
Company office must submit the Plan to the IRS for a determination that the
termination of the Plan with respect to the Participating Company will not
adversely affect the qualified status of the Plan and the Trust Fund under
sections 401(a) and 501(a) of the Code. No distributions of assets will be made
in connection with the termination of the Plan until the IRS has issued a
determination as to the effect of such termination. The Participating Company
may, by written notice delivered to the Administrative Committee and the
Trustee, waive its right to apply for such a determination. Any such waiver
request must be approved by the Board of Directors.
17.4 Termination of the Plan. If the Plan is terminated with respect to
-----------------------
all Participating Companies, the provisions of this Section 17 will be applied
to each of the Participating Companies individually or collectively as
determined by the Administrative Committee in its sole and absolute discretion.
60
<PAGE>
SECTION 18 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
- ---------- ------------------------------------------------------
18.1 Right to Amend. The Board of Directors have the right at any time,
--------------
to modify, alter or amend this Plan, in whole or in part, prospectively or
retroactively. No amendment will reduce any Member's Plan Benefit, calculated as
of the date on which the amendment is adopted, except to the extent as may be
appropriate or necessary to enable the Plan and Trust Fund to continue to
satisfy the requirements of section 401(a) and section 501(a) of the Code or
other applicable law. Any such amendment will be evidenced by an instrument in
writing duly executed, acknowledged and delivered to the Administrative
Committee and the Trustee. If the Plan is amended by the Board of Directors
after it is adopted by an Affiliated Company, unless otherwise expressly
provided, it will be treated as so amended by the Affiliated Company without the
necessity of any action on the part of the Affiliated Company.
18.2 Plan Merger or Consolidation. The Board of Directors reserves the
----------------------------
right to merge or consolidate this Plan with any other plan or to direct the
Trustee to transfer the assets held in the Trust Fund and/or the liabilities of
this Plan to any other plan or to accept a transfer of assets and liabilities
from any other plan. In the event of the merger or consolidation of this Plan
and the Trust Fund with any other plan, or a transfer of assets or liabilities
to or from the Trust Fund to or from any other such plan, then each Member will
be entitled to a benefit immediately after the merger, consolidation or transfer
(determined as if the Plan was then terminated) that is equal to or greater than
the benefit he or she would have been entitled to receive immediately before
such merger, consolidation or transfer (if this Plan had then terminated).
18.3 Termination of the Plan. The Board of Directors hopes and expects
-----------------------
to continue the Plan indefinitely. Nevertheless, to the full extent permitted by
law, the Board of Directors reserves the right to terminate the Plan or to
completely discontinue contributions under the Plan. As required by law, before
the termination or discontinuance of contributions, the Board of Directors, or
its designee, will notify the Administrative Committee, the Trustee, or any
other fiduciary of its intent to terminate the Plan or to discontinue
contributions under the Plan. Upon such termination or discontinuance of
contributions, the interest of each Member in his or her Accounts will become
fully vested and nonforfeitable.
18.4 Partial Termination of the Plan. Upon a curtailment of the Plan or
-------------------------------
a discontinuance of the Plan with respect to a group or class of Members that
constitutes a "Partial Termination" under section 411(d)(3) of the Code, the
interest of each Member in his or her Accounts will become fully vested and
nonforfeitable. If a Partial Termination occurs, the Accounts of the Members
affected by the Partial Termination will be segregated by the Trustee and used
to pay benefits under the Plan to such Members in accordance with Section 0 as
though the Plan had been completely terminated. Alternatively, the
Administrative Committee may postpone benefit payments to those Members until
their subsequent termination of Service with the Company in accordance with
other provisions of the Plan.
18.5 Manner of Distribution. Upon termination of the Plan, the
----------------------
Administrative Committee may, in its sole and absolute discretion, direct the
Trustee to convert the Trust Fund into
61
<PAGE>
cash and liquidate it by making benefit payments to Members in accordance with
the modes of payment provided for in Section 0. Alternatively, with the consent
of the Board of Directors, or its designee, the Administrative Committee may
direct the Trustee to hold the Members' Plan Benefit in the Trust Fund until
such Members or their Beneficiaries become eligible to receive benefit payments
under the terms and provisions of this Plan.
18.6 Restrictions on Liquidation of Trust Upon Termination. In no
-----------------------------------------------------
event, however, will a Member's Nonelective Account and Pre-Tax Account be
distributed before the first to occur of the following events:
-----
(a) The Member's retirement;
(b) The Member's death;
(c) The Member's disability (as determined by the
Administrative Committee);
(d) The Member's termination of employment;
(e) The Member's attainment of age 59-1/2;
(f) The termination of the Plan, provided that neither the Company
nor an Affiliated Company maintains a successor plan;
(g) The disposition, to a corporation that is not an Affiliated
Company, of substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used by the Company in the trade or business in which the
Member is employed, provided that the Member continues employment with the
transferee corporation and the Company continues to maintain the Plan; or
(h) The disposition, to a corporation that is not an Affiliated
Company, of the Company's interest in a subsidiary in which the Member is
employed, provided that the Member continues employment with the subsidiary and
the Company continues to maintain the Plan.
A distribution may be made under (f), (g), or (h) above only if it
constitutes a total distribution of the entire balance of the Member's Accounts.
62
<PAGE>
SECTION 19 INALIENABILITY OF BENEFITS.
- ---------- --------------------------
19.1 No Assignment Permitted. Except as may otherwise be required by
-----------------------
law, no amount payable at any time under the Plan and the Trust Agreement will
be used or diverted for purposes other than for the exclusive benefit of Members
and their Beneficiaries. No amount payable at any time under the Plan and the
Trust Agreement will be subject in any manner to alienation by anticipation,
sale, transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind nor in any manner be subject to the debts or liabilities
of any Member, Beneficiary or Alternate Payee. Any attempt to so alienate or
subject any such amount will be void. If any Member, Beneficiary or Alternate
Payee attempts to, or alienates, sells, transfers, assigns, pledges, attaches or
otherwise encumbers any amount payable under the Plan and Trust Agreement, or
any portion of such amount, or if by reason of his or her bankruptcy or any
other event, such amount would be made subject to his or her debts or
liabilities, or would otherwise not be enjoyed by him or her, then the
Administrative Committee, if it so elects, may direct that such amount be
withheld and that such amount or any portion of such amount be paid or applied
to or for the benefit of such person, his or her spouse, children or other
dependents or any of them, in such manner and proportion as the Administrative
Committee may deem proper.
The following arrangements are not prohibited under the Plan:
(a) Arrangements for the withholding of tax from benefit
distributions;
(b) Arrangements for the recovery of benefit overpayments; or
(c) Arrangements for direct deposit of benefit payments to an
account in a bank, savings and loan association or credit union (provided that
such arrangement is not part of an arrangement constituting an assignment or
alienation).
In addition, the return of Company Contributions under Section 0 and
the creation, assignment or recognition of a right to all or a portion of a
Member's Plan Benefit under a Qualified Domestic Relations Order under Section 0
will not violate this Section 0.
19.2 Return of Contributions. All Pre-Tax Contributions, Nonelective
-----------------------
Contributions, Matching Contributions and Profit Sharing Contributions are
expressly conditioned upon the deductibility of such contributions under section
404 of the Code. If the deduction of any Pre-Tax Contributions, Nonelective
Contribution, Matching Contribution or Profit Sharing Contribution is
disallowed, then the amount for which a deduction is disallowed will be returned
to the appropriate Participating Company within 12 months after the date of the
disallowance. In addition, if any Pre-Tax Contributions, Nonelective
Contribution, Matching Contribution or Profit Sharing Contribution is made as a
result of a mistake of fact, such contribution may be repaid to the appropriate
Participating Company within 12 months after it is made. Any Pre-Tax
Contributions, Nonelective Contribution, Matching Contribution or Profit Sharing
Contribution so returned will be reduced to reflect losses but will not be
increased to reflect gains or income. Any Pre-Tax Contributions so returned will
be paid to the Member from whom it was withheld.
63
<PAGE>
19.3 Qualified Domestic Relations Orders. The Administrative Committee
-----------------------------------
will honor the terms of a Qualified Domestic Relations Order that satisfies the
following requirements.
(a) Requirements. In accordance with section 414(p) of the
------------
Code, a Domestic Relations Order will not be treated as a Qualified Domestic
Relations Order unless it satisfies all of the following conditions:
---
(i) The Domestic Relations Order clearly specifies the name
and last known mailing address (if any) of the Member and the name and
last known mailing address of each Alternate Payee covered by the
order, the amount or percentage of the Member's Plan Benefit to be paid
to each Alternate Payee or the manner in which such amount or
percentage is to be determined, and the number of payments or period to
which such order applies.
(ii) The Domestic Relations Order specifically indicates that
it applies to this Plan.
(iii) The Domestic Relations Order does not require this Plan
to provide any type or form of benefit, or any option, not otherwise
provided under the Plan, and it does not require the Plan to provide
increased benefits.
(iv) The Domestic Relations Order does not require the
payment of all or a portion of a Member's Plan Benefit to an Alternate
Payee which is required to be paid to another Alternate Payee under
another order previously determined to qualify as a Qualified Domestic
Relations Order.
(b) Early Commencement of Payments to Alternate Payees. A
--------------------------------------------------
Domestic Relations Order requiring payment to an Alternate Payee before a Member
has separated from employment may qualify as a Qualified Domestic Relations
Order as long as the order does not require payment before the Member's
"Earliest Retirement Age," which is the earliest date on which the Member could
elect to receive a Plan Benefit. If the order requires payments to begin after a
Member's Earliest Retirement Age before the Member's actual retirement, the
amount of the payments must be determined as if the Member had begun receiving
benefit payments on the date on which the payments are to begin under the order,
but taking into account only the value of the Member's Accounts at that time.
The Plan Benefit payable to an Alternate Payee will not be recalculated upon the
Member's actual retirement.
(c) Alternate Payment Forms. The Domestic Relations Order may
-----------------------
call for the payment of the Member's Plan Benefit to an Alternate Payee in any
form in which benefits may be paid under the Plan to the Member, other than in
the form of a qualified joint and survivor annuity, as defined in section 417(b)
of the Code, with respect to the Alternate Payee and his or her subsequent
spouse.
(d) Processing of Qualified Domestic Relations Orders. The
-------------------------------------------------
Administrative Committee will promptly notify the Member, and any Alternate
Payee (including any Alternate
64
<PAGE>
Payee who may be entitled to benefits under a previously received Qualified
Domestic Relations Order) of the receipt of any Domestic Relations Order which
could qualify as a Qualified Domestic Relations Order. At the same time, the
Administrative Committee will advise the Member and each Alternate Payee of the
Plan provisions relating to the determination of the qualified status of such
orders.
Within a reasonable period of time after receipt of a copy of the
Domestic Relations Order, the Administrative Committee will determine whether
the order is a Qualified Domestic Relations Order and notify the Member and each
Alternate Payee of its determination. The determination of the status of a
Domestic Relations Order as a Qualified Domestic Relations Order will be made in
accordance with such uniform and nondiscriminatory rules and procedures as may
be adopted by the Administrative Committee from time to time. If monthly
benefits are presently being paid with respect to a Member named in a Domestic
Relations Order which may qualify as a Qualified Domestic Relations Order, or if
the Member's Plan Benefit becomes payable after receipt of the order, the
Administrative Committee will notify the Trustee to segregate and hold the
amounts which would be payable to the Alternate Payee or payees designated in
the order if the order is ultimately determined to be a Qualified Domestic
Relations Order.
If the Administrative Committee determines that the Domestic Relations
Order is a Qualified Domestic Relations Order within 18 months of receipt of the
order, the Administrative Committee will instruct the Trustee to pay the
segregated amounts (plus any earnings on such amounts) to the Alternate Payee
specified in the Qualified Domestic Relations Order. Conversely, if within the
same 18 month period the Administrative Committee determines that the Domestic
Relations Order is not a Qualified Domestic Relations Order, or if the status of
the order as a Qualified Domestic Relations Order is not resolved, the
Administrative Committee will instruct the Trustee to pay the segregated amounts
(plus any earnings on such amounts) to the person or persons who would have been
entitled to such amounts if the order had not been entered. If the
Administrative Committee determines that a Domestic Relations Order is a
Qualified Domestic Relations Order after the close of the 18 month period
mentioned above, the determination will be applied prospectively only. The
determination of the Administrative Committee as to the status of a Domestic
Relations Order as a Qualified Domestic Relations Order will be binding and
conclusive on all interested parties, present and future, subject to the claims
review provisions of Section 0.
(e) Responsibility of Alternate Payees. Any person claiming to be
----------------------------------
an Alternate Payee under a Qualified Domestic Relations Order will be
responsible for supplying the Administrative Committee with a certified or
otherwise authenticated copy of the order and any other information or evidence
that the Administrative Committee deems necessary in order to substantiate the
person's claim or the status of the order as a Qualified Domestic Relations
Order.
65
<PAGE>
SECTION 20 TOP-HEAVY PROVISIONS.
- ---------- --------------------
20.1 Determination of Top-Heavy Status. If the Plan becomes "Top
---------------------------------
Heavy," the provisions of this Section 0 will become operative. The Plan will be
Top Heavy for a Plan Year if, on the last day of the prior Plan Year (the
"Determination Date"), the cumulative balances credited to the Accounts of all
Members who are "Key Employees" under the Plan exceed 60% of the cumulative
balances credited to the Accounts of all Members under the Plan. The Plan will
be "Super Top Heavy" if, on the Determination Date, the cumulative balances
credited to the Accounts of all Members who are "Key Employees" under the Plan
exceed 90% of the cumulative balances credited to the Accounts of all Members.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee, in its sole and absolute discretion,
but under the provisions of section 416 of the Code, determines that the Plan is
a constituent in an "Aggregation Group", this Plan will be considered Top Heavy
or Super Top Heavy only if the Aggregation Group is a "Top Heavy Group" or a
"Super Top Heavy Group."
An "Aggregation Group" includes:
(a) Each plan intended to qualify under section 401(a) of the Code
sponsored by the Company or an Affiliated Company in which 1 or more Key
Employees participate;
(b) Each other plan of the Company or an Affiliated Company that
is considered in conjunction with such plans in determining whether or not the
discrimination and coverage requirements of section 401(a)(4) and section 410 of
the Code are satisfied; and
(c) In the discretion of the Administrative Committee, any other
such plan of the Company or an Affiliated Company, which, when considered in
conjunction with the plans referred to above, satisfies the nondiscrimination
and coverage requirements of section 401(a)(4) and section 410 of the Code.
A "Top Heavy Group" is an Aggregation Group in which the sum
(determined as of the Determination Date) of the aggregate of the amounts
credited to the accounts of Key Employees under all "defined contribution plans"
(as defined in section 414(i) of the Code) included in such group plus the
present value of the cumulative accrued benefits for Key Employees under all
"defined benefit plans" (as defined in section 414(j) of the Code) included in
such group, exceed 60% of the total of such amounts for all employees and
beneficiaries covered by such plans. A "Super Top Heavy Group" is an Aggregation
Group for which the sum so determined for Key Employees exceeds 90% of the sum
so determined for all employees and beneficiaries. Such determination will be
made by the Administrative Committee in accordance with section 416 of the Code.
20.2 Minimum Allocations. For any Plan Year during which the Plan is a
-------------------
Top-Heavy Plan, the Matching Contributions, Nonelective Contributions, Profit
Sharing Contributions (other
66
<PAGE>
than the portion of the Profit Sharing Contributions and Forfeitures which could
have been received in cash in accordance with Section 6.2) and Forfeitures
allocated under this Plan and employer contributions and forfeitures allocated
under any other defined contribution plan of the Aggregation Group, on behalf of
any Member who is (a) employed on the last regularly scheduled working day of
the Plan Year, and (b) who is not a Key Employee will not be less than a
percentage of the Member's Total Compensation, equal to the lesser of:
------
(a) 3%; or
(b) The percentage equal to the largest percentage that any Key
Employee for that Plan Year receives of Pre-Tax Contributions, Matching
Contributions, Nonelective Contributions, Profit Sharing Contributions and
Forfeitures allocated on behalf of that Key Employee's Total Compensation for
that Plan Year, as limited by Section 0 below.
The minimum allocation will be determined without regard to any
contributions made or benefits available under the federal Social Security Act.
20.3 Minimum Vesting. If a Member (other than a Member who did not
---------------
complete any Period of Service after the Plan became a Top-Heavy Plan) ceases to
be an Employee while the Plan is a Top-Heavy Plan and after such Member has
completed 3 or more Years of Service, such Member's Vested Interest in his or
her Matching Account and Profit Sharing Regular Account will be 100% and will no
longer be subject to forfeiture for an act of Misconduct under 0. If a Member
ceases to be an Employee while the Plan is a Top-Heavy Plan and before the
Member has completed 3 Years of Service, the Member's Vested Interest in his or
her Matching Account and Profit Sharing Regular Account will be determined in
accordance with Section 0.
20.4 Effect of Change in Top-Heavy Status on Vesting. If the Plan at
-----------------------------------------------
any time is a Top-Heavy Plan and later ceases to be a Top-Heavy Plan, each
Member who is credited with 3 or more Years of Service as of the last day of the
last Plan Year in which the Plan is a Top-Heavy Plan will continue to have a
100% Vested Interest in his or her Matching Account and Profit Sharing Regular
Account. Each Member who is credited with fewer than 3 Years of Service as of
the last day of the last Plan Year in which the Plan is a Top-Heavy Plan will
have his or her Vested Interest in his or her Matching Account and Profit
Sharing Regular Account determined under Section 0 (unless and until the Plan
again becomes a Top-Heavy Plan).
20.5 Impact on Maximum Benefits. For any Plan Year in which the Plan is
--------------------------
a Top-Heavy Plan, the number "1.00" will be substituted for the number "1.25"
wherever it appears in section 415(e)(2) and section 415(e)(3) of the Code. Such
substitution will not have the effect of reducing any benefit accrued under a
defined benefit plan maintained by a Participating Company before the first day
of the Plan Year in which this provision becomes applicable.
67
<PAGE>
SECTION 21 GENERAL LIMITATIONS AND PROVISIONS.
- ---------- ----------------------------------
21.1 No Employment Rights. Nothing in the Plan will be deemed to give
--------------------
any employee the right to be retained in the employment of the Company or an
Affiliated Company or affect the right of the Company or an Affiliated Company
to terminate a person's employment with or without cause.
21.2 Payments from the Trust Fund. The Trust Fund will be the sole
----------------------------
source of benefits under the Plan and, except as otherwise required by the Act,
the Company, the Administrative Committee and the Investment Committee assume no
liability or responsibility for payment of such benefits. Each Member,
Beneficiary or other person who will claim the right to any payment under the
Plan will be entitled to look only to the Trust Fund for such payment and will
not have the right, claim or demand for such amount against the Company, the
Administrative Committee or the Investment Committee or any member of the
Committees, or any employee or member of the board of directors of the Company.
21.3 Payments to Minors or Incompetents. If the Administrative
----------------------------------
Committee finds that any person to whom any amount is payable under the Plan is
unable to care for his or her affairs because of illness or accident, or is a
minor, or has died, then any payment due him or her or his or her estate (unless
a prior claim therefore has been made by a duly appointed legal representative)
may, if the Administrative Committee so elects, be paid to his or her spouse, a
child, a relative, an institution maintaining or having custody of such person,
or any other person deemed by the Administrative Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment will be a complete discharge of the liability of the Plan and the Trust
Fund.
21.4 Lost Members or Other Persons. If the Administrative Committee is
-----------------------------
unable to locate a Member, Beneficiary or other person who is entitled to
receive a benefit under the Plan, the Administrative Committee may (but need
not) direct that such benefit be applied to reduce the Company Matching
Contribution and/or Profit Sharing Contribution to the Plan. If the person later
makes a claim for his or her benefit before the date final distributions are
made from the Trust Fund following the termination of the Plan, the Company that
employed the Member with respect to whom the benefit is payable, will reinstate
such benefit (without income, gains or other adjustment) by making a special
contribution to the Plan as soon as reasonably practicable after such claim is
made. However, if the benefit would have been lost by reason of escheat under
applicable state law, then the benefit will not be subject to reinstatement. If
the Plan is terminated and final distributions are made from the Trust Fund
before the applicable escheat period has expired, the Administrative Committee
may transfer the affected person's benefits to an individual retirement account
established for such person.
21.5 Personal Data to the Administrative Committee. Each Member must
---------------------------------------------
file with the Administrative Committee such pertinent information concerning
himself or herself, his or her Beneficiary or any other person as the
Administrative Committee may specify, and no member, Beneficiary or other person
will have any rights to any benefit under the Plan unless such information is
filed by or with respect to him or her. The Administrative Committee is entitled
to
68
<PAGE>
rely on personal data given to it by a Member.
21.6 Insurance Contracts. If the payment of any benefit under the Plan
-------------------
is provided for by a contract with an insurance company the payment of such
benefit will be subject to all the provisions of such contract.
21.7 Notice to the Administrative Committee. All elections,
--------------------------------------
designations, requests, notices, instructions and other communications from a
Participating Company, a Member, Beneficiary, or other person to the
Administrative Committee, required or permitted under the Plan, will be:
(a) In such form as is prescribed from time to time by the
Administrative Committee;
(b) Mailed by first-class mail or delivered to such location as
will be specified by the Administrative Committee, or provide by electronic
means, including telephone, as permitted by the Administrative Committee; and
(c) Deemed to have been given and delivered only upon actual
receipt by the Administrative Committee or its designee at the location.
21.8 Notices to Members and Beneficiaries. All notices, statements,
------------------------------------
reports and other communications from a Participating Company or the
Administrative Committee or Investment Committee to any employee, Member,
Beneficiary or other person (other than the Administrative Committee) required
or permitted under the Plan will be deemed to have been duly given when
delivered to, or when mailed by first-class mail, postage prepaid and addressed
to, the employee, Member, Beneficiary or other person at his or her address last
appearing on the records of the Administrative Committee.
21.9 Word Usage. Whenever used in the Plan, the masculine gender
----------
includes the feminine, and wherever the context of the Plan dictates, the plural
will be read as the singular and the singular as the plural. Uses of the term
"Sections" as a cross-reference will be to other Sections contained in the Plan
and not to another instrument, document or publication unless specifically
stated otherwise.
21.10 Headings. The titles and headings of Sections are included for
--------
convenience of reference only and are not to be considered in construing the
provisions of the Plan.
21.11 Governing Law. The Plan and all rights under the Plan will be
--------------
interpreted and construed in accordance with California law except to the extent
such law is preempted by the Act and the Code.
21.12 Heirs and Successors. All of the provisions of the Plan will be
--------------------
binding upon all persons who will be entitled to any benefits under the Plan,
their heirs and legal representatives.
69
<PAGE>
21.13 Withholding. Payment of benefits under this Plan will be subject
-----------
to applicable law governing the withholding of taxes from benefit payments, and
the Trustee and Administrative Committee will be authorized to withhold taxes
from the payment of any benefits under the Plan, in accordance with applicable
law.
IN WITNESS WHEREOF, LEVI STRAUSS ASSOCIATES INC. has caused this Plan
to be executed and its corporate seal to be hereunto affixed by its duly
authorized officers, as of this 21st day of November, 1995.
LEVI STRAUSS ASSOCIATES INC.
By: /s/
----------------------------------
Donna Goya
Its: Sr. Vice President
70
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27, 1989)
APPENDIX A
----------
PRIOR PLAN PROVISIONS
---------------------
This Appendix A states the provisions of the Plan in effect on or after the
Effective Date (November 27, 1989) which were amended before September 1, 1994.
The provisions of the Plan in effect as of September 1, 1994 are presented in
the main text of this amended and restated Plan.
1. Effective before November 21, 1990, Section 2.1 of the Plan, then
designated as Section 18.1, read as follows:
18.1 "Accounts" means, to the extent applicable to
--------
a Member, one or more of the following accounts:
Matching Account, Post-Tax Account, Pre-Tax Account,
Profit Sharing Account and Rollover Account.
2. Effective before November 21, 1990, Section 2.6 of the Plan, then
designated as Section 15.4, read as follows:
15.4 Annual Additions. For purposes of this
----------------
Section 15, a Member's "Annual Additions" for a Plan
Year will equal the sum of the following:
(a) The amount of employer contributions and
forfeitures allocated to the Member as of any date
within such Plan Year under any qualified defined
contribution plan maintained by the Affiliated Group,
including Profit Sharing Contributions, Matching
Contributions and Forfeitures under this Plan;
(b) The aggregate employee contributions
which the Member contributes during such Plan Year to
all qualified retirement plans maintained by the
Affiliated Group, including Post-Tax Contributions to
this Plan; and
(c) The amount of contributions made on
behalf of the Member for such Plan Year to any
qualified defined contribution plan maintained by the
Affiliated Group under a salary deferral election by
the Member under a qualified cash or deferred
arrangement, including Pre-Tax Contributions to this
Plan.
3. Effective August 13, 1990, the following clause was added to the end of the
fourth sentence
<PAGE>
of Section 2.8 of the Plan, then designated as Section 10.9:
"or the Administrative Committee is satisfied the spouse cannot be
located."
4. Before November 26, 1990, an account executive's Compensation under Section
2.14 of the Plan could not exceed the maximum for the Home Office Salary
Grade 6 salary range in effect at the end of such a Plan Year.
5. Effective before August 13, 1990, the last paragraph of 2.17 of the Plan,
then designated as Section 18.46, read as follows:
18.46 "Temporary Employee" means a person who:
-------------------
(a) Is hired to fill, for a period not to exceed six
calendar months, a position which arises from either an emergency
situation or from the temporary absence of an Eligible Employee;
(b) Is subject, as a condition of such employment, to
termination without prior notice at any time; and
(c) Does not complete a 365-day Period of Service.
6. Effective before November 21, 1990, Section 2.17 of the Plan, then
designated as Section 18.10, read as follows:
18.10 "Eligible Employee" means an Employee of a Participating
-----------------
Company who is paid from the home office of the Company. The Board of
Directors, in designating a Participating Company, may specify that
only certain named Employees or only certain classifications of
Employees of such Participating Company will be "Eligible Employees,"
in which event all other Employees of such Participating Company will
not be "Eligible Employees." In addition, the term "Eligible Employee"
will not include an Employee who is:
(a) Included in a unit of employees covered by a collective-
bargaining agreement that does not provide that such Employee will be
eligible to participate in the Plan;
(b) A stocktaker, service representative, retiree
coordinator or Temporary Employee;
(c) A nonresident alien who receives no remuneration from a
Participating Company that constitutes income from sources within the
United States (within the meaning of section 861(a)(3) of the code);
(d) Any alien who (i) receives remuneration from the
<PAGE>
Company which constitutes income from sources within the
United States (within the meaning of Section 861(a)(3) of
the Code) and (ii) has been transferred by the Company from
a job outside the United States to a job within the United
States, during any period in respect of which the alien is
benefiting (by reason of accruing a benefit or making or
having contributions made on such alien's behalf) under (A)
a retirement plan established or maintained outside of the
United States by a foreign subsidiary (including a domestic
subsidiary operating abroad) or foreign division of the
Company or (B) the Levi Strauss International Retirement
Plan for Third Country National Employees or any successor
or similar plan maintained by the Company or any member of
the Affiliated Group;
(e) A United States citizen locally hired by a
foreign subsidiary (including a domestic subsidiary
operating broad) or foreign division of a Participating
Company;
(f) Not paid on a salary or commission basis;
(g) Covered by an individual employment contract
that expressly provides that he or she will not be eligible
for membership in the Plan; or
(h) A "leased employee" (as defined in section
414(n) of the Code) who is providing services to a member of
the Affiliated Group.
The Board of Directors on a nondiscriminatory basis may
designate as an Eligible Employee any person described in
(c), (d), (e) or (f) above. Such designation must be made in
writing after receiving the advice of counsel.
A person's status as an Eligible Employee will be
determined by the Administrative Committee and such
determination will be conclusive and binding on all persons.
7. Effective on and after November 26, 1990, Section 2.17 of the Plan, then
designated as Section 18.10, was amended to exclude Highly Compensated
Employees as Eligible Employees for purposes of making Member Contributions
and for receiving an allocation of Matching Contributions, Nonelective
Contributions, Profit Sharing Contributions and Forfeitures under the Plan.
8. Effective before November 21, 1990, Section 2.34 of the Plan, then
designated as Section 18.23, read as follows:
18.23 "Matching Contributions" means the contribution
----------------------
made by the Participating Companies under Section 4.
9. Effective before November 26, 1990, Section 2.35 of the Plan, then
designated as Section
<PAGE>
18.24, read as follows:
18.24 "Member" means a person who participates in the Plan under
------
Section 2.
10. Effective before July 1, 1991, Section 2.37 of the Plan, then designated as
Section 18.12, read as follows:
18.12 "Entry Date" means December 1 and June 1 of each Plan Year.
----------
11. Section 2.40 and Section 2.41 of the Plan, then designated as Section 18.28
and Section 18.29, were added to the Plan, effective on and after November
21, 1990.
12. Section 3.5 of the Plan, then designated as Section 2.5, was added to the
Plan effective on and after November 26, 1990.
13. Effective before November 21, 1990, Section 5 of the Plan, then designated
as Section 4, read as follows:
SECTION 4. MATCHING CONTRIBUTIONS.
--------- ----------------------
4.1 Amount and Form. The Participating Companies will
---------------
make a Matching Contribution to the Plan for each Plan Year
in an amount equal to 50% of each Member's Member
Contributions for such Plan Year which are transferred to
Fund C under Section 6.2. The Board of Directors may
determine that no Matching Contribution will be made for a
particular Plan Year or portion of a Plan Year, or may
determine that a lesser Matching Contribution will be made,
in view of Company performance and economic and financial
conditions prevailing and anticipated at the time. The Board
of Directors also may determine in its sole discretion that
a greater Matching Contribution will be made for a
particular Plan Year or portion of a Plan Year. No Matching
Contribution will be made for a Member unless he or she (a)
is an Employee on the date as of which a Matching
Contribution is allocated or (b) ceased to be an Employee
during the Plan Year after attaining age 55 and completing
15 years of Service, after attaining age 65 or by reason of
death and his or her Account has not been distributed under
Section 10. Matching Contributions may be made in the form
of cash or in the form of shares of Stock, or a combination
of both.
4.2 Deposit With Trustee; Crediting Accounts. Matching
----------------------------------------
Contributions for any Plan Year will be paid to the Trustee
at the time when Member Contributions are transferred to
Fund C under Section 6.2 and will be allocated among Members
in proportion to their Member Contributions which are
transferred to Fund C. A Member's share of the Matching
Contributions will be allocated and credited to the Member's
Matching
<PAGE>
Account as of the earlier of the date the Matching
Contributions are made to the Plan or the end of the Plan
Year during which the Member made the Member Contributions
with respect to which such Matching Contributions are made.
Forfeitures arising under Section 10.4 with respect to any
Member's Matching Account during a Plan Year will be
allocated among other Members as additional Matching
Contributions for such Plan Year and credited to such
Members' Matching Accounts.
4.3 Curtailment or Distribution of Excess Aggregate
-----------------------------------------------
Contributions. If any Matching Contributions otherwise
-------------
allocable to a Member would constitute "excess aggregate
contributions" (as defined in section 401(m)(6)(B) of the
Code) with respect to a Plan Year, then such matching
contributions will be treated in accordance with paragraph
(a) or (b):
(a) Such Matching Contributions will not be made
to the Plan, if the Matching Contributions have not
been made to the Plan as of the date on which such
Matching Contributions are determined to constitute
excess aggregate contributions, or
(b) Such Matching Contributions (and any earnings
on such Matching Contributions) will be distributed to
the Member no later than 2-1/2 months after the end of
the Plan Year, if such Matching Contributions have been
made to the Plan before the date as of which the
Matching Contributions are determined to constitute
excess aggregate contributions.
14. Effective before January 1, 1993, Section 4.7 of the Plan read as follows:
4.7 Rollover Contributions. An Employee may make a
----------------------
Rollover Contribution to the Plan in an amount equal to all
or part of a previous distribution from a plan that, at the
time of the distribution, met the requirements of section
401(a) of the Code. The Rollover Contribution must be made
in cash within 60 days after its receipt by the Employee
either from the qualified plan or an individual retirement
account which meets the requirements of section 408 of the
Code. A Rollover Contribution shall be permitted only if the
Employee establishes that:
(a) The Rollover Contribution includes no assets
other than those attributable to employer contributions,
earnings on employer contributions and earnings on employee
contributions under plans qualified under section 401(a) of
the Code;
(b) Such Contribution includes no assets other
than those attributable to a qualified total distribution,
as defined in section 402(a)(S)(E)(i) of the Code; and
<PAGE>
(c) If the amount was received by the Employee from an
individual retirement account, the distribution from such account
represented a total distribution thereof.
The Rollover Contribution shall be paid to the Trustee as soon
as practicable, credited to the Employee's Rollover Account and
invested as described in Section 7. If it is determined that a
Member' 5 Rollover Contribution mistakenly failed to qualify
under the Code as a tax-free rollover, then the balance in the
Member' 5 Rollover Account attributable to the mistaken
contribution immediately shall be segregated from all other
Plan assets, treated as a nonqualified trust established by and
for the benefit of the Member, and distributed to the Member.
Such a mistaken contribution shall be deemed never to have been
a part of the Plan.
15. Effective before November 26, 1990, the following sentence appeared at the
end of Section 6.2 of the Plan, then designated as Section 5.2:
Forfeitures arising under Section 10.5 with respect to any
Member's Profit Sharing Account during a Plan Year will be
allocated among other Members who are Employees on the last
working day of such Plan Year as additional Profit Sharing
Contributions for such Plan Year and, subject to Section 5.2,
will be credited to such Members' Profit Sharing Accounts.
16. Fund E was added to the Plan, as an investment option under Section 7.1,
effective March 1, 1991.
17. Effective before November 21, 1990, Section 7.2 of the Plan, then
designated as Section 6.2, read as follows:
6.2 Investment of Contributions. A Member's share of
---------------------------
any Profit Sharing Contribution and Forfeitures attributable
to Profit Sharing Accounts will be deposited in Fund A, Fund
B, Fund D and/or Fund H in 25% increments of such
Contribution and Forfeitures as directed by the Member in
accordance with procedures established by the Administrative
Committee. A Member's investment directions for Profit
Sharing Contributions and Forfeitures will remain in effect
until changed by the Member. If the Member fails to file any
investment directions, his or her share of any Profit
Sharing Contribution and Forfeitures attributable to Profit
Sharing Accounts will be deposited in Fund D. All Matching
Contributions will be deposited in Fund C. All Member
Contributions initially will be deposited in the Segregated
Account. Twice each Plan Year, the Investment Committee will
obtain an independent appraisal of the Fair Market Value of
Stock. The Investment Committee will notify the Trustee of
such Fair Market Value promptly after completion of the
appraisal. If the Trustee determines that the Fair Market
Value exceeds
<PAGE>
adequate consideration for Stock within the meaning of section 3(18)
of ERISA, all Member Contributions that are invested in the Segregated
Account and any earnings on such contributions will be transferred
from the Segregated Account to Fund D, and no Matching Contribution
will be made with respect to such Member Contributions. If the Trustee
determines that the Fair Market Value does not exceed adequate
consideration for stock, the Administrative Committee will notify
Members of such Fair Market Value and the Company's stockholders of
the Trustee's intention to purchase Stock. Each Member who has Member
Contributions invested in the Segregated Account will have the
opportunity to elect to have such Member Contributions and any
earnings on such contributions transferred from the Segregated Account
to Fund A, Fund B, Fund C, Fund D and/or Fund H in 25% increments of
such Member Contributions and earnings. If a Member files such an
election on the prescribed form by the date determined by the
Administrative Committee, the Member's Member Contributions that are
invested in the Segregated Account and any earnings on such
contributions will be transferred to the Fund(s) elected by the
Member. If a Member fails to file such an election on the prescribed
form by the date determined by the Administrative Committee, the
Member's Member Contributions that are invested in the Segregated
Account and any earnings on such contributions automatically will be
transferred to Fund C. At the time when Member Contributions and
earnings are transferred to Fund C, the Participating Companies will
make a Matching Contribution under Section 4.1 unless the Board of
Directors determines that no Matching contribution will be made. The
Trustee will seek to acquire Stock for Fund C at a price no greater
than Fair Market Value to the extent any cash Matching Contributions
deposited in Fund C and Member Contributions transferred to Fund C
exceed the cash requirements of Fund C as determined by the
Administrative Committee. The Trustee may acquire Stock from a party-
in-interest or a disqualified person for no more than adequate
consideration (as defined in section 3(18) of ERISA) in accordance
with the requirements of section 408(e) of ERISA.
If any Member's Member Contributions in excess of the cash
requirements of Fund C have not been invested in Stock when the Fair
Market Value of Stock is next determined because insufficient Stock
was available to the Trustee, the Member may elect to have such Member
Contributions and any earnings on such contributions transferred to
Fund A, Fund B, Fund D and/or Fund H in 25% increments in accordance
with procedures established by the Administrative Committee. In the
absence of such an election, the Member Contributions and earnings
will remain in Fund C for investment in Stock at the new Fair Market
Value to the extent Stock is available. Any Matching Contributions and
earnings on such contributions that have not been invested in Stock
will remain in Fund C, whether or not the Member elects to transfer
the excess Member Contributions to another Fund.
<PAGE>
Any Member who requests a distribution of his or her
Plan Benefit under Section 10 before a date on which
Matching Contributions are made to the Plan will be deemed
to have elected not to invest in Fund C such Member's Member
Contributions and earnings on such contributions which were
held in the Segregated Account immediately before such
request.
18. Before May 31, 1991, Member investment directions had to be in increments
of 25% of the Member's Accounts.
19. Effective on and after October 29, 1990, Section 7.2 of the Plan, then
designated as Section 6.2, was amended to give the Investment Committee the
discretion to effect a "Suspension."
20. Before July 1, 1991, the phrase "as of the last day of each quarter during
a Plan Year" in Section 7.3 of the Plan, then designated as Section 6.2,
was replaced by the phrase "as of the last day of each Quarter."
21. Section 7.4 of the Plan, then designated as Section 6.4, was added to the
Plan effective on and after January 1, 1991.
22. Effective before February 28, 1991 clause (i) of Section 7.7 of the Plan,
then designated as section 17.5, read as follows:
(i) any offer to purchase stock by the Company if
it is for purposes of making cash distributions under the
Plan.
23. Section 7.7(c) of the Plan, then designated as Section 17.5(b), was added
to the Plan, effective on and after February 28, 1991.
24. Effective with respect to Hardship Withdrawals made before August 13, 1990,
the final paragraph of Section 9.3 of the Plan, then designated as Section
8.3, was not applicable.
25. The last clause of Section 9.3(a)(vii) became effective for hardship
withdrawals made after May 3, 1993.
26. Effective before the issuance of final regulations under section 401(k) of
the Code, the Plan provided for hardship withdrawals from Members'
Nonelective Accounts.
27. Effective with respect to withdrawals made before November 21, 1990,
Section 9.4 of the Plan, then designated as Section 8.4, read as follows:
8.4 Withdrawals From Fund C. The portion of a Member's Accounts
-----------------------
invested in Fund C may be withdrawn under Section 8.1 or 8.3 at the
time when Member Contributions and Matching Contributions are invested
in Fund C, but only to the extent the Administrative Committee
determines that there is sufficient cash available in Fund C to permit
the withdrawal.
<PAGE>
28. Effective with respect to withdrawals made before November 21, 1990,
Section 9.5 of the Plan, then designated as Section 8.5, read as follows:
8.5 Payment of Withdrawals. A Member may request a
----------------------
withdrawal by filing the prescribed form with the
Administrative Committee. A withdrawal will be paid in cash
soon as reasonably practicable after the Administrative
Committee receives the prescribed form and determines that
the withdrawal request meets the requirements of Section
8.1, 8.2 or 8.3, as applicable.
29. Effective with respect to withdrawals made before June 25, 1990, Section
9.7 of the Plan, then designated as Section 8.7, read as follows:
A Member's Accounts will be liquidated to the extent
necessary to fund a withdrawal under Section 8.3 in the
following order of priority: Post-Tax Account, Rollover
Account, Pre-Tax Account, Profit Sharing Account and
Matching Account. Within a Member's Profit Sharing Account,
the portion attributable to amounts which the Member could
have elected to receive in cash under Section 5.2 will be
liquidated only after the balance of the Member's Vested
Interest in his or her Profit Sharing Account has been
liquidated. Within any Account, amounts invested in each
Fund will be liquidated in the following order of priority:
Fund D, Fund B, Fund H and Fund A. If the Investment
Committee determines that it is not feasible for the Trustee
to prudently liquidate the necessary amount invested in any
Fund in accordance with Members' withdrawal requests, the
Investment Committee will so advise the Administrative
Committee which will direct that such steps be taken as it
considers necessary or desirable for the protection of
Members' Accounts, including the reordering of liquidation
priorities or a pro rata reduction in the amount of each
Member's withdrawal.
30. Effective with respect to withdrawals made after June 25, 1990, but before
November 21, 1990, Section 9.7 of the Plan, then designated as Section 8.7,
read as follows:
8.7 Source of Withdrawals. A Member's Accounts will be
---------------------
liquidated to the extent necessary to fund a withdrawal
under Section 8.3 in the following order of priority: Post
Tax-Account (excluding any portion of such Account held in
Fund C or the Segregated Account within Fund D), Rollover
Account, Pre-Tax Account (excluding any portion of such
Account held in Fund C or the Segregated Account within Fund
D), the portion of the Member's Profit Sharing Account
attributable to amounts which the Member could have elected
to receive in cash under Section 5.2, the portion of the
Member's Post-Tax Account held in the Segregated Account
within Fund D, the portion of the Member's Pre-Tax Account
held in the Segregated Account within Fund D, the portion of
the Member's Post-Tax
<PAGE>
Account held in Fund C, the portion of the Member's Pre-Tax
Account held in Fund C, the balance of the Member's Profit
Sharing Account, the Matching Account and the Nonelective
Account. Except as provided above, within any Account,
amounts invested in each Fund will be liquidated in the
following order of priority; Fund D, Fund B, Fund H and Fund
A.
31. Effective before April 1, 1990, Section 10.1(a) of the Plan, then
designated as Section 9.1(a), read as follows:
(a) Profit Sharing Account. A Member may borrow an
----------------------
amount from his or her Profit Sharing Account not exceeding
100% of the Member's Vested Interest in such Account. Such a
loan will be permitted only if the Administrative Committee
determines that (i) the proceeds of the loan will be used to
acquire, construct or rehabilitate the Member's primary
residence, or to refinance any loan or loans previously made
to the Member by a third party for any of the foregoing
purposes; or (ii) such loan is required by the Member for
reasons set forth in Section 8.3(g).
32. Effective before March 1, 1991, Section 10.1(b) of the Plan, then
designated as Section 9.1(b), read as follows:
(b) After-Tax, Pre-Tax, Matching and Rollover Accounts.
--------------------------------------------------
Effective on and after a date determined by the
Administrative Committee and announced to Members, a Member
may borrow an amount from his or her Post-Tax Account,
Rollover Account, Matching Account and/or Pre-Tax Account
not exceeding 100% of the balance credited to such Accounts.
A loan from the Member's Pre-Tax Account will be permitted
only if the Administrative Committee determines that the
Member is Totally and Permanently Disabled or that the
proceeds will be used for a purpose described in Section
8.3(a) through (f).
33. Effective before April 1, 1990 Section 10.1(d) of the Plan, then designated
as Section 9.1(c), read as follows:
(c) Additional Limitations. No loan will be permitted
----------------------
from the portion of any Account invested in Fund C. No loan
will be granted to the extent it would cause the aggregate
balance of all loans a Member has outstanding under the Plan
to exceed the least of (i) $50,000, less the amount by which
such aggregate balance has been reduced by repayments of
principal during the one-year period ending on the day
before the new loan is made; (ii) 50% of the Member's Vested
Interest in all of the Member's Accounts; or (iii) the
amount that can be repaid with level monthly payments,
including interest, equal to 15% of the Member's monthly
base Compensation. The amount of any loan will be a multiple
of $100 and will not be less than $1,000. In addition, only
2 loans to a Member may be outstanding at any time, and a
Member may apply for a loan no more than
<PAGE>
twice in any Plan Year.
34. Effective before April 1, 1990 Section 10.2 of the Plan, then designated as
Section 9.2, read as follows:
9.2 Terms of Loans. All loans will be on such terms and
--------------
conditions as the Administrative Committee may determine,
provided that all loans will:
(a) Be made under a promissory note secured by (i)
the residence that the Member acquires, in the case of
a loan from the Member's Profit Sharing Account, and
(ii) the Account(s) that funded the loan;
(b) Be subject to a substantially level payment
schedule, as determined by the Administrative
Committee, with payments to be made at least quarterly
and whenever possible to be made through semi-monthly
payroll deductions;
(c) Bear interest at a fixed rate determined by
the Administrative Committee based upon the prime
interest rate in effect at a commercial bank as of the
first day of December, March, June or September
immediately preceding the date on which the loan is
approved, plus 1%; and
(d) Provide for repayment in full, whether from
the Member's Accounts or otherwise, on or before the
earlier of (i) 5 years after the date the loan is made
(15 years after the date the loan is made if the loan
is used to acquire the Member's principal residence) or
(ii) the date the Member's Plan Benefit is distributed
under Section 10.
35. Effective for the Period beginning April 1, 1990, and ending November 20,
1990, Section 10.2 of the Plan, then designated as Section 9.2, read as
follows:
9.2 Terms of Loans. All loans will be on such terms and
--------------
conditions as the Administrative Committee may determine,
provided that all loans will:
(a) Be made under a promissory note secured by
(i) the residence of the Member, in the case of
a loan under Section 9.1(a)(i) or, to the extent agreed upon
by the Member and the Administrative Committee, in the case
of the loan under 9.1(a)(ii) for reasons set forth in
8.1(b); and
(ii) the Account(s) that funded the loan to the
extent that such Account(s) funds the loan; provided,
however that:
<PAGE>
(A) in the case of a loan made on or after
April 1, 1990, under 9.1(a)(i), or a loan made under
9.1(a)(ii) and secured by the Member's residence, the
Plan's security interest in the Member's Profit Sharing
Account will not extend to the portion of such Account
attributable to amounts which the Member could have
elected to receive in cash under Section 5.2 ("Elective
Profit Sharing Contributions"); and
(B) in the case of any other loan made
under Section 9.1(a)(ii), the promissory note with
respect to such loan will be secured by portions of the
Account other than Elective Profit Sharing
Contributions only to the extent that the amount of
such loan exceeds the amount of Elective Profit Sharing
Contributions available to secure such promissory note;
(b) Be subject to a substantially level payment
schedule, as determined by the Administrative Committee,
with payments to be made at least quarterly and whenever
possible to be made through semi-monthly payroll deductions;
provided, however, that in the event that payments are not
made for a period of up to 90 days due to the Member's
temporary absence from active work, such payments may be
made (i) in a single sum after the Member returns to active
work, (ii) ratably over the remaining period of the loan,
(iii) in a single sum together with the final payment
provided for under the note, or (iv) in another manner
mutually agreed upon by the Member and the Administrative
Committee;
(c) Bear interest at a fixed rate determined by the
Administrative Committee based upon the prime interest rate
in effect at a commercial bank as of the first day of
December, March, June or September immediately preceding the
date on which the loan is approved, plus 1%; and
(d) Provide for repayment in full, whether from the
Member's Accounts or otherwise, on or before the earlier of
(i) 5 years after the date the loan is made (15 years after
the date the loan is made if the loan is used to acquire the
Member's principal residence) or (ii) the date the Member's
Plan Benefit is distributed under Section 10.
36. Effective November 21, 1990, Section 10.2 of the Plan, then designated as
Section 9.2, was amended to read as set forth in this amended and restated
Plan.
37. Effective with respect to loans made before March 1, 1991, Section 10.3 of
the Plan, then designated as Section 9.3, read as follows:
9.3 Source of Loans; Application of Loan Payments. As
---------------------------------------------
of the first day of the month following the date the
Administrative Committee approves a loan, the amount of the
loan will be paid to the Member from the
<PAGE>
vested portion of the Member's Accounts that are being used
to fund the loan, in the following order of priority: Post-
Tax Account, Rollover Account, Pre-Tax Account, Profit
Sharing Account, and the portion attributable to amounts
which the Member could have elected to receive in cash under
Section 5.2 will be used to fund a loan only after the
balance of the Member's Vested Interest in his or her Profit
Sharing Account has been so used. Amounts invested in Fund
A, Fund B and Fund H will be liquidated and transferred to
Fund D for disbursement from Fund D. If less than the entire
amount of any Account is required to fund the loan, amounts
invested in the Funds will be liquidated to fund the loan in
the following order of priority: Fund D, Fund B, Fund H and
Fund A. If the Investment Committee determines that it is
not feasible for the Trustee to prudently liquidate the
necessary amount invested in any Fund in accordance with
Members' loan requests, the Investment Committee will so
advise the Administrative Committee which will direct that
such steps be taken as it considers necessary or desirable
for the protection of Members' Accounts, including the
reordering of liquidation priorities or a pro rata reduction
in the amount of each Member's loan. The promissory note
executed by the Member will be deposited in the Member's
Account(s) that funded the loan. Principal and interest
payments will be credited to the Member's Account(s) that
funded the loan and invested in Fund D.
38. Effective with respect to loans made before November 26, 1990, the second
to last sentence of Section 10.4 of the Plan, then designated as Section
9.4, read as follows:
If an involuntary withdrawal from the Member's Profit
Sharing Account is declared, the Member's Vested Interest in
such Account will be determined as provided in Section 12.2.
39. Effective before November 26, 1990, Section 11.1(a) of the Plan, then
designated as Section 10.1(a), read as follows:
(a) A Member's Vested Interest in his or her Pre-
Tax Account, Post-Tax Account and Rollover Account (if any)
will be 100% at all times. Except as provided in Section
10.1(c), a Member's Vested Interest in his or her Matching
Account will be 100% at all times.
40. Effective before November 26, 1990, Section 11.1(b) and (c) of the Plan,
then designated as Section 10.1(b) and (c), read as follows:
(b) A Member's Vested Interest in the portion of
his or her Profit Sharing Account attributable to amounts
which the Member could have elected to receive in cash under
Section 5.2 will be 100% at all times. The Member's Vested
Interest in the remainder of his or her Profit Sharing
Account will be 100% if the Member attains age 65 as an
Employee, dies while an Employee or becomes Totally and
Permanently Disabled while an
<PAGE>
Employee. Until a Member's Vested Interest in the remainder
of such Account becomes 100% under the preceding sentence,
the Member's Vested Interest in the remainder of such
Account will be determined according to the following
schedule based on the Member's completed Years of Service:
Completed
Years of Service Vested Interest
---------------- ---------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
(c) If the Administrative Committee determines
that any Member who has not reached age 65 and who has
completed less than 5 Years of Service engaged in any act of
misconduct while an Employee, the Member will have no Vested
Interest in his or her Matching Account and the Member's
Vested Interest in his or her Profit Sharing Account will
consist solely of the amounts described in the first
sentence of Section 10.1(b). The balance of such Accounts
will be forfeited under Section 10.5.
41. Effective before November 26, 1990, Section 10.2 of the Plan read as
follows:
10.2 Vesting After Prior Withdrawals or Distributions.
------------------------------------------------
Section 10.1(b) will be applied as set forth in the following
sentence in the case of any Member who received one or more
prior withdrawals or distributions from his or her Profit
Sharing Account under Section 8, 9.4 or this Section 10, who
subsequently remained an Employee or was rehired as an
Employee and whose Vested Interest in the entire Profit
Sharing Account is not yet 100%. The Member's Vested
Interest in such Account will be determined by first
applying the appropriate percentage under the schedule in
Section 10.1(b) to the sum of the value of such Account plus
the aggregate value of the Member's prior withdrawals or
distributions from such Account, and then subtracting the
aggregate value of such prior withdrawals or distributions.
42. Effective before November 26, 1990, Section 10.5 of the Plan read as
follows:
10.5 Forfeitures. If a Member ceases to be an Employee
-----------
during a Plan Year and is not rehired as an Employee on or
before the date the Member incurs a 1-year Service Break,
then the portion of the Member's Profit Sharing Account in
excess of the Member's Vested Interest will become a
Forfeiture as of such date.
<PAGE>
43. Effective before August 6, 1990, Section 11.5(a) of the Plan, then
designated as Section 10.7(a), read as follows:
(a) Monthly installments over a period not
exceeding the reasonable life expectancy of the Member (or
Beneficiary), as determined under the mortality table
specified in Appendix B to the Revised Home Office Pension
Plan of Levi Strauss & Co. The amount of each installment
will be determined by dividing the value of the portion of
the Plan Benefit remaining in the Trust Fund by the number
of installments elected less the number of installments
already paid.
44. Effective before August 1, 1989, Section 12.2 of the Plan, then designated
as Section 15.2, read as follows:
15.2 Combined Limitation on Benefits and Contributions.
-------------------------------------------------
Except as otherwise permitted under ERISA, the Tax Equity an
Fiscal Responsibility Act of 1982 and the Tax Reform Act of
1986, the sum of a Member's defined benefit plan fraction
and his or her defined contribution plan fraction will not
exceed 1.0 with respect to any Plan Year. For purposes of
this Section 15.2, the terms "defined benefit plan fraction"
and "defined contribution plan fraction" will have the
meaning given to such terms by section 415(e) of the Code
and the regulations thereunder. If a Member would exceed the
above limitation, then such Member's benefits under any
qualified defined benefit plan(s) that may be maintained by
the Affiliated Group will be reduced as necessary to allow
his or her Annual Additions to equal the maximum permitted
by law and the Plan.
45. Effective before November 21, 1990, Section 12.3 of the Plan, then
designated as Section 15.3, read as follows:
15.3 Disposition of Excess Annual Additions. Any Annual
--------------------------------------
Additions under this Plan that cannot be allocated to a
Member because of the limitation described in Section 15.1
will be processed as follows:
(a) Profit Sharing Contributions and Forfeitures
attributable to Profit Sharing Accounts that cannot be
allocated to the Member will be deducted from the amount of
Profit Sharing Contributions which otherwise would be made
under Section 5, but such reduction will not affect the
amounts allocable under Section 5.3 to Members whose Profit
Sharing Contribution component of Annual Additions is not
reduced.
(b) Matching Contributions and Forfeitures
attributable to Matching Accounts that cannot be allocated
to the Member will be deducted from the amount of Matching
Contributions which otherwise would be made under Section 4,
but such reduction will not affect the amounts allocable
under Section 4.2 to Members whose Matching
<PAGE>
Contribution component of Annual Additions is not reduced.
(c) Post-Tax Contributions made by the Member
(increased by any income or reduced by any losses allocable
to such Contributions) will be returned to the Member in
cash.
(d) Pre-Tax Contributions made by the Member will
be reduced under Section 3.4. Any Pre-Tax Contributions that
cannot be handled in accordance with Section 3.4 will be
credited to a suspense account on behalf of the Member. All
amounts credited to such account will be treated as Pre-Tax
Contributions for successive Plan Years and will be
allocated annually to the Member under Section 3 (to the
extent such allocation is not prohibited by Section 15.1)
until exhausted. No gains or losses will be credited to such
account and no additional Pre-Tax Contributions, Matching
Contributions or Profit Sharing Contributions will be made
by or on behalf of the Member so long as any amount remains
in such account.
46. Effective before November 21, 1990, Section 13.1 of the Plan, then
designated as 11.1, read as follows:
11.1 Contributions. The Administrative Committee will
-------------
make arrangements for the collection of Member Contributions
as provided in Section 3. The Company will cause the
Participating Companies to make Matching Contributions and
Profit Sharing Contributions to the Plan as provided in
Sections 4 and 5.
47. Effective before November 21, 1990, Section 18.3 of the Plan, then
designated as Section 14.3, read as follows:
14.3 Effect of Termination. Upon termination of the
---------------------
Plan, no assets of the Plan will revert to any Participating
Company or be used for, or diverted to, purposes other than
the exclusive purpose of providing benefits to Members and
Beneficiaries and of defraying the reasonable expenses of
termination. Upon termination of the Plan or upon complete
discontinuance of contributions, the Vested Interest of each
Member in his or her Matching Account and entire Profit
Sharing Account will be 100%. (Each Member's Vested Interest
in his or her Pre-Tax Account, Post-Tax Account and Rollover
Account is 100% at all times.)
48. Effective before November 21, 1990, Section 20.2 of the Plan, then
designated as paragraph (b) in Appendix A, read as follows:
(b) Minimum Allocations. For any Plan Year during which
-------------------
the Plan is a Top-Heavy Plan, the Pre-Tax Contributions,
Matching Contributions, Profit Sharing Contributions and
Forfeitures allocated under
<PAGE>
this Plan and employer contributions and forfeitures
allocated under any other defined contribution plan of the
Aggregation Group on behalf of any Member who is employed on
the last regularly scheduled working day of the Plan Year
and who is not a Key Employee will not be less than a
percentage of the Member's Total Compensation equal to the
lesser of (i) 3%; or (ii) the percentage equal to the
largest percentage that any Key Employee for that Plan Year
receives of Pre-Tax Contributions, Matching Contributions,
Profit Sharing Contributions and Forfeitures allocated on
behalf of that Key Employee's Total Compensation for that
Plan Year as limited by (e) below. The minimum allocation
will be determined without regard to any contributions made
or benefits available under the Federal Social Security Act.
49. Effective before November 21, 1990, Section 20.2 of the Plan, then
designated as Section 17.7, read as follows:
17.7 Return of Contributions. All Pre-Tax Contributions,
-----------------------
Matching Contributions and Profit Sharing Contributions are
expressly conditioned upon the deductibility of such
Contributions under section 404 of the Code. If the
deduction of any such Contribution is disallowed, then the
amount for which a deduction is disallowed will be returned
to the appropriate Participating Company within 12 months
after the date of the disallowance. In addition, if any
Member Contribution, Matching Contribution or Profit Sharing
Contribution is made as a result of a mistake of fact, such
Contribution may be repaid to the appropriate Participating
Company within 12 months after it is made. Any such
Contribution returned under this Section 17.7 will be
reduced to reflect losses but will not be increased to
reflect gains or income. Any Member Contribution returned
under this Section 17.7 will be paid to the Member from whom
it was withheld.
50. Effective for the period beginning January 1, 1990 and ending July 16,
1990, Appendix C to the Plan, read as follows:
As of January 1, 1990, Members will not make Member
Contributions as Pre-Tax Contributions.
51. Effective on and after July 17, 1990, Appendix C to the Plan read as
follows:
As of January 1, 1990, Members will not make Member
Contributions as Pre-Tax Contributions; provided, however,
that after July 16, 1990, such provision will not apply to
any Member who is not a "Highly Compensated Employee,"
within the meaning of section 414(q) of the Code.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
APPENDIX B
----------
BLACKOUT PROVISIONS
-------------------
1. In General. Any person or entity authorized to amend the Plan, or
----------
any person or entity designated in writing by such person or entity (the
"Blackout Coordinator"), may establish a Blackout Period, as defined below, in
the event that the Blackout Coordinator determines that such a Blackout Period
is necessary or appropriate in the administration of the Plan.
2. Definitions.
-----------
(a) A Blackout Period is a period of time during which Affected
Requests shall not be processed or effected.
(b) An Affected Request is any of the following requests by a
Member (or Beneficiary) for an action or an event under the Plan, or any of the
following Plan functions or events:
(i) Reinvestment of Accounts pursuant to Section 7 of the
Plan;
(ii) Valuation of Accounts and distribution of statements
pursuant to Section 8 of the Plan;
(iii) Withdrawals pursuant to Section 9 of the Plan;
(iv) Loans pursuant to Section 10 of the Plan; and
(v) Distribution of Plan Benefits pursuant to Section 11 of
the Plan.
In addition, the Blackout Coordinator, in its declaration of the
Blackout Period or in any supplementary action regarding the Blackout Period,
may designate as Affected Requests any other requests by a Member (or
Beneficiary) or other Plan functions or events which are otherwise allowed or
provided for under the Plan, or may declare that specified requests or Plan
functions or events encompassed by (b)(i)-(v) above shall not constitute
Affected Requests, for all or a designated portion of the Blackout Period.
3. Duration. The duration of the Blackout Period shall be determined
--------
by the Blackout Coordinator, in its sole discretion.
<PAGE>
4. Effect of Blackout Period. Affected Requests will be held by the
-------------------------
Administrative Committee until the end of the Blackout Period. At the end of the
Blackout Period, the Administrative Committee shall reconfirm the Member's (or
Beneficiary's) eligibility for or desire with respect to any Affected Request
which had been submitted by such Member (or Beneficiary), but which had not been
processed as a result of the Blackout Period. Other Plan functions or events
which would have occurred if not for the Blackout Period, will be processed
automatically after the expiration of the Blackout Period.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
APPENDIX C
----------
FUNDS
-----
- - Fidelity Money Market Trust: Retirement Money Market Portfolio
- - Fidelity Investment Grade Bond Fund
- - Fidelity Asset Manager: Income
- - Fidelity Asset Manager
- - Fidelity Asset Manager: Growth
- - Fidelity Magellan Fund
- - Fidelity Contrafund
- - Fidelity Overseas Fund
- - Sponsor Stock Fund
The Fund designated as the Holding Account referenced in Section 7.1 shall
be the Fidelity Retirement Government Money Market Portfolio.
The Fund designated as the Fund to receive contributions for which no
proper Member investment direction has been received shall be the Fidelity
Retirement Government Money Market Portfolio.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
APPENDIX D
----------
ADDITIONAL ELIGIBLE WITHDRAWALS AND LOANS
-----------------------------------------
In accordance with Sections 9.3(a)(viii), 9.3(b)(ii)(B) and
10.1(a)(iii), losses relating to natural disasters described herein may form a
basis for withdrawals or loans.
1. (a) Description of Natural Disaster.
-------------------------------
1998 Flood in Kansas
(b) Limitations.
-----------
None.
__________________/s/___________________________
Donna J. Goya, Sr. Vice President
11/19/98
- --------
<PAGE>
EMPLOYEE INVESTMENT PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Employee Investment Plan of Levi Strauss Associates Inc. (the "Plan");
WHEREAS, pursuant to Section 18.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason,
WHEREAS, the Company desires to amend the Plan in order to expand the
provisions relating to withdrawals in the event of financial hardship;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to any other officer of the Company the authority to adopt certain amendments to
the Plan;
WHEREAS, on June 1, 1993, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President, the authority to amend the Plan subject, to specified
limits, and such delegation has not been amended, rescinded or superseded as of
the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of the date set forth below, paragraph (a) of
subsection. 9.3 of the Plan is hereby amended as follows:
1. The word "or" which follows the semicolon in subparagraph (vii) is
hereby deleted.
2. The period at the end of subparagraph (viii) is hereby deleted and
replaced with a semicolon and the word "or."
3. A new subparagraph (ix) is hereby added to read as set forth below:
(ix) The need to pay attorney's fees, fines, penalties, judgments, assessments
or other costs related to legal proceedings on behalf of the Member or the
Member's spouse or dependents.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on July
6, 1995.
/s/
---------------------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
EMPLOYEE INVESTMENT PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Employee Investment Plan of Levi Strauss Associates Inc. (the "Plan");
WHEREAS, pursuant to Section 18.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company and certain of its major stockholders are
considering a transaction intended to ensure the long-term private, family
ownership of the Company (the "Transaction") and which would involve the
elimination of Company stock as an investment under the Plan;
WHEREAS, by resolutions duly adopted on November 30, 1995, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt amendments to the Plan in order to accommodate
and reflect the possibility of the Transaction and any related transactions; and
WHEREAS, the amendments herein are within the scope of such delegated
authority of Robert D. Haas;
NOW, THEREFORE, effective as of the date hereof, the Plan is hereby
amended by the addition of Appendix F, to read as set forth on the attached
exhibit.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto, on
December 7 1995.
/s/
--------------------------------------------
Robert D. Haas
Chairman of the Board and Chief Executive
Officer
<PAGE>
EXHIBIT
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS ASSOCIATES INC.
APPENDIX F
SUSPENSION OF STOCK FUND INVESTMENTS
AND RELATED PROVISIONS
1. Introduction.
Effective as of December 7, 1995, the provisions of this Appendix F to
the Plan are applicable with respect to the transactions and events
specified below, instead of the provisions of the main text of, or
other appendices to, the Plan which would otherwise govern such
transactions and events.
2. Special Provisions.
(a) Stock Fund Transactions,.
(i) All reinvestment of Accounts under Section 7.3,
withdrawals under Section 9, loans under Section 10
and distributions of Plan Benefits under Section 11
shall be suspended effective for requests received on
or after December 15, 1995, to the extent that such
transactions would have resulted in the distribution
or transfer of funds from the Stock Fund.
(ii) (A) Except as provided in (B) below, any duty,
responsibility or function assigned to the
Investment Committee with respect to matters
relating to the Stock Fund after the Effective
Date, including but not limited to obtaining an
appraisal of the Fair Market Value of LSAI Stock,
is hereby assigned to the Chief Executive Officer
of the Company (the "CEO"), or to any person or
entity designated in writing by the CEO. The CEO,
or the individual or entity designated by the
CEO, if any, shall be referred to as the
"Coordinator."
(B) The assignment provided in (A) above does not
apply to any responsibility of the Investment
Committee in discharging its duties under the
Plan in connection with a transaction or event
which may result in the sale, conversion or other
disposition of the LSAI Stock held by the Plan,
including but not limited to acting on behalf of
the Plan with respect to the exercise of
stockholders' rights associated with mergers (for
example, dissenter's rights under relevant state
law) and responses to purchase offers as
described in Section 7.7(c).
<PAGE>
(iii) Nothing herein is intended to require the Coordinator
to obtain a Fair Market Value of LSAI Stock during
the suspension of Stock Fund transactions provided in
Section F.2(a)(i) above.
(iv) The responsibilities of the Investment Committee
under the Plan which are not described in the
assignment provided in Section F.2(a)(i) above shall
remain in full force and effect.
(b) Investments and Investment Directions.
(i) No additional investment of Member Contributions or
Company Contributions shall be made to the Stock
Fund.
(ii) Effective for pay periods beginning December 25,
1995, all Member Contributions held in the Retirement
Government Money Market Fund pending potential
investment in the Stock Fund shall be transferred to
the Retirement Money Market Fund, all current Member
Contributions shall be deposited in the fund
designated by the Member for the investment of such
Member Contributions, and the Retirement Money Market
Fund shall be the Fund to receive contributions for
which no proper investment direction has been
received.
(iii) With respect to any Matching Contribution which is
made with respect to Member Contributions made, on or
after May 29, 1995:
(A) A transfer of Member Contributions to the
Stock Fund is not required in order for the
Company to make a Matching Contribution.
(B) The first Matching Contribution made after
the date of this Appendix shall be made with
respect to Member Contributions made on or
before December 24, 1995 on behalf of a
Member who was an Employee on November 22,
1995, or ceased to be an Employee between
May 29, 1995 and November 22, 1995 by reason
of an event described in Section
5.1(b)(i)-(iv). Any subsequent Matching
Contributions, and the time for making any
such Matching Contribution, shall be
determined by the Company, in its sole
discretion.
(C) Matching Contributions shall be made in cash
and deposited in the Fund designated by the
Member as of the date of deposit for
investment of his or her Member
contributions or, if no such designation is
in effect, in the Retirement Money Market
Fund.
<PAGE>
EMPLOYEE INVESTMENT PLAN
OF
LEVI STRAUSS ASSOCIATES, INC.
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Employee Investment Plan of Levi Strauss Associates Inc. (the "Plan");
WHEREAS, pursuant to Section 18.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan in order to readmit a
limited number of Highly Compensated Employees to active participation under
certain circumstances;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to any other officer of the Company the authority to adopt certain amendments to
the Plan;
WHEREAS, on June 1, 1993, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President, the authority to amend the Plan subject to specified
limits, and such delegation has not been amended, rescinded or superseded as of
the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective November 27, 1998, the Plan is hereby amended
as set forth below:
1. The current text of Section 3.5 is redesignated as Section 3.5(a).
2. Current Sections 3.5(a) through (d) are redesignated as Sections
3.5(a)(i) through iv).
3. The first sentence of current Section 3.5 is amended to read as
set forth below:
Any Highly Compensated Employee will only be eligible for
membership in the Plan as an Inactive Member or as set forth in Section
3.5(b), and in either case only if he or she satisfies the eligibility
requirements of Section 3.1.
4. Section 3.5 is amended by a new Section 3.5(b), to read, as set
forth below:
(b) (i) Eligible Highly Compensated Employees. Section 3.5(a)
-------------------------------------
notwithstanding, a Highly Compensated Employee who satisfies the
eligibility requirements of Section 3.1 may participate in the Plan for
all or a portion of a Plan Year as a Member provided that be or she is,
included in an eligible category of Highly Compensated Employees
described in Appendix E to the Plan.
<PAGE>
(ii) Establishment of Appendix E. Appendix E may be established,
---------------------------
amended or revoked from time to time by any individual or entity
empowered to amend the Plan. It is intended that Appendix E designate
an eligible category of Highly Compensated Employees who can
participate in the Plan without resulting in the Plan failing to comply
with the nondiscriminatory coverage rules of Code section 410(b) or any
successor provision. However, the existence of this provision does not
require the Company to designate any Highly Compensated Employees, or
the maximum permissible Highly Compensated Employees, to participate in
the Plan as Members for any Plan Year.
5. The Plan is amended by a new Appendix E, to read as set forth on
the attached exhibit hereto.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
December 21, 1995.
/s/
--------------------------------
Donna J. Goya
Senior Vice President
<PAGE>
EXHIBIT TO EMPLOYEE INVESTMENT PLAN AMENDMENT
EMPLOYEE INVESTMENT PLAN OF
LEVI, STRAUSS ASSOCIATES INC.
APPENDIX E
Pursuant to Section 3-5(b) of the Plan, the Highly Compensated
Employees described below are eligible to participate in this Plan as Members:
1. For the Plan Year ending in 1996, Highly Compensated Employees
whose compensation (as determined pursuant to Section. 2.23) for the Plan Year
ending in 1995 did not exceed $95,000.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS ASSOCIATES INC.
APPENDIX D
ADDITIONAL ELIGIBLE WITHDRAWALS AND LOANS
In accordance with Sections 9.3(a)(viii), 9.3(b)(ii)(B) and
10.1(a)(iii), losses relating to natural disasters described herein may form a
basis for withdrawals or loans.
1. (a) Description of Natural Disaster.
1995 flood in Sonoma County, California.
(b) Limitations.
None.
/s/
- ----------------------------------------
Donna J. Goya, Senior Vice President
5/15/95
- ----------------------------------------
Dated
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS ASSOCIATES INC.
(AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 27, 1989,
WITH MAIN TEXT REFLECTING CERTAIN CHANGES AS OF SEPTEMBER 1, 1994)
<PAGE>
LEVI STRAUSS & CO.
AMENDMENTS TO EXECUTIVE COMPENSATION
AND EMPLOYEE BENEFIT PLANS
WHEREAS, LSAI HOLDING CORP. ("Holdings"), LEVI STRAUSS ASSOCIATES INC.
("LSAI") and LEVI STRAUSS & CO. ("LS&CO.") have established and maintained
various employee benefit plans listed on Exhibit A hereto for the benefit of
their eligible employees (the "Plans");
WHEREAS, the Plans generally provide that LSAI is the sponsor of the
Plans, although certain Plans provide that Holdings, LS&CO. or other direct or
indirect subsidiaries of Holdings, LSAI or LS&CO. is the Plan sponsor;
WHEREAS, effective October 1, 1996 (the "Merger Effective Date"),
Holdings and LSAI were merged with and into LS&CO. (the "Merger"), and LS&CO.
from the Merger Effective Date is the owner or corporate parent, as appropriate,
with respect to all of the assets and business held by Holdings, LSAI and LS&CO.
before the Merger;
WHEREAS, after the Merger, LS&CO. is the successor Plan sponsor of any
Plan which was sponsored by Holdings or LSAI before the Merger,
WHEREAS, LS&CO. desires to amend the Plans to reflect that after the
Merger LS&CO. is the Plan sponsor of each Plan;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board and Chief
Executive Officer, to adopt certain amendments to the Plans and to delegate to
certain other officers of LS&CO- the authority to adopt certain amendments to
the Plans; and
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plans, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the Merger Effective Date, the Plans
are hereby amended as set forth below:
1. The Employee. Investment Plan of Levi Strauss Associates Inc. (the
"EIP") is amended as set forth below:
a. The name of the EIP, whenever it appears, is changed to the
"Employee Investment Plan of Levi Strauss & Co. "
b. Section 1.1 of the EIP is amended by the addition of a new
paragraph to read as set forth below:
"Effective as of October 1, 1996, Levi Strauss Associates Inc. and
its parent, LSAI Holding Corp., were merged into Levi Strauss & Co.
Thereafter, Levi Strauss & Co. is the plan sponsor of the EIP. "
<PAGE>
c. Sections 2.4, 2.9, 2.17, 2.33, 2.45, 2.60, 2.70, 7.5 and 7.7
and the execution clause are amended by replacing all references to "Levi
Strauss Associates Inc. " with Levi Strauss & Co."
d. Section 2.13 is amended by removing the reference to 'Levi
Strauss Associates Inc."
2. The Levi Strauss Associates Inc. Employee Long-Term Investment and
Savings Plan (the -ELTIS") is amended as set forth below:
a. The name of the ELTIS, wherever it appears, is changed to "The
Levi Strauss & Co. Employee Long-Term Investment and Savings Plan. "
b. Section 1. 1 is amended by the addition of a new paragraph to
read as set forth below:
"Effective as of October 1, 1996, Levi Strauss Associates Inc. and
its parent, LSAI Holding Corp., were merged into Levi Strauss & Co.
Thereafter, Levi Strauss & Co. is the plan sponsor of ELTIS."
c. Sections 2.4, 2.9, 2.16, 2.29, 2.37, 2.47, 2.59, 6.5 and 6.7
and the execution clause are amended by replacing all references to "Levi
Strauss Associates Inc." with "Levi Strauss & Co."
d. Section 2.12 is amended by removing the reference to '"Levi
Strauss Associates Inc."
3. The Revised Home Office Pension Plan of Levi Strauss Associates
Inc. (the "HOPP") is amended as set forth below:
a. The name of the HOPP, wherever is appears, is changed to the
"Revised Home Office Pension Plan of Levi Strauss & Co."
b. Section 1. 1 is amended by the addition of a new paragraph to
read as set forth below:
"Effective as of October 1. 1996, Levi Strauss Associates Inc. and
its parent, LSAI Holding Corp., were merged into Levi Strauss & Co.
Thereafter Levi Strauss & Co. is the plan sponsor of the Plan."
c. Sections 2.4, 2.10, 2.26 and 2.46 and the execution clause are
amended by replacing all references to "Levi Strauss Associates Inc." with
"Levi Strauss & Co."
d. Section 2.16 is amended by removing the reference to "Levi
Strauss Associates Inc."
4. The Levi Strauss Associates Inc. Revised Employee Retirement Plan
(the "ERP") is amended as set forth below:
<PAGE>
a. The name of the ERP, wherever is appears, is changed to the
"Levi Strauss & Co. Revised Employee Retirement Plan. "
b. Section 1. 1 is amended by the addition of a new paragraph to
read as set forth below:
"Effective as of October 1, 1996, Levi Strauss Associates Inc. and
its parent, LSAI Holding Corp., were merged into Levi Strauss & Co.
Thereafter Levi Strauss & Co. is the plan sponsor of the Plan."
c. Sections 2.4, 2.10, 2.26 and 2.47 and the execution clause are
amended by replacing all references to "Levi Strauss Associates Inc." with "Levi
Strauss & Co."
d. Section 2.16 is amended by removing the reference to "Levi
Strauss Associates Inc."
5. The Levi Strauss Associates Inc. Retirement Plan for Over-the-Road
Truck Drivers and Dispatchers (the "OTRD") is amended as set forth below:
a. The name of the OTRD, wherever is appears, is changed to the
"Levi Strauss & Co. Retirement Plan for Over-the-Road Truck Drivers and
Dispatchers."
b. Section 1 - 1 is amended by the addition of a new paragraph
to read as set forth below:
"Effective as' of October 1, 1996, Levi Strauss Associates Inc.
and its parent, LSAI Holding Corp., were merged into Levi Strauss & Co.
Thereafter Levi Strauss & Co. is the plan sponsor of the Plan."
c. Sections 2.4, 2.9, 2.25 and 2.44 and the execution clause are
amended by replacing all references to "Levi Strauss Associates Inc." with
"Levi Strauss & Co."
d. Section 2,15 is amended by removing the reference to "Levi
Strauss Associates Inc."
6. For each Plan which is not amended by Sections 1 through 5 above
(the "Nonqualified Plans"), each reference in the name of a Nonqualified Plan to
"LSAI Holding Corp." or "Levi Strauss Associates Inc." is hereby replaced by
"Levi Strauss & Co."
7. Each of the Nonqualified Plans is amended by the addition of an
Addendum to read as set forth on the Exhibit B hereto.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on
January 24, 1997.
/s/
-------------------------------------
Donna J. Goya
Senior Vice President for
Global Human Resources
<PAGE>
EXHIBIT A
Employee Investment Plan of Levi Strauss Associates Inc.
Levi Strauss Associates Inc. Employee Long-Term Investment and Savings Plan
Revised Home Office Pension Plan of Levi Strauss Associates Inc.
Levi Strauss Associates Inc. Revised Employee Retirement Plan
Levi Strauss Associates Inc. Retirement Plan for Over-the-Road Truck Drivers and
Dispatchers
Levi Strauss Associates Inc. Supplemental Benefit Restoration Plan
Levi Strauss Associates Inc. Excess Benefit Restoration Plan
Partners in Performance Long-Term Incentive Plan
LSAI Holding Corp. Deferred Compensation Plan for Outside Directors
Levi Strauss Associates Inc. Deferred Compensation Plan for Executives
Levi Strauss Asso6ates Inc. Long-Term Performance Plan
<PAGE>
EXHIBIT B
MERGER ADDENDUM
Effective October 1, 1996 (the "Merger Date"), LSAI Holding Corp. and
Levi Strauss Associates Inc. were merged with and into Levi Strauss & Co.
("LS&CO."). From and after the Merger Date, LS&CO. is the plan sponsor of the
Plan. Further, unless the context clearly indicates to the contrary, all
references to the "Company" shall mean LS&CO. and all references to the "Board
of Directors" of LSAI Holding Corp., Levi Strauss Associates Inc. or the
"Company" shall refer to the Board of Directors of LS&CO.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Levi Strauss
& Co. Employee Investment Plan (the "EIP") as the successor to Levi Strauss
Associates Inc.;
WHEREAS, the Company established the EIP for the benefit of its
employees and amended and restated the EIP to comply with the Tax Reform Act of
1986, the Unemployment Compensation Amendments of 1992, and the Revenue
Reconciliation Act of 1993;
WHEREAS, the Company requested that the Internal Revenue Service issue
a favorable determination letter regarding the tax-qualified status of the EIP;
WHEREAS, the Internal Revenue Service conditioned its issuance of a
favorable determination upon the adoption of certain amendments to the restated
EIP; and
WHEREAS, the Company desires to satisfy such conditions and Article 18
of the EIP provides that the Company may amend the EIP at any time and for any
reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the EIP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the EIP;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of November 27, 1989, except to the extent
that another effective date is specifically provided below, the Company amends
the EIP as set forth below:
1. Section 2.66 of the EIP is amended by the addition of the
following:
If an Employee's absence is attributable to maternity or paternity
leave, the Employee's Service shall include the first 12 months of such
absence. Further, the second 12 months of absence for such reason shall
be considered neither Service nor absence from Service.
2. Section 2.8 of the EIP is amended by the addition of the
following:
However, a married participant's spouse shall be the participant's
<PAGE>
beneficiary unless the participant's spouse consents in writing to the
designation of another beneficiary and such consent is witnessed by a
notary public.
3. Sections 4.6 and 4.7, and all references thereto, are renumbered
"4.7" and 114.8.
4. A new Section 4.6 is added to the EIP as follows:
4.6 Limitation on Contributions.
(a) Limitation on Pre-Tax Contributions. For any Plan Year, the
-----------------------------------
"average deferral percentage" (as defined below) for the group of
Highly Compensated Employees eligible to make Pre-Tax Contributions may
not exceed the greater of
(i) 125 % of the average deferral percentage for all
other employees eligible to make Pre-Tax Contributions; or
(ii) the lesser of (A) 2 multiplied by the average
deferral percentage for all employees eligible to make Pre-Tax
Contributions other than Highly Compensated Employees or (B) the
average deferral percentage for such employees plus 2 percentage
points.
The average deferral percentage for any group of employees is the
average of the ratios (calculated separately for each employee) of the
amount of Pre-Tax Contributions (and any other contributions treated as
elective deferrals under section 401(k) of the Code) made on behalf of
each employee for the Plan Year, divided by the employee's
compensation. Compensation for purposes of this Section 4.6(a) shall be
determined in a manner consistent with sections 401(k) and 414(s) of
the Code.
This Section 4.6(a) shall be interpreted in a manner consistent
with section 401(k)(3) and 1.401(k)-I(b) of the Code.
(b) Limitations on Post-Tax Contributions and Matching,
---------------------------------------------------
Contributions. For any Plan Year, the "average contribution percentage"
-------------
(as defined below) for the group of Highly Compensated Employees
eligible to make Post-Tax Contributions and receive an allocation of
Matching Contributions may not exceed the lesser of
(i) 125% -of the average contribution percentage of
all other employees eligible to make such contributions; or
(ii) the lesser of (A) 2 multiplied by the average
contribution percentage of such other employees or (B) the average
contribution percentage for such other employees plus 2 percentage
points.
The average contribution percentage for any group of employees is
the average of the ratios (calculated separately for each employee) of
the sum of Post-Tax Contributions and Matching Contributions (and other
contributions aggregate
<PAGE>
with such contributions for purposes of this test and section 401(m) of
the Code) paid under the Plan on behalf of the Employee for the Plan
Year, divided by the Employee's compensation. Compensation for purposes
of this Section 4.6(b) shall be determined in a manner consistent with
sections 401(m) and 414(s) of the Code.
This Section 4.6(b) shall be interpreted in a manner consistent
with sections 401(m) and 1.401(m)-l of the Code.
(c) Use of Alternative Limitations. In determining the maximum
------------------------------
contributions under Sections 4 and 5, the multiple use of the
alternative limitation under Code sections 401(k)(3)(A)(ii)(Il) and
401(m)(A)(2)(ii) shall be limited as provided in Code section 1.401(m)-
2(b).
5. Renumbered Section 4.7(a) of the EIP is amended by the addition of
the following:
In the event that the average deferral ratio of a Highly
Compensated Employee is determined under the family aggregation rules
of Code section 401(k)-l(g)(1)(ii)(C), the amount of any Excess
Contributions shall be determined by reducing such deferrals under the
leveling method provided in Code section 1.401(k)-l(f)(2) and the
Excess Contributions shall be allocated among the family members in
proportion to the contributions of each family member whose
contributions have been combined with such Member.
6. Renumbered Section 4.7(c) is amended in its entirety to read as
follows:
4.7(c) Excess Aggregate Contributions. If a Member who is a Highly
------------------------------
Compensated Employee makes Post-Tax Contributions which constitute
"Excess Aggregate Contributions" (as defined in section 401(m)(6)(B) of
the Code and the Regulations issued under such Code section which are
expressly incorporated by this reference) with respect to a Plan Year,
such Excess Aggregate Contributions (and any earnings on such
contributions up to the date of distribution, determined in a manner
consistent with 1.401(m)-1(e)(3)(ii) of the Code) will be distributed
to the Member by the end of the next Plan Year. Post-Tax Contributions
and any earnings on such contributions directed by the Highly
Compensated Employees having the highest rate of Post-Tax Contributions
(as a percentage of Compensation) will be refunded first under the
provisions of applicable Regulations. Any refund of Post-Tax
Contributions and earnings will be limited to the amount that, in the
judgment of the Administrative Committee, will result in the Plan
satisfying the requirements of section 401(m)(3) of the Code.
7. A new Section 4.7(d) is added to the EIP as follows:
(d) Reduction in Return or Recharacterization of Excess
---------------------------------------------------
Contributions. The amount of Excess Contributions refunded or
-------------
recharacterized with respect to an Employee for a Plan Year under this
Section 4.6 shall be reduced by any
<PAGE>
excess deferrals previously distributed for the Employee's taxable year
ending in the same Plan Year.
8. A new Section 4.9 is added to the EIP as follows:
4.9 Use of Alternative Limitation. In determining the maximum
-----------------------------
contributions under Sections 4 and 5, the multiple use of the
alternative limitation under Code sections 401(k)(3)(A)(ii)(II) and
401(m)(A)(2)(ii) shall be limited as provided in Code section
1.401(m)-2(b).
9. Section 5.4 of the EIP is amended by the addition of the
following:
Excess aggregate contributions (and income allocable thereto)
shall be designated as excess aggregate contributions and distributed
within 12 months after the end of the Plan Year to the Highly
Compensated Employees on the basis of the respective portions of such
excess aggregate contributions attributable to each of such Highly-
Compensated Employees. Further, the excess aggregate contributions so
distributed shall include Matching Contributions to the extent
necessary to satisfy section, 401(a)(4) of the Code, as provided in
section 1.401(m)-1(e)(4) of the Code.
In the event that the actual contribution ratio of a Highly
Compensated Employee is determined under the family aggregation rules,
the amount of the Excess Aggregate Contribution shall be determined by
reducing such contribution under the leveling method provided in Code
section 1.402(m)-l(e)(2) and the Excess Aggregate contribution shall be
allocated among the family members in proportion to the contributions
of each family member whose contributions have been combined with such
Member.
10. Section 5.4(b) of the EIP is amended in its entirety to read as
follows:
5.4(b) The Matching Contribution and/or Nonelective Contribution
(and any earnings on such contributions up to the date of distribution,
determined in a manner consistent with 1.401(m)-1(e)(3)(ii) of the
Code) will be distributed to the Member by the end of the next Plan
Year, if the' Matching Contribution and/or Nonelective Contribution has
been made to the Plan before the date on which the Matching and/or
Nonelective Contributions are determined to constitute an Excess
Aggregate Contribution.
11. Effective January 24, 1997, Section 9.1 is hereby amended to read
as set forth below:
9.1 Withdrawals from Post-Tax Accounts. A Member may withdraw all
----------------------------------
or part of the balance credited to his or her Post-Tax Account invested
in any Fund.
12. Effective January 24, 1997, the EIP is hereby amended by the
addition of a new Section 11.10, to read as set forth below:
<PAGE>
11.10 Benefits for Alternate Payees. At the request of an
-----------------------------
Alternate Payee, the Benefit payable to the Alternate Payee hereunder
shall be paid in a lump sum, either directly to the Alternate Payee or
to an individual ' retirement account for the Benefit of the Alternate
Payee, regardless of whether the Member from whom the Alternate Payee's
Benefit derived has attained his or her earliest possible distribution
date under the Plan.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
4/8/97 /s/
- ------------------------------------ --------------------------------
Date Donna J. Goya
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Levi Strauss
& Co. Employee Investment Plan (the "EIP") as the successor to Levi Strauss
Associates Inc.;
WHEREAS, the Company desires to amend the EIP to expand the sources of
Participant loans in certain respects and Article 18 of the EIP provides that
the Company may amend the EIP at any time and for any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the EIP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the EIP;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of September 1, 1997, the Company amends
Section 10 of the EIP in its entirety to read as set forth below:
SECTION 10 LOANS.
10.1 Amount of Loans.
(a) Profit Sharing Regular, Profit Sharing 401(k), Pre-Tax and
----------------------------------------------------------
Matching Accounts. A Member may borrow up to 100% of the Member's
-----------------
Vested Interest in his or her Profit Sharing Regular Account, Profit
Sharing 401(k) Account, Pre-Tax Account and Matching Account to the
extent that such amount may be used to secure the promissory note with
respect to such loan under Section 10.2(a). Such a loan will be
permitted only if the Administrative Committee determines that:
(i) The proceeds of the loan will be used to
acquire, construct or rehabilitate the Member's primary
residence, or to refinance any loan or loans previously made
to the Member by a third party for any of these purposes;
(ii) The loan is required by the Member for the
payment of expenses relating to the post-secondary education
of the Member or the Member's spouse or children, including
expenses for tuition, fees, room, board or books; or
(iii) The loan is required by the Member due to the
loss of income, real
<PAGE>
property or personal property as a result of any natural
disaster as specified on Appendix D to the Plan by any
individual or entity empowered to amend the Plan.
(b) Post-Tax and Rollover Accounts. A Member may borrow up to
------------------------------
100% of the balance credited to his or her Post-Tax Account and/or
Rollover Account. Such loans will be permitted for any reason, but will
be subject to Section 10.1(d) regarding the maximum loan amount),
Section 10. 2 (regarding loan terms), Section 10.3 (regarding source of
loans) and Section 10.4 (regarding events of default), in addition to
other applicable provisions of the Plan.
(c) Additional Limitations. No loan will be granted to the
----------------------
extent it would cause the aggregate balance of all loans a Member has
outstanding under the Plan to exceed the lesser of:
------
(i) $50,000, less the amount by which such aggregate
balance has been reduced by repayments of principal during the
one-year period ending on the day before the new loan is made;
or
(ii) 50% of the Member's Vested Interest in all of
the Member's Accounts.
The amount of any loan must be a multiple of $100 and may not be less
than $1,000. Only 4 loans to a Member may be outstanding at any time
(no more than 2 of which may be for the acquisition, construction or
rehabilitation of the Member's primary residence, or to refinance any
loan or loans previously made by a third party for these purposes).
(d) Vested Interest and Value of Accounts. The Member's Vested
-------------------------------------
Interest in an Account and the value of the balance credited to such
Account will be determined as of the latest Valuation Date preceding
the date the loan application is submitted for which information is
then available.
10.2 Terms of Loans. All loans will be on such terms and conditions as
--------------
the Administrative Committee may determine, and must satisfy the following
requirements:
(a) Adequate Security. All loans will be made under a
-----------------
promissory note secured by:
(i) The Account or Accounts that funded the loan to the
extent that such Account or Accounts fund the loan; and
(ii) Such other security as the Administration Committee
may require.
No loans will be secured by the Member's Account or Accounts in an
amount greater than 50% of the Vested Interest and value of the balance of the
Account of such Member at the time such loan was made.
(b) Substantially Level Payment. All loans will be subject to
---------------------------
a substantially level payment schedule, as determined by the
Administrative Committee, with payments
<PAGE>
to be made at least quarterly and whenever possible to be made through
semi-monthly payroll deductions. If loan payments are not made for a
period of up to 365 days due to the Member's temporary absence from
active work, such missed payments may be made.
(i) In a single sum after the Member returns to
active work;
(ii) Ratably over the remaining period of the loan;
(iii) In a single sum together with the final payment
provided for under the note; or
(iv) In another manner mutually agreed upon by the
Member and the Administrative Committee,
However, loan repayments by a Member who has been absent temporarily
must recommence by the end of the one-year period following the date the
Member's temporary absence began or, if earlier, upon the first paycheck after
the Member's return to active work.
(c) Reasonable Rate of Interest. All loans will beat interest
---------------------------
at a fixed rate determined by the Administrative Committee based upon
the prime interest rate in effect at a commercial bank as of the first
day of the month immediately preceding the date on which the loan
application is received plus 1%, unless such rate would not be
"reasonable" as defined by section 408(b)(3) of the Act, in which case
a "reasonable" rate of interest will be used.
(d) Repayment in Full. All loans will provide for repayment
-----------------
in full, whether from the Member's Accounts or otherwise, on or before
the earlier of:
-------
(i) 5 years after the date the loan is made (15 years
after the date the loan is made if the loan is used to acquire
the Member's principal residence); or
(ii) The date the Member's Plan Benefit is
distributed under Section 11.
10.3 Source of Loans; Application of Loan Payments. As soon as
---------------------------------------------
administratively practical following the approval of a loan by the
Administrative Committee, the amount of the loan will be distributed to the
Member from the vested portion of the Member's Accounts that are being used to
fund the loan, in the following order of priority:
(a) Post-Tax Account;
(b) Rollover Account;
(c) Pre-Tax Account;
(d) Profit Sharing 401(k) Account;
(e) Profit Sharing Regular Account; and
<PAGE>
(f) Matching Account,
If less than the entire amount of any Account is required to fund the
loan, amounts invested in the Funds will be liquidated to fund the loan pro rata
from each Fund in which the Account is invested.
If the Investment Committee determines that it is not feasible for the
Trustee to prudently liquidate the necessary amount invested in any Fund in
accordance with Members' loan requests, the Investment Committee will so advise
the Administrative Committee. The Administrative Committee will direct that such
steps be taken as it considers necessary or desirable for the protection of
Members' Accounts, including the reordering of liquidation priorities or a pro
rata reduction in the amount of each Member's loan. The promissory note executed
by the Member will be reflected in reporting the balance of the Member's Account
or Accounts that funded the loan, Principal and interest payments will be
credited to the Member's Account or Accounts in proportion to the extent that
such Account or Accounts funded the loan. Such principal and interest payments
shall be invested in Funds in proportion to the extent that the funds loaned to
the Member were invested in such Funds at the time such loan was made to the
Member.
10.4 Default. If the Administrative Committee determines that a
-------
Member's loan obligation is in default, it will take such actions as it deems
necessary or appropriate to cause the Plan to realize on its security for the
loan. Those actions may include, without limitation, a demand for payment in
full, and a distribution of the Member's promissory note to the Member, which
will be deemed an involuntary withdrawal from the Member's Accounts in an amount
equal to the principal balance of the loan, whether or not the withdrawal would
otherwise be permitted on a voluntary basis. No distribution of a Member's
promissory note and involuntary withdrawal will occur with respect to a loan
from the Member's Pre-Tax Contributions Account or Nonelective Account before
the earliest of the events specified in Section 18.6. Any loss caused by the
nonpayment or other default on a Member's loan obligation will be borne solely
by the Member's Accounts. A Member who is temporarily absent from work will not
be considered to be in default for the period which is the lesser of (i) 365
days from the date the Member begins the temporary leave of absence on (ii) the
date the Member is no longer considered to be temporarily absent from work.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
9/9/97________________________ __________./s/______________
Date Donna J. Goya
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Levi Strauss
& Co. Employee Investment Plan (the "EIP") as the successor to Levi Strauss
Associates Inc.;
WHEREAS, the Company desires to amend the EIP to provide for the
maximum involuntary lump sum cash-out permitted by the Uruguay Round of the
General Agreement on Tariffs and Trade ("GATT")( legislation, and Article 18 of
the EIP provides that the Company may amend the EIP at any time and for any
reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the EIP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the EIP;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna 1. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of December 1, 1997, except to the extent
that another effective date is specifically provided below, the Company amends
the EIP as set forth below:
Section 11.6(a) is amended by replacing "$3,500" wherever it
appears with "$5,000."
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
11/25/97_________________________ _______/s/__________________________
Date Donna J. Goya
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP");
WHEREAS, the Company desires to amend Appendix C of the EIP to reflect
revised investment alternatives available under the EIP;
WHEREAS, Article 18 of the EIP provides that the Company may amend the
EIP at any time and for any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the EIP and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the EIP;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof, and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of December 1, 1997, the Company amends
Appendix C of the EIP to read as set forth on the attached Exhibit.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
11/25/98_____________________ ______/s/________________________
Date Donna J. Goya
<PAGE>
EXHIBIT
EMPLOYEE INVESTMENT PLAN OF LEVI STRAUSS & CO.
APPENDIX C
FUNDS
Fidelity Retirement Money Market
Fidelity Investment Grade Bond Fund (phased out 3/31/98, mapped to U.S. Bond
Index)
Fidelity U.S. Bond Index Fund (eff. 3/31/98)
Fidelity Asset Manager: Income (phased out 9/30/98, mapped to Freedom Income
Fund)
Fidelity Asset Manager (phased out 9/30/98, mapped to Dodge & Cox Balanced Fund)
Fidelity Asset Manager: Growth (phased out 9/30/98, mapped to Freedom 2020 Fund)
Fidelity Contrafund
Fidelity Magellan
Fidelity Overseas (closed 11/1/96, mapped to MSIF International Portfolio)
Morgan Stanley Institutional Fund International Portfolio (eff. 11/1/96)
Fidelity US Equity Index-Commingled Pool (eff. 4/30/96)
Fidelity Growth & Income (eff. 4/30/96)
Fidelity Low-Priced Stock (eff. 4/30/96)
Fidelity Freedom Income Fund (eff. 9/19/97)
Fidelity Freedom 2000 Fund (eff. 9/19/97)
Fidelity Freedom 2010 Fund (eff. 9/19/97)
Fidelity Freedom 2020 Fund (eff. 9/19/97)
Fidelity Freedom 2030 Fund (eff. 9/19/97)
Dodge & Cox Balanced Fund (eff. 3/31/98)
The Fund designated as the Fund to receive contributions for which no proper
Member investment direction has been received shall be the Fidelity Retirement
Money Market Fund.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
LEVI STRAUSS & CO.
EMPLOYEE LONG-TERM INVESTMENT AND
SAVINGS PLAN
REVISED HOME OFFICE PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP"), the Levi Strauss & Co. Long-
Term Investment and Savings Plan (the "ELTIS"), and the Revised Home Office
Pension Plan of Levi Strauss & Co. (the "HOPP") (collectively, the "Plans");
WHEREAS, the Company desires to amend the Plans to provide that the
definitions of compensation used under the Plans are as consistent as reasonably
practical and are administratively convenient;
WHEREAS, each Plan provides that the Company may amend the Plan at any
time and any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plans and to
delegate to certain other officers of the Company the authority to adopt certain
amendments to the Plans;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plans, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective December 1, 1997:
<PAGE>
1. Section 2.14 of the EIP is amended as set forth on Exhibit A-1
hereto;
2. The final paragraph of Section 2.23 of the EIP is amended as set
forth on Exhibit A-2 hereto;
3. Section 2.68 of the EIP is amended as set forth on Exhibit A-3
hereto;
4. Section 12.1(b) of the EIP is amended as set forth on Exhibit A-4
hereto;
5. Section 2.12 of the ELTIS is amended as set forth on Exhibit B-1
hereto;
6. The final paragraph of Section 2.20 of the ELTIS is amended as set
forth on Exhibit B-2 hereto;
7. Section 2.57 of the ELTIS is amended as set forth on Exhibit B-3
hereto;
8. Section 10. 1 (b) of the ELTIS is amended as set forth on Exhibit
B-4;
9. Section 2.17 of the HOPP is amended as set forth on Exhibit C-1
hereto; and
10. Section 2.29 of the HOPP is amended as set forth on Exhibit C-2
hereto.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on the
date set forth below.
_11/25/98_______________ ______/s/__________________
Date Donna J. Goya
Senior Vice President
<PAGE>
Exhibit A-1
-----------
2.14 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses (except as excluded in
paragraphs (e) or (f) below), incentive compensation (except as excluded in
paragraphs (e) or (f) below) and overtime pay. "Compensation" also includes the
Member's Member Contributions to the Plan (or any other plan maintained by the
Company under sections 401(k) of the Code) for the Plan Year and any amounts
contributed by the Member to a cafeteria plan maintained by the Company under
section 125 of the Code, and amounts deferred under the Company's Deferred
Compensation Plan for executives. Back pay will be included in Compensation only
for the Plan Year in which the back pay is made and the amount to be included
will be limited to the amount attributable to that Plan Year, regardless of
mitigation of damages.
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
-----------
(a) Matching Contributions, Nonelective Contributions or Profit Sharing
Contributions to the Plan and/or amounts paid to the Member according to an
election under Section 6.2.
(b) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, including contributions to nonqualified deferred compensation plans,
and any matching contribution made under the Company's Capital Accumulation
Plan, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the exercise
of any right granted under a stock option plan maintained by the Company or an
Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan or long-
term incentive plan;
(g) Severance payments or pay in lieu of notice;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
<PAGE>
(j) "Perks."
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section 401(a)(17) of the Code (as adjusted as provided
under section 401(a)(17) of the Code) will be disregarded. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
<PAGE>
Exhibit A-2
-----------
"Compensation" for purposes of this Section 2.23 means Total
Compensation as defined in Section 2.68 of the Plan.
<PAGE>
Exhibit A-3
-----------
2.68 "Total Compensation" for any employee for any Plan Year means the
------------------
amount shown for the Employee for the Plan Year in Box 1 of Form W-2, plus any
amounts which were excluded from the Employee's income pursuant to section 125
of the Code or section 402(a)(8) of the Code.
Total compensation in excess of $200,000 or any successor limitation as
provided for the Plan Years in section 401(a)(17) of the Code (as adjusted as
provided under section 401(a)(17) of the Code) will be disregarded.
<PAGE>
Exhibit A-4
-----------
12.1 ...
(b) 25 % of the Member's compensation for such Plan Year. Compensation
means Total Compensation for Plan Years beginning after December 31, 1997. For
Plan Years beginning prior to January 1, 1998, "Compensation" means Total
Compensation without regard to section 125 of the Code or section 402(a)(8) of
the Code.
<PAGE>
Exhibit B-1
-----------
2.12 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses (except as excluded in
paragraphs (e) or (f) below), incentive compensation (except as excluded in
paragraphs (e) or (f) below) and overtime pay. "Compensation" also includes the
Member's Member Contributions to the Plan (or any other plan maintained by the
Company under section 401 (k) of the Code) for the Plan Year and any amounts
contributed by the Member to a cafeteria plan maintained by the Company under
section 125 of the Code, and amounts deferred under the Company's Deferred
Compensation Plan for executives. Back pay will be included in Compensation only
for the Plan Year in which the back pay is made and the amount to be included
will be limited to the amount attributable to that Plan Year, regardless of
mitigation of damages.
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
--------
(a) Matching Contributions or Special Company Contributions to the Plan
under Section 5.2;
(b) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, including contributions to nonqualified deferred compensation plans,
and any matching contribution made under the Company's Capital Accumulation
Plan, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the exercise
of any right granted under a stock option plan maintained by the Company or an
Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan or long-
term incentive plan;
(g) Severance payments or pay in lieu of notice;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
(j) "Perks."
<PAGE>
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section 401(a)(17) of the Code (as adjusted as provided
under section 401(a)(17) of the Code) will be disregarded. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
<PAGE>
Exhibit B-2
-----------
"Compensation" for purposes of this Section 2.20 means Total
Compensation as defined in Section 2.57 of the Plan.
<PAGE>
Exhibit B-3
-----------
2.57 "Total Compensation for any employee for any Plan Year means the
------------------
amount shown for the Employee for the Plan Year in Box 1 of Form W-2, plus any
amounts which were excluded from the Employee's income pursuant to section 125
of the Code or section 402(a)(8) of the Code.
Total compensation in excess of $200,000 or any successor limitation as
provided for the Plan Year in section 401(a)(17) of the Code (as adjusted as
provided under section 401(a)(17) of the Code) will be disregarded.
<PAGE>
Exhibit B-4
-----------
10.1 ...
(b) 25% of the Member's compensation for such Plan Year. Compensation
means Total Compensation for Plan Years beginning after December 31, 1997. For
Plan Years beginning prior to January 1, 1998, "Compensation" means Total
Compensation without regard to section 125 of the Code or section 402(a)(8) of
the Code.
<PAGE>
Exhibit C-1
-----------
2.17 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, including salary, wages, fees, commissions, bonuses (except as excluded in
paragraphs (e) or (f) below), incentive compensation (except as excluded in
paragraphs (e) or (f) below) and overtime pay. "Compensation" also includes the
Member's contributions to any plan maintained by the Company under section
401(k) of the Code for the Plan Year and any amounts contributed by the Member
to a cafeteria plan maintained by the Company under section 125 of the Code.
Back pay will be included in Compensation only for the Plan Year in which the
back pay is made and the amount to be included will be limited to the amount
attributable to that Plan Year, regardless of mitigation of damages.
In the case of a Member who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home office
of the Company, "Compensation" will be the amount determined by the
Administrative Committee to be the amount that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
-----------
(a) Contributions to another plan maintained by the Company (other than
cash or deferred contributions under Section 401(k) of the Code;
(b) Amounts paid or contributed to any group insurance plan or other
employee benefit plan established or maintained by the Company or an Affiliated
Company, including contributions to nonqualified deferred compensation plans,
and any matching contribution made under the Company's Capital Accumulation
Plan, except as provided above;
(c) Relocation expenses;
(d) Ordinary income recognized by the employee related to the exercise
of any right granted under a stock option plan maintained by the Company or an
Affiliated Company;
(e) Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
(f) Payments under the Company's long-term performance plan or long-
term incentive plan;
(g) Severance payments or pay in lieu of notice;
(h) Payments from the Company's Long Term Disability Plan;
(i) "Imputed income;" or
(j) "Perks."
<PAGE>
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other amounts
the Administrative Committee determines to be imputed income to the Member under
the Code. "Perks" include, but are not limited to, Company paid parking, Company
provided car allowances, and the flexible perk allowances provided to certain
Members which may be used by the Member for financial counseling or planning;
tax preparation or advice; excess medical expenses; physical examinations;
additional life insurance, disability insurance, accidental death and
dismemberment insurance or liability insurance; business lunch club dues or
legal expenses.
For Plan Years beginning on and after November 27, 1989, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as provided
for the Plan Year in section.401(a)(17) of the Code (as adjusted as provided
under section 401(a)(17) of the Code) will be disregarded. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
<PAGE>
Exhibit C-2
-----------
2.29 "High-3 Year Average Compensation" means a Member's average annual
--------------------------------
compensation from the Company or an Affiliated Company for the 3 consecutive
Plan Years during which his or her compensation was highest. If the Member has
not been employed with the Company or an Affiliated Company for 3 Consecutive
Plan Years, "High-3 Year Average Compensation" will mean the Member's average
annual compensation for the actual number of consecutive Plan Years with the
Company or an Affiliate Company during which his or her compensation was the
highest.
For Plan Years beginning prior to January 1, 1998, "Compensation" means
compensation which would be shown in Box 1 of Form W-2, plus any amounts which
were excluded from Box 1 of Form W-2 pursuant to section 125 of the Code or
section 402(a)(8) of the Code. For Plan Years beginning after December 31, 1997,
"Compensation" means compensation which would be shown in Box 1 of Form W-2.
Compensation for any Plan Year in excess of $200,000 or any successor
limitation as provided for the Plan Year in section 401(a)(17) of the Code (as
adjusted under section 401(a)(17) of the Code). (The "401(a)(17) limitation"),
will be disregarded. The adjustment to the 401(a)(17) limitation that takes
effect on January 1 of each year is effective for the Plan Year beginning
____________.
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Employee Investment Plan of
Levi Strauss & Co. (the "EIP"); and
WHEREAS, Section 18.1 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason; and
WHEREAS, the EIP has consistently provided, and been interpreted to provide,
benefits exclusively for persons considered by LS&CO. to be employees of the
"Company" (as defined under Section 2.13 of the EIP) and to exclude from
coverage individuals who perform services for the Company and who are
categorized as independent contractors or leased employees, or in any other
non-employee category, regardless of whether such persons are determined to be
common law or statutory employees of the Company, and LS&CO. desires to reaffirm
the practice of covering only those individuals whom LS&CO. designates as
employees of the Company; and
WHEREAS, LS&CO. desires to amend Appendix E to the EIP to clarify those
eligible highly compensated employees that are eligible to participate under the
EIP; and
WHEREAS, LS&CO. desires to amend the EIP to clarify the treatment of
Matching Contributions associated with excess contributions; and
WHEREAS, LS&CO. desires to amend the EIP to clarify that employees must
complete twelve full calendar months of service in order to become eligible to
participate under the EIP; and
WHEREAS, LS&CO. desires to amend the EIP to clarify that Members are
not required to first request a loan in order to qualify for a hardship
withdrawal if the effect of the loan would be to increase the financial
hardship; and
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board and Chief
Executive Officer, to adopt certain amendments to the EIP and to delegate to
certain other officers of LS&CO. the authority to adopt certain amendments to
the EIP; and
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J.
Goya, Senior Vice President for Global Human Resources, the authority to amend
the EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREOF, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the EIP is hereby amended as follows, effective as of
the dates set
<PAGE>
forth below:
1. Section 2.17 of the EIP is hereby amended in its entirety,
effective as of November 30, 1998, to read as follows:
?2.17 "Employee" means any person who is employed by the Company excluding:
-------- ---------
(a) Any employee of the Company who is not paid from the
home office payroll of LS&CO.;
(b) Any employee of a Participating Company other than
LS&CO. who is not paid on a salary or commission basis;
(c) Any stocktaker, service representative, Retiree
Coordinator or "Temporary Employee;"
(d) Any employee who is not employed in a state or territory
of the United States or who receives no remuneration from the Company that
constitutes income from sources within the United States (within the meaning of
section 816(a)(3) of the Code);
(e) Any alien who:
(i) Receives remuneration from the Company that
constitutes income from sources within the United States (within the
meaning of section 816(a)(3) of the Code); and
(ii) Has been transferred by the Company from a job
outside the United States to a job within the United States, during nay
period with respect to which the alien is benefiting (by reason of
accruing a benefit or making or having contributions made on the
alien's behalf) under:
(A) A retirement plan established or maintained
outside the United States by a foreign subsidiary (including a
domestic subsidiary operating abroad) or a foreign division of
the Company; or
(B) The Levi Strauss International Retirement
Plan for Third Country National Employees or any successor or
similar plan maintained by the Company or an Affiliated
Company;
(f) A United States citizen locally hired by a foreign subsidiary
(including a domestic subsidiary operating abroad) or a foreign division of the
Company;
(g) Any employee who is included in a unit of employees covered by
a negotiated collective bargaining agreement which does not provide for his or
her membership in the Plan;
(h) Any individual who must be treated as an employee of the
Company for limited purposes under the leased employee provisions of Code
Section 414(n);
(i) Any individual providing services to the Company pursuant to a
contract
<PAGE>
designating him/her as an independent contractor or consultant;
(j) Any individual providing services to the Company pursuant to
an agreement between the Company and a third party;
(k) Any employee who is included in a group or classification of
employees on a payroll of a company designated by the Board of Directors as not
being eligible to participate in the Plan; or
(l) A Highly Compensated Employee with respect to the eligibility
to make Member Contributions or receive an allocation of Matching Contributions,
nonelective Contributions, Profit Sharing Contributions and Forfeitures only,
except as otherwise provided under Appendix E.
A member of the Board of Directors of the Company is not eligible
for membership in the Plan unless he or she is also an Employee of the Company.
For purposes of this Section 2.17, a "Temporary Employee" means a person who:
(i) Is hired to fill a position which arises from either an
emergency situation of the temporary absence of an Employee; and
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time; and
(iii) Is designated by LS&CO. as a "Temporary Employee."
A person's status as an Employee will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons
notwithstanding and contrary determination of Employee status by any court or
governmental agency including, but not limited to, the Internal Revenue
Service."
2. Effective as of the date this amendment is adopted, the second
to last sentence of Section 2.66 of the EIP is hereby amended to read as
follows:
"All Service will be aggregated, whether or not such Service is performed
consecutively, and every partial month will be deemed to be
one full month of Service; except that for purposes of
eligibility under Section 3.1, an Employee must complete
twelve (12) full calendar months of Service."
3. Effective as of December 1, 1997, Section 4.7 of the EIP is
hereby amended by adding the following new paragraph (e) to read as follows:
?(e) Treatment of Associated Matching Contributions. This
----------------------------------------------
Section 4.7(e) clarifies that any Matching Contribution that
is associated with a Pre-Tax Contribution or Post-Tax
Contribution made by the Company for a Member that is reduced
for a Plan Year pursuant to Section 4.7 shall be forfeited and
be used to offset future Matching Contributions."
<PAGE>
4. Effective as of the date this amendment is adopted,
subparagraph (iv) of paragraph (c) of Section 9.3 of the EIP is amended to read
as follows:
?(iv) A loan from the Member's Accounts under Section 10.1 or a loan from a
commercial source on reasonable terms, to the extent such loan
would not itself cause an immediate and heavy financial need."
5. Appendix E of the EIP is hereby amended in its entirety,
effective as of December 1, 1997, to read as follows:
"Pursuant to Section 3.5(b) of the Plan, the Highly Compensated Employees
described below are eligible to participate in this Plan as
Members:
1. For any Plan Year ending in or after the 1996 calendar
year, Highly Compensated Employees whose compensation (as
determined pursuant to Section 2.23) for the prior Plan
Year did not exceed $95,000.?
* * *
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
November 22, 1999.
LEVI STRAUSS & CO.
_____/s/____________________________
Donna J. Goya
Senior Vice President
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP"); and
WHEREAS, Section 18 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason; and
WHEREAS, LS&CO. desires to amend the EIP to provide that loans made on
or after February 1, 2000 shall (1) be immediately offset after ninety (90) days
after the date a Member terminates employment, and (2) generally be limited to
two outstanding loans at any one time; and
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board and Chief
Executive Officer, to adopt certain amendments to the EIP and to delegate to
certain other officers of LS&CO. the authority to adopt certain amendments to
the EIP; and
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J.
Goya, Senior Vice President for Global Human Resources, the authority to amend
the EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREOF, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the EIP is hereby amended as follows, effective as of
the dates set forth below:
1. Effective as of February 1, 2000, paragraph (c) of Section 10.1 of the EIP
is amended by adding the following sentence to the end thereof to read as
follows:
"Notwithstanding the foregoing, effective February 1, 2000, only 2 loans to
a Member may be outstanding at any time; provided, however, that those
existing loans as of February 1, 2000 in excess of 2 shall not be counted
for purposes of this limitation."
2. Effective as of February 1, 2000, paragraph (d) of Section 10.2 of the EIP
is amended by read as follows:
?(d) Repayment in Full. All loans will provide for repayment in
-----------------
full, whether fromthe Member's Accounts or otherwise, on or before the
earlier of:
(i) 5 years after the date the loan is made (15 years after the date the
loan is made if the loan is used to acquire the Member's principal
residence);
<PAGE>
(ii) The date the Member's Plan Benefit is distributed under Section 11;
or
(iii) In the case of any loan made on or after February 1, 2000, ninety
(90) days after the date the Member terminates employment for any
reason with the Company or an Affiliated Company and is not a party
in interest with respect to the Plan under Section 3(14) of the Act.
In the event that a Member's loan is repaid due to termination of employment, in
accordance with (iii) above, such Member's entire unpaid loan balance will
become immediately due and payable by way of an offset of such Member's
corresponding Accounts, as described under Sections 10.3 and 10.4.?
* * *
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
December 23, 1999.
LEVI STRAUSS & CO.
____/s/_________________________
Donna J. Goya
Senior Vice President
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
APPENDIX D
ADDITIONAL ELIGIBLE WITHDRAWALS
In accordance with Section 8.3(b)(viii), losses relating to natural
disasters described herein may form a basis for withdrawals.
1. (a) Description of Natural Disaster.
Las Vegas Storm/Flood in Summer 1999
(b) Limitations.
None
/s/
----------------------------------------------
Donna J. Goya, Senior Vice President
12/23/99
--------
Date
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP"); and
WHEREAS, Section 18 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason; and
WHEREAS, LS&CO. desires to amend the EIP effective April 3, 2000 to
eliminate the one year service requirement for employee contributions; and
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board, to adopt
certain amendments to the EIP and to delegate to certain other officers of
LS&CO. the authority to adopt certain amendments to the EIP; and
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J.
Goya, Senior Vice President for Global Human Resources, the authority to amend
the EIP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREOF, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the EIP is hereby amended as follows, effective as of
the dates set forth below:
1. Effective as of April 3, 2000, the second to last sentence of Section
2.66 of the EIP is hereby amended to read as follows:
"All Service will be aggregated, whether or not such Service is performed
consecutively, and every partial month will be deemed to be one full month of
Service, except that only full calendar months will be taken into account for
purposes of eligibility for (a) becoming a Member under Section 3.1 and, (b) the
Matching Contribution under Section 5.1?
2. Effective as of April 3, 2000, Section 3.1 of the EIP is hereby
amended in its entirety to read as follows:
?3.1 Commencement of Membership. Each Employee who was a Member in the
--------------------------
Plan on the Effective Date will continue to be a Member. Prior to April 3, 2000,
each Employee who was not a Member in the Plan on the Effective Date, will
become a Member in the Plan on the first day of the pay period coinciding with
or next following the day on which he or she completes a Year of Service.
Effective as of April 3, 2000, each Employee will become a Member in the Plan on
the first day of the pay period coinciding with or next following the date such
Employee performs one Hour of Service. Upon becoming a Member, an Employee will
<PAGE>
designate a Beneficiary under Section 2.8 and Section 14.?
3. Effective as of April 3, 2000, the first sentence of Section 5.1 of the
EIP is hereby amended to read as follows:
"Except as provided below, for each period (an "Accumulated Period") during a
Plan Year with respect to the pay period coinciding with or next following the
day on which a Member completes a year of Service, the Company will make a
Matching Contribution to the Plan in an amount equal to 50% of each Member's
Contributions for the Accumulation Period."
* * *
IN WITNESS WHEREOF, the undersigned has set your hand hereunto, on
March 10, 2000.
LEVI STRAUSS & CO.
_______________/s/_______________
Donna J. Goya
Senior Vice President
<PAGE>
EXHIBIT 10.21
CAPITAL ACCUMULATION PLAN OF
LEVI STRAUSS & CO.
PLAN DOCUMENT AND
EMPLOYEE BOOKLET
This Capital Accumulation Plan of Levi Strauss & Co. Plan Document and Employee
Booklet (the "Booklet") contains the terms of the Capital Accumulation Plan of
Levi Strauss & Co. (the "Plan") and constitutes the Plan document. Under the
Plan, Levi Strauss & Co. and certain of its subsidiaries (collectively, the
"Company") are making available to eligible employees an opportunity, through
payroll deductions, to contribute money to individual retail brokerage accounts
offered by Charles Schwab & Co., Inc. ("Charles Schwab"). Under the Plan the
Company will match certain employee contributions with contributions to the
employee's brokerage account equal to 75% of the employee contributions. Each
individual employee is solely responsible for selecting and monitoring his or
her investment choices, paying related commissions and charges, and for
investment results from participation in the Plan. The Plan is intended to make
individual investment more convenient for employees.
You should review this Booklet carefully. An overview of the Plan appears in
Part 1 of this Booklet. Particular features of the Plan are presented in a
question-and-answer format in the second part of this Booklet. Part 3 contains
information about the federal income tax consequences of participation in the
Plan. You should also carefully review the separate materials provided by
Charles Schwab.
1
<PAGE>
This Booklet originated May 28, 1996, and was last updated August 1, 1998
PART 1. OVERVIEW
Key features of the Plan include:
. Home Office payroll employees are eligible to participate in the Plan if they
have completed at least one year of service and would be eligible to
participate in the Employee Investment Plan ("EIP") if not for that plan's
exclusion of employees whose compensation exceeds the applicable maximum
limitation.
. The Plan allows eligible employees to contribute money through payroll
deduction and receive a 75% matching employer contribution (the "Match").
. An employee may contribute any fixed contribution percentage (using a whole
percentage) up to 10% of the employee's covered compensation to the Plan
(prior to October 1, 1997, contribution was based on a fixed amount.)
Contributions are made on an after-tax basis. The employer contributions and
any dividends or capital gains earned by investments made with employee or
employer contributions are current income to the employee for tax purposes.
Tax reporting with respect to investments made with these funds is the
responsibility of the employee, not the Company. Charles Schwab will issue a
Form 1099 to participants after the close of each year.
2
<PAGE>
. Employee contributions and the Match will be sent to an individual retail
brokerage account established in the employee's name at Charles Schwab (the
"Account") and placed in a Charles Schwab money market fund of the employee's
choice. Employees may invest the funds in any investment offered by Charles
Schwab. All investment decisions, related commissions and charges, and
investment results are the responsibility of the employee, not the Company.
. THE COMPANY DOES NOT ENDORSE, RECOMMEND OR GUARANTEE ANY INVESTMENT OR
SERVICE OFFERED, PROVIDED OR PROMISED BY CHARLES SCHWAB OR ANY OTHER OFFEROR
OF INVESTMENTS. THE COMPANY IS NOT RESPONSIBLE FOR INVESTMENT OPTIONS,
INDIVIDUAL INVESTMENT CHOICES OR THE RETURNS ON INVESTMENTS. EACH EMPLOYEE IS
RESPONSIBLE FOR MONITORING HIS OR HER OWN ACCOUNT. ALL FUNDS CONTRIBUTED BY
THE EMPLOYEE AND THE COMPANY UNDER THE PLAN ARE DEPOSITED IN THE EMPLOYEE'S
ACCOUNT. NEITHER THE COMPANY NOR ANY TRUST HOLDS ANY OF THESE FUNDS.
. Employees will own the Account and have full control over investments in the
Account. Dividends and interest paid on Account investments will be deposited
into the Account.
. The value of the Match on your payroll deductions is taxable compensation;
thus, applicable taxes will be withheld from your regular pay, and the entire
Match will be deposited in your Account.
3
<PAGE>
. An employee may withdraw funds from the employee's Account whenever he or she
wants to do so. However, when an active employee withdraws funds from his or
her Account, the employee's contributions by payroll deduction, and
contributions with respect to AIP and the Match will be suspended for one
year unless the withdrawal was for one of the stated hardship reasons (see
questions 23-25).
. The Company will have the right to obtain certain information regarding
employees' Accounts in order to administer the Plan.
. Upon termination of employment for any reason, the terminating employee (or
his/her beneficiary) has the right to do anything with the Account he/she
chooses, including continuing to contribute and making partial or complete
withdrawals, although the Match will cease. The Company has no right to the
Account whatsoever (except in the rare case of a mistaken contribution (see
question 26)).
. Neither you, your dependents, your beneficiary nor anyone else has the right
or claim to benefits under the Plan other than those described in the Plan.
PLEASE NOTE THAT THE ABOVE IS BUT A BRIEF OVERVIEW OF THE PLAN. YOU ARE
ENCOURAGED TO CAREFULLY READ THIS ENTIRE BOOKLET, TOGETHER WITH MATERIALS
PROVIDED BY CHARLES SCHWAB. THE PLAN
4
<PAGE>
IS NOT AN EMPLOYMENT CONTRACT AND NONE OF THE PLAN PROVISIONS GUARANTEE YOUR
EMPLOYMENT WITH THE COMPANY OR AFFECT THE RIGHT OF THE COMPANY TO TERMINATE YOUR
EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE. THIS BOOKLET IS NOT INTENDED TO
IMPLY ANY PROMISE OF CONTINUED EMPLOYMENT WITH THE COMPANY. IN FACT, EMPLOYMENT
WITH THE COMPANY MAY BE ENDED WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE,
AT ANY TIME, BY EITHER THE COMPANY OR YOU.
PART 2. INFORMATION ABOUT THE PLAN
1. WHAT IS THE PLAN?
The Plan is a payroll deduction program that allows eligible employees to
contribute money to an individual retail brokerage account maintained by Charles
Schwab (the "Account"). It also provides for an employer contribution equal to
75% of the employee's contributions (the "Match"). (For information about the
Match, see question 7.) The Account is a regular brokerage account; employees
are responsible for their own investments. Company involvement is limited to
the contribution and Match features of the Plan.
5
<PAGE>
2. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to attract, retain, motivate and reward eligible
employees of the Company, and to provide employees with an arrangement intended
to make individual investment more convenient for employees.
3. WHO MAY PARTICIPATE IN THE PLAN?
You may participate in the Plan if you otherwise could participate in the EIP,
but have been excluded from active participation in that plan because your
compensation exceeds the maximum limitation provided in the EIP. For current
fiscal year 1998 participation in the Plan, your earnings in the previous fiscal
year must be greater than $95,000. This earning limitation may be changed from
time to time. In order to otherwise have been eligible to participate in the
EIP, you must have at least one year of service as an employee of the Company or
any subsidiary of the Company, and currently be paid on the Home Office payroll
and employed by the Company or any subsidiary of the Company that has adopted
the EIP. Those subsidiaries include Levi Strauss International, Levi's Only
Stores ("LOS"), Custom Clothing Technology Corp. ("CCTC"), and Britannia
Sportswear Ltd. (prior to its sale in August, 1997.) In addition, you must not
be covered by a collective bargaining agreement or a member of certain other
excluded groups. If you have question about your eligibility to participate in
the Plan, you may contact U.S. Retirement Benefits.
6
<PAGE>
4. HOW DO I PARTICIPATE?
To enroll in the Plan, you must complete a "payroll deduction authorization
form" and the "Charles Schwab account application form", and submit to U.S.
Retirement Benefits, 1155 Battery Street IH1/4, San Francisco, CA 94111. BOTH
----
FORMS MUST BE RETURNED TO U.S. RETIREMENT BENEFITS, NOT TO CHARLES SCHWAB.
- -------------------------------------------------------------------------
5. WHEN MAY I ENROLL IN THE PLAN?
You may enroll and begin your participation in the Plan effective on the first
day of any payroll period after you have completed one year of service (whether
before or after the effective date of the Plan) if you otherwise are an eligible
employee at that time.
6. HOW MUCH MAY I INVEST THROUGH THE PLAN?
You may authorize the Company to deduct, in a fixed contribution percentage
(using a whole percentage), up to 10% of your covered compensation in each pay
period. Your covered compensation for purposes of the Plan is explained in
question 11. You may change your contribution as frequently as every pay
period, with 20 days' notice. You also may transfer funds from other sources to
the Account outside of the Plan, but these transfers will not earn the Match
(see question 12) and will be subject to the same withdrawal rules as your Plan
contributions and Match (see question 23).
7
<PAGE>
7. WHAT ARE THE AMOUNT AND CONDITIONS FOR THE MATCH?
Your contributions deducted from each pay check and AIP payment under the Plan
earn the Match, which is an employer payment equal to 75% of your contributions
under the Plan. The Match is taxable immediately, and appropriate taxes will be
withheld from your regular pay and AIP payment so that the entire Match will go
to your Account. See question 33 for information about the Company's ability to
change or end the Match.
8. WHAT HAPPENS IF MY PAY CHANGES DURING THE YEAR?
Effective October 1, 1997, if your pay increases during the year, your payroll
deduction for the Plan will also increase because your deduction is based on
your designated contribution percentage. Likewise, your payroll deduction for
the Plan will decrease if your pay is reduced during the year because your
deduction is based on your designated contribution percentage. Prior to October
1, 1997, you were required to submit a change of your contribution amount to
U.S. Retirement Benefits to reflect your pay increase or decrease. No
retroactive deductions or retroactive match are allowed.
9. IS THERE A WAY FOR ME TO MAKE A CAP CONTRIBUTION ON A HAND-DRAWN CHECK?
CAP is administered as individual direct deposit accounts with Charles Schwab.
The contribution and match must go through the automated payroll system to
complete the deposit. This is not possible to do with a hand-drawn check. For
this reason, there is no CAP deduction taken from a hand-drawn check, and
therefore, no Match is made.
8
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10. HOW DO I MAKE A CONTRIBUTION ON MY AIP PAYMENT?
Prior to 1998, you were allowed to write a check for up to 10% of your AIP and
submit it to U.S. Retirement Benefits in order to make a CAP contribution from
your AIP and to receive a Company Match on your contribution. A payroll system
change in October, 1997 has alleviated these steps. Now, your AIP contribution
and Match are automatically processed through the payroll system.
11. WHAT IS MY "COVERED COMPENSATION" UNDER THE PLAN?
Generally, your covered compensation is your base pay, plus any amounts which
would have been included in your base pay if not for the deferral of such
amounts under any deferred compensation program of the Company, and your AIP.
For purposes of Matches made in 1996 and 1997, covered compensation for
Territory managers, Account Managers and Account Executives is limited to
specified maximum amounts for grades 5, 6, and 7, respectively. Effective
12/1/97, as a result of the change in pay structure for the sales force, it is
no longer required to have company match limits for the sales group.
9
<PAGE>
12. MAY I INVEST OTHER THAN BY PAYROLL DEDUCTIONS?
Yes. You own the Account and may make contributions at any time and in any
amount to the Account by personal check. These contributions should be sent to
Charles Schwab directly; they should NOT be sent to the Company. Generally,
these additional funds are not subject to the Plan and do not earn the Match.
However, because ANY withdrawals from the Account, other than those classified
as "hardship" withdrawals, will cause all payroll and the Match under the Plan
to stop for a 12-month period, you may be better served opening another
investment account outside of the Plan.
13. WHEN DO MY PAYROLL DEDUCTIONS BEGIN?
Your payroll deductions will begin on the second pay period following
enrollment.
14. WHAT HAPPENS TO MY PAYROLL DEDUCTION?
The amount you authorize for deduction will be deducted from your paycheck. It
will be sent to Charles Schwab and held in a money market fund unless you
redirect your funds and Match to other investments. You may call Charles Schwab
and arrange for those funds to be invested in any investment offered by Charles
Schwab. You should be aware that Charles Schwab may have requirements,
limitations, commissions, conditions and fees with respect to the investment of
funds contributed to the Account. Such matters are solely within the control of
Charles Schwab and not the Company. Fulfillment or compliance with any of these
requirements, limitations or
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conditions and payment of any applicable commissions and fees are the
responsibility of the participating employee.
15. MAY I CHANGE THE LEVEL OF MY PAYROLL DEDUCTION?
Yes. You may decrease or increase your contributions by changing your
contribution percentage (but not above the 10% limit) at any time. You may stop
your deductions at any time. Those actions will become effective at the later
of the time you choose or within two payroll periods after you return the proper
forms to U.S. Retirement benefits (see question 6 and 8).
16. HOW LONG WILL MY PAYROLL DEDUCTION AUTHORIZATION REMAIN IN EFFECT?
Your participation in the Plan will remain unchanged and effective until you
become ineligible to participate or you stop or change the level of your payroll
deduction (see question 6 and question 15).
17. HOW WILL INVESTMENTS BE MADE?
You will need to contact Charles Schwab directly once you have your CAP account
number. You have sole responsibility for your investments. The Company will
not make or monitor your investments under the Plan and does not undertake to
provide you with investment information. Neither the Company nor any person,
group or function within the Company (including but not limited to the
Investment Committee under the qualified plans of U.S. Retirement Benefits) has
any responsibility for your investments. The Account is a regular brokerage
account; Company involvement is limited to the Match and contributions features
of the Plan.
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18. IN WHOSE NAME WILL MY ACCOUNT BE REGISTERED?
Your Account will be a regular individual brokerage account registered in your
name with Charles Schwab. Unlike the EIP, you (not a trust) will own the
investments directly and in your name. No funds are set aside in a trust or
held by the Company. Your investments through the Account can go up or down,
and any risk of loss is borne by you.
19. WILL STOCK OF THE COMPANY BE AN INVESTMENT OPTION?
No. No stock of or interest in the Company will be an investment option.
20. WHAT HAPPENS IF MY INVESTMENTS LOSE MONEY, THE STOCK MARKETS CRASH OR
SOMETHING HAPPENS TO CHARLES SCHWAB? WILL THE COMPANY PROTECT ME AND MY
INVESTMENTS?
No. The Company will not protect you from these or other events. You, alone,
are responsible for your investments.
21. WILL I RECEIVE STATEMENTS ABOUT MY INVESTMENTS?
Yes. Charles Schwab will send you periodic statements and transaction
confirmation. The frequency and content of any information regarding your
Account are entirely the responsibility of Charles Schwab, not the Company.
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22. MAY I SELL MY INVESTMENTS?
Yes. You may buy and sell as much as you wish (subject to any conditions
applicable to your investments.) However, you should remember that these
transactions may have charges, costs, fees (including commissions) and tax
consequences. These charges and other amounts are your responsibility, not the
Company's responsibility.
23. MAY I WITHDRAW FUNDS FROM MY ACCOUNT?
You own the Account and may withdraw funds at any time. However, withdrawal of
any funds from your Account, regardless of the source (e.g., payroll deduction,
Match, dividends and contributions outside of the Plan), except for hardship
purposes, will cause your payroll deductions and Match to be suspended for 12
months from the later of the date of withdrawal or the date that the
contribution suspension can first be effected by the Company. After the
suspension period is over, it is your responsibility to reinitiate payroll
deductions by contacting U.S. Retirement Benefits. You may continue to make
contributions by personal check directly to Charles Schwab during the suspension
period, but you will not receive a Match. Please be aware that transfer of
funds or investments from CAP to another broker or investment accounts is a
withdrawal.
24. WHAT ARE THE QUALIFYING HARDSHIPS WHICH WOULD ALLOW ME TO CONTINUE MAKING
CONTRIBUTIONS AFTER A WITHDRAWAL?
Withdrawals in the amount necessary to satisfy the following hardships will not
result in suspension:
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(i) The payment of extraordinary and unreimbursed medical or hospital
expenses incurred by you, your spouse, any of your dependents or those of
your spouse or any nondependent parent or child of you or your spouse;
(ii) The payment of expenses for tuition, books, room-and-board and required
supplies for the next academic year of post-secondary education for you,
your spouse or child, or any of your or your spouse's dependents;
(iii) The payment of expenses incurred by you in buying your primary
residence;
(iv) The need to prevent your eviction from your primary residence or
foreclosure of your primary residence;
(v) The payment of funeral expenses for a family member or relative;
(vi) The loss of income resulting from an abbreviated work schedule required
by your or your spouse's health, a loss of employment by your working
spouse or the garnishment of your or your spouse's wages; or
(vii) Payment of taxes resulting from capital gains, dividends or other taxable
events within the plan.
(viii) The loss of income, real property, or personal property as a result of
any natural disaster approved as hardship withdrawal under EIP.
25. WHAT MUST I DO TO HAVE MY WITHDRAWAL BE CONSIDERED A HARDSHIP WITHDRAWAL?
It is your responsibility to provide U.S. Retirement Benefits with appropriate
evidence that your withdrawal is for one of the hardship reasons discussed in
question 24. The form of evidence required for a hardship withdrawal is
specified by U.S. Retirement Benefits. Please contact U.S. Retirement Benefits
to discuss evidence requirements for hardship withdrawals. If you provide the
required evidence at least 30 days before your withdrawal and the Company agrees
that your reason qualifies as a hardship, there will be no suspension of your
participation. If you do not submit your required evidence at least 30 days
before your withdrawal, or if the Company
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reviews your request and concludes that your withdrawal is not for one of the
hardship reasons, your participation will be suspended. If you are late in
submitting evidence for your withdrawal and face suspension from the Plan, the
Company will consider whether your withdrawal is a hardship withdrawal. If the
Company concludes that the withdrawal was not by reason of a hardship, your
suspension will continue. If the Company concludes that your withdrawal was for
reasons of an eligible hardship, your suspension will be revoked prospectively
upon receipt and processing of a new payroll deduction authorization. You will
not be permitted to make retroactive contributions or receive a retroactive
Match for the period of your suspension. The Company will decide whether a
---------------------------------
withdrawal constitutes a hardship for the purposes of the Plan.
- --------------------------------------------------------------
26. WHAT HAPPENS IF I'M NO LONGER AN EMPLOYEE?
After your employment terminates, you may do anything with the Account as you
wish. The Company has no authority to involve itself with your Account after
termination. However, if a Match is contributed to your Account by mistake
after you are no longer an employee, the Company can cause the Match to be
returned to the Company.
27. CAN I GET A LOAN FROM THE PLAN?
No. There is no loan feature in the CAP.
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28. WHAT HAPPENS IF I GET DIVORCED?
A transfer out of your Account or division of your Account in connection with a
divorce or marital property settlement will not be considered a withdrawal if
the transfer or division is pursuant to a final order of a court with
jurisdiction over the matter. Any other transfer or division in connection with
your divorce will be considered a withdrawal from your Account and will result
in suspension. It is your responsibility to provide the appropriate documents
to U.S. Retirement Benefits before any suspension is imposed.
29. WHAT ARE THE TAX CONSEQUENCES OF PARTICIPATING IN THE PLAN?
Information about the federal income tax consequences of participating in the
Plan is presented in Part 3 of this Booklet. That discussion includes
information about, among other things, the need to withhold taxes in connection
with the payment of the Match and the potential taxation of dividends and gains
from transactions in Account investments. You are encouraged to read Part 3
carefully and to consult with your own tax advisor about the specific tax
consequences to your participation in the Plan.
30. IS THE PLAN "QUALIFIED" UNDER THE TAX CODE?
No. The Plan is not intended to be and is not a "qualified" plan under the
Internal Revenue Code. It is not a plan described in sections 401(a), 401(k) or
423 of the Internal Revenue Code and none of the special benefits of those
provisions, including but not limited to deferral of taxes on contributions or
investment earnings, are available with respect to participation in the Plan.
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31. IS THE PLAN GOVERNED BY ERISA?
No. The Plan is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, including but not limited to the reporting,
disclosure and fiduciary responsibility rules.
32. WHO ADMINISTERS THE PLAN?
The Plan is administered by the Administrative Committee under the tax-qualified
employee benefit plans of the Company (the "Administrative Committee") to the
extent described below. Except to the extent that such responsibility is
otherwise delegated by the Board of Directors of LS&CO. or the Administrative
Committee, the Administrative Committee is responsible for the administration of
the Plan in the following respects:
(i) Determination of eligibility for participation;
(ii) Determination of whether the reason for a withdrawal satisfies as one of
the hardships specified in the Booklet;
(iii) Interpretation of the Booklet; and
(iv) The promulgation of forms relating to participation in the Plan,
excluding any forms required by Charles Schwab in connection with the
Account.
It is expected that the Administrative Committee will delegate some or all of
its responsibilities to U.S. Retirement Benefits.
Charles Schwab is responsible for the following:
(i) The investments offered to participants in the Plan;
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(ii) The provision of information to participants regarding the Accounts
including, but not limited to, information regarding assets held in the
Account, dividends paid with respect to Account investments, gains (or
losses) on transactions involving Account investments, and taxes for
which the participant may be liable with respect to the Account or its
investments; and
(iii) The execution of instructions for and transactions in the Accounts.
Charles Schwab has complete responsibility with respect to the Accounts. The
Company is not responsible for any requirements, conditions, investment options
or other decisions by Charles Schwab, or for the content or timing of any
communications or reports from Charles Schwab.
33. MAY THE PLAN BE TERMINATED OR CHANGED?
Yes. The Company anticipates that the Plan will continue. However, the Company
may amend, terminate or suspend the Plan -- including the existence or amount of
the Match, the suspension rules or the brokerage firm -- at any time and for any
reason. The Plan may be amended in writing by the Board of Directors of LS&CO.
or by any person to whom the Board of Directors has directly or indirectly
delegated the authority to amend the Plan. For purposes of any delegation of
authority to amend employee benefit plans of the Company, this Plan shall
constitute an employee benefit plan.
Charles Schwab may also change its rules, policies, investment choices and fee
and commissions structure. Those changes, and any communications about them,
are the responsibility of Charles Schwab.
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34. MAY I OBTAIN ADDITIONAL INFORMATION ABOUT THE PLAN OR THE COMPANY?
Yes. You may obtain additional information about the Plan and its
administrators by contacting the Manager of U.S. Retirement Benefits at 1155
Battery Street IH1/4, San Francisco, CA 94111 (415) 501-1532. The Company may
distribute information about the Plan by e-mail or voice mail in lieu of or in
addition to hard copy.
PART 3. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
PARTICIPATION IN THE PLAN
The following description of United States federal income tax consequences is
based on existing statutes, regulations and interpretations. These rules are
complex and may change without notice. The description is intended to be
general and should not be relied upon as specific tax advice for any individual
employee. The tax consequences of participation in the Plan may vary depending
upon individual circumstances; each employee should consult with his or her own
tax advisor. This description does not discuss tax consequences of
participation in the Plan under any local or state law or the law of any country
other than the United States.
The Plan is a voluntary investment program. There is no identifiable tax
benefit to your participation in the Plan. Specifically, you should be aware of
the following:
. Your payroll deduction contributions to the Plan are made on an after-tax
basis; that is, the contributions are included in your gross salary and are
subject to federal income, employment (including Social Security) and other
taxes.
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. You will have taxable income upon the payment of the Match. The Company is
required to withhold specific amounts of tax in connection with the Match.
. Buying and selling of securities and other investments in your Account may
generate taxable income, either as capital gains or ordinary income. It will
be your responsibility to report this income and pay any applicable taxes.
. In order for you to correctly report and pay any taxes with respect to the
investment of your Account, you must accurately record your basis in any
investment.
THE RESPONSIBILITY TO ASCERTAIN ANY REPORTABLE INCOME WITH RESPECT TO YOUR
ACCOUNT, AND TO REPORT SUCH INCOME AND PAY ANY APPLICABLE TAXES, BELONGS SOLELY
TO YOU. THE COMPANY HAS NO RESPONSIBILITY FOR SUCH TAXES OR TAX REPORTING. FOR
INFORMATION RELATING TO ANY TAX FOR WHICH YOU ARE LIABLE WITH RESPECT TO THE
ACCOUNT, YOU SHOULD LOOK TO CHARLES SCHWAB AND/OR ANY OTHER OFFEROR OF
INVESTMENTS HELD IN YOUR ACCOUNT.
******
THIS PLAN IS NOT AN EMPLOYMENT CONTRACT AND NONE OF THE PLAN PROVISIONS
GUARANTEE YOUR EMPLOYMENT WITH THE COMPANY OR AFFECT THE RIGHT OF THE COMPANY TO
TERMINATE YOUR EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE. THIS BOOKLET IS
NOT INTENDED TO IMPLY ANY PROMISE OF CONTINUED EMPLOYMENT WITH THE COMPANY. IN
FACT, EMPLOYMENT WITH THE COMPANY MAY BE ENDED WITH OR WITHOUT CAUSE, AND WITH
OR WITHOUT NOTICE, AT ANY TIME, BY EITHER THE COMPANY OR YOU. NOBODY OTHER THAN
THE CHIEF EXECUTIVE OFFICER, PRESIDENT OR A SENIOR VICE PRESIDENT OF THE
20
<PAGE>
COMPANY MAY ENTER INTO ANY AGREEMENT WITH AN EMPLOYEE THAT GUARANTEES HIS OR HER
EMPLOYMENT. IF THERE IS AN AGREEMENT BY THESE EXECUTIVES IMPLYING PROMISE OF
CONTINUED EMPLOYMENT WITH THE COMPANY, THE AGREEMENT MUST BE IN WRITING AND
SIGNED BY THE CHIEF EXECUTIVE OFFICER, PRESIDENT OR A SENIOR VICE PRESIDENT.
YOU, NOT THE COMPANY, ARE RESPONSIBLE FOR THE INVESTMENT DECISIONS AND OUTCOMES
OF YOUR ACCOUNT.
21
<PAGE>
CAPITAL ACCUMULATION PLAN OF
LEVI STRAUSS & CO.
AMENDMENTS
WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Capital Accumulation
Plan of Levi Strauss & Co. (the "CAP"); and
WHEREAS, Part 2, Q&A-33 of the CAP provides that LS&CO. may amend the CAP
at any time and for any reason; and
WHEREAS, LS&CO. desires to amend the CAP effective April 3, 2000 to
eliminate the one year service requirement for employee contributions; and
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO. authorized Robert D. Haas, Chairman of the Board, to adopt
certain amendments to the CAP and to delegate to certain other officers of
LS&CO. the authority to adopt certain amendments to the CAP; and
WHEREAS, on December 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
CAP, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREOF, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the CAP is hereby amended as follows, effective as of the
dates set forth below:
1. Effective as of April 3, 2000, the first bullet of Part 1 of the CAP is
hereby amended in its entirety to read as follows:
"Prior to April 3, 2000, Home Office payroll employees are eligible to
participate in the Plan if they have completed at least one year of
service and would be eligible to participate in the Employee
Investment Plan ("EIP") if not for that plan's exclusion of employees
whose compensation exceeds the applicable maximum limitation.
Effective as of April 3, 2000, Home Office payroll employees are
eligible to participate in the Plan if they have completed at least
one hour of service and would be eligible to participate in the EIP if
not for that
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plan's exclusion of employees whose compensation exceeds the
applicable maximum limitation."
2. Effective as of April 3, 2000, the fourth sentence of Part 2, Q&A-3 of the
CAP is hereby amended to read as follows:
"In order to otherwise have been eligible to participate in the EIP,
you must (1) have at least one year of service as an employee of the
Company or any subsidiary of the Company; except that effective as of
April 3, 2000, you must have only one hour of service as an employee
of the Company or any subsidiary of the Company, and (2) currently be
paid on the Home Office payroll and employed by the Company or any
subsidiary of the Company that has adopted the EIP."
3. Effective as of April 3, 2000, Part 2, Q&A-5 of the CAP is hereby amended
in its entirety to read as follows:
"Prior to April 3, 2000, you may enroll and begin participation in the
Plan effective on the first day of any payroll period after you have
completed one year of service (whether before or after the effective
date of the Plan) if you otherwise are an eligible employee at that
time. Effective as of April 3, 2000, you may enroll and begin your
participation in the Plan effective on the first day of any payroll
period coinciding with or following the date you perform one hour of
service, if you otherwise are an eligible employee at that time."
4. Effective as of April 3, 2000, the first sentence of Part 2, Q&A-7 of the
CAP is hereby amended to read as follows:
"After you have completed one year of service, your contributions
deducted from each paycheck and AIP payment under the Plan earn the
Match, which is an employer payment equal to 75% of your contributions
under the Plan."
* * *
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on March
____, 2000.
LEVI STRAUSS & CO.
_________________________________
Donna J. Goya
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Senior Vice President
24
<PAGE>
EXHIBIT 10.22
LEVI STRAUSS ASSOCIATES INC.
1996 SPECIAL DEFERRAL PLAN
(1994 Grants)
1. PURPOSE.
The purpose of this Levi Strauss Associates Inc. Special Deferral Plan
(1994 Grants) (the "Plan") is to enable a select group of highly compensated
management employees of Levi Strauss Associates Inc. and its subsidiaries
(collectively, the "Company") to convert the compensation element of certain
stock appreciation rights into deferred cash compensation. By means of this
Plan, the Company seeks to retain and motivate this group of key management
personnel.
2. DEFINITIONS.
2.1 ADMINISTRATOR. "Administrator" means the Personnel Committee of
the Board, another committee of the Board appointed pursuant to Section 3.1, or
the Board itself, administering this Plan as provided in Section 3.1.
2.2 BENEFICIARY. "Beneficiary" means a beneficiary designated by a
Participant pursuant to Section 6.5.
2.3 BOARD. "Board" means the Board of Directors of LSAI Holding
Corp., the parent corporation of the Company.
2.4 DEFERRAL AMOUNT. "Deferral Amount" is the portion of an SAR
Conversion Amount that a Participant elects to defer, or to continue to defer,
under this Plan.
2.5 ELECTED DISTRIBUTION YEAR. "Elected Distribution Year" means the
calendar year selected by a Participant to receive payment of part, or all (at
the Participant's election), of the balance credited (at the time of payment) to
a Reserve Account of the Participant. The Elected Distribution Year cannot be
earlier than the calendar year following the calendar year in which a Reserve
Account Vests nor later than the calendar year in which the Reserve Account's
Last Payment Date occurs; however, a Reserve Account may have more than one
Elected Distribution Year.
2.6 FIRST PAYMENT DATE. "First Payment Date" means the earlier of
(i) the first business day of January of the Elected Distribution Year and (ii)
the first business day of January immediately following the date a Participant's
employment by the Company terminates, whether voluntarily, involuntarily, or by
reason of the Participant's death or incapacity.
2.7 LAST PAYMENT DATE. "Last Payment Date" means the first business
day of January following the seventh anniversary of the grant date of an SAR.
<PAGE>
2.8 PARTICIPANT. A "Participant" is a Company employee who, on or
before August 31, 1996, (a) holds one or more SARs, (b) elects to participate in
this Plan pursuant to Section 4.1, and (c) in connection with that election
surrenders his or her SARs to the Company.
2.9 PARTICIPATION YEAR. "Participation Year" means a fiscal year of
the Company during which an individual is a Participant.
2.10 RESERVE ACCOUNT. "Reserve Account" means an unfunded, unsecured
book reserve account maintained on behalf of a Participant in respect of a
Vested or Vesting portion of an SAR pursuant to Section 6.
2.11 SAR. "SAR" means each Vested or Vesting portion of a stock
appreciation right issued by Levi Strauss Associates Inc. under its 1992
Executive Stock Appreciation Rights Plan. For example, if a stock appreciation
right was granted for 900 shares, Vesting in equal increments in 1995, 1996, and
1997, each of those increments would be an "SAR" for purposes of this Plan.
2.12 SAR CONVERSION AMOUNT. "SAR Conversion Amount" means the excess
of (i) $265 (plus an increment based upon money-market fund rates measured from
April 17, 1996 to the date on which an SAR Conversion Amount is credited to a
Participant's Reserve Account) over (ii) the nominal exercise price per share of
an SAR, multiplied by the number of nominal shares as to which the SAR was
granted.
2.13 SAR CONVERSION ELECTION. "SAR Conversion Election" means an
election pursuant to Section 4.1.
2.14 SAR PLAN. "SAR Plan" means the Company's 1992 Executive Stock
Appreciation Rights Plan.
2.15 SUBSEQUENT DEFERRAL ELECTION. "Subsequent Deferral Election"
means an election made pursuant to Section 5.2.
2.16 VESTED. "Vested" has the meaning given in Section 4.2.
3. ADMINISTRATION.
3.1 ADMINISTRATOR. This Plan shall be administered by (i) the
Personnel Committee of the Board, (ii) if so determined by the Board, by a
committee consisting of not less than two directors, or (iii) in default of a
committee acting pursuant to (i) or (ii), the Board (in any case, the
"Administrator"). The Administrator may act only by a majority of its members.
The Administrator may delegate administrative duties to such employees of the
Company as it deems proper. The Board at any time may terminate the authority
delegated to any committee pursuant to this Section 3.1 and reinstate
administration of this Plan in itself.
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<PAGE>
3.2 ADMINISTRATOR'S DETERMINATIONS BINDING. The Administrator may
adopt, alter, or repeal administrative rules, guidelines, and practices
governing this Plan as it shall deem advisable from time to time, may interpret
the terms and provisions of this Plan, may correct any defect, omission, or
inconsistency in this Plan, and shall supervise administration of this Plan. All
decisions made by the Administrator under this Plan (including without
limitation, decisions made pursuant to Section 11) shall be binding upon all
persons, including the Company and all Participants. No member of the
Administrator shall be liable for any action that he or she, in good faith,
takes or fails to take with respect to this Plan.
4. ELECTIONS; VESTING.
4.1 SAR CONVERSION ELECTIONS. Subject to the terms and conditions of
this Plan, on or before August 31, 1996, any Participant may elect to convert
into deferred cash compensation all or part of the SAR Conversion Amount as to
any SAR he or she holds at the time of the election. The election shall be made
by filing a copy of the form attached to this Plan (or such other form as the
Administrator may specify from time to time) with the Administrator at the
principal executive offices of the Company. The election shall specify the
Deferral Amount and Elected Distribution Year and shall be effective on the date
it is delivered to the Administrator. By making the election , the Participant
waives all rights he or she may possess under the SAR Plan with respect to the
SAR(s) as to which participation in this Plan is elected.
4.2 VESTING. If an SAR has not "Vested" (i.e., if the SAR would
----
forfeit upon termination of the Participant's employment with the Company) at
the date of a Participant's SAR Conversion Election, the Participant's Reserve
Account shall be subject to "Vesting" on terms and at times corresponding to the
terms and times that would have applied to the SAR but for the election.
Investment-based accretions attributable to a non-Vested Reserve Account shall
be subject to Vesting on the same terms as the Reserve Account.
5. PAYMENT OF PLAN BENEFITS.
5.1 LUMP-SUM DISTRIBUTIONS FROM RESERVE ACCOUNTS. Subject to any
Subsequent Deferral Elections of the Participant, the amount of a Participant's
Reserve Account shall be distributed to the Participant as soon as practicable
after the First Payment Date.
5.2 SUBSEQUENT DEFERRAL ELECTION. On or before the first business
day of November before the date that a distribution from a Participant's Reserve
Account otherwise is to be made pursuant to this Plan, the Participant may, by
filing with the Administrator a "Subsequent Deferral Election" (using such form
as the Administrator prescribes from time to time), defer payment of all or a
portion of such distribution for an additional one-year period (or a longer
period approved by the Administrator). Any such Subsequent Deferral Election
shall be effective only with the consent of the Administrator; however, as it is
in the Company's interest to defer payments of compensation, the Administrator
shall be deemed to consent to a Subsequent Deferral Election unless the
Administrator notifies the Participant in writing, within ten business days
after receipt of the Subsequent Deferral Election, that consent is not given.
Each Subsequent
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<PAGE>
Deferral Election shall be filed with the Administrator at the principal
executive offices of the Company. Under no circumstances, however, may a
Subsequent Deferral Election defer the distribution from a Participant's Reserve
beyond its Last Payment Date.
5.3 TERMINATION OF EMPLOYMENT. If a Participant's employment by the
Company terminates for any reason, whether voluntary, involuntary, or by reason
of death or disability, then notwithstanding any other provision of this Plan,
the First Payment Date for all the Participant's Reserve Accounts that are
Vested as of the termination date (plus deemed investment amounts accruing to
such portions between the termination and distribution dates) shall be the first
business of January immediately following termination. All non-Vested Reserve
Accounts (plus deemed investment amounts accruing to such Reserve Accounts) of a
terminated Participant shall be forfeited as of the termination date.
5.4 HARDSHIP. Upon the request of a Participant and based upon a
showing of financial hardship, the Administrator may, in its sole discretion,
accelerate the time of payment of that portion (up to all) of the amounts
credited to the Participant's Vested Reserve Accounts necessary to avoid such
hardship. For purposes of this Plan, "hardship" includes any need, circumstance,
or event that is considered a "hardship" under the then-current provisions of
the Company's Employee Investment Plan (whether or not the Participant
participates in such plan) and such other needs, circumstances, or events that
the Administrator, in its sole discretion, determines are consistent with the
goals of the Company and the requirements of administration of this Plan.
6. RESERVE ACCOUNTS.
6.1 ESTABLISHMENT AND MAINTENANCE. The Administrator shall establish
and maintain a separate Reserve Account for each SAR as to which a Participant
makes an SAR Conversion Election. Each Reserve Account shall be credited with
the amount of the Deferral Amount in respect of the SAR and with earnings and
realized and unrealized gains with respect to such Deferral Amount, based on the
investment tracking options selected by the Participant, and shall be charged
with any amount distributed to or with respect to, the Participant from the
Reserve Account in accordance with this Plan, with realized and unrealized
losses incurred by the Reserve Account based on the investment tracking options
selected by the Participant, and with any expenses, fees, and withholding taxes
properly chargeable to the Reserve Account under this Plan.
6.2 DEEMED INVESTMENT OF ACCOUNTS. By written directions to the
Administrator, each Participant shall direct the deemed investment of each of
his or her Reserve Accounts among the investment-tracking options available
under this Plan. In the absence of timely instructions, a Participant's Reserve
Accounts shall be treated as invested in a cash management money market fund
(or, if there is no cash management money market fund among the choices
available under this Plan, in the investment fund that most closely resembles a
cash management money market fund). In accordance with rules established by the
Administrator, each Participant shall be allowed to modify his or her
investment-tracking directions (or the initial deemed investment made in the
absence of directions from the Participant) with respect to all or any portion
of each of his or her Reserve Accounts, effective as of the date of the
modification established by the Administrator. By making investment-tracking
alternatives available under this Plan, the
4
<PAGE>
Company makes no representation, warranty, or guarantee regarding the prudence
or desirability of, or the return to be expected from, any alternative, nor does
the Company undertake that any alternative selected by a Participant will result
in a return of principal or deemed investment return to any of a Participant's
Reserve Accounts.
6.3 DESIGNATION OF AVAILABLE INVESTMENT OPTIONS. The Administrator
shall select the investment-tracking options that will initially be available
with respect to Reserve Accounts. The Administrator shall have the power and
authority, in its sole and absolute discretion, to add any new investment-
tracking option considered desirable and to eliminate any investment-tracking
option previously available. If an investment-tracking option is eliminated, any
Reserve Account tracking that option shall be treated as held without investment
instructions pursuant to Section 6.2 until the Participant elects another
investment-tracking option for that Reserve Account.
6.4 VALUATION OF ACCOUNTS; STATEMENTS. Following the end of each
calendar quarter, the Administrator shall value each Reserve Account, based on
the fair market value of its deemed investments as of the close of the quarter.
Each Reserve Account shall be valued separately. Any earnings and realized and
unrealized gains attributable to a Reserve Account shall be credited to such
Account, and any amounts distributed from, any realized and unrealized losses
incurred by, and any expenses and fees properly chargeable to, a Reserve Account
shall be charged against such Account. As soon as practicable after the
valuation, the Administrator shall provide each Participant (or, if applicable,
Beneficiary) a written statement of the value of each of his or her Reserve
Accounts.
6.5 BENEFICIARIES. A Participant may designate a Beneficiary or
Beneficiaries (using the form attached to this Plan as (or such other form as
the Administrator may specify from time to time)), to receive the net amount of
the Participant's Vested Reserve Accounts upon the Participant's death. A
Participant may at any time revoke the designation or substitute another
Beneficiary or Beneficiaries by delivery to the Administrator of a properly
executed designation form. If there is no valid designation of a Beneficiary on
file with the Administrator, the net amount of a deceased Participant's Vested
Reserve Accounts shall be payable to the Participant's surviving spouse, or if
the Participant does not have a surviving spouse, the Participant's estate. If
a Participant has a living spouse at the time the Participant designates a
Beneficiary other than the Participant's spouse, the Participant's spouse must
consent in writing to the designation.
6.6 NONASSIGNABILITY OF RIGHTS. The right of a Participant or any
other person to payment from the Company under this Plan may not be sold,
assigned, transferred, pledged, encumbered, or subject to attachment or
garnishment, except pursuant to court order that the Administrator determines in
its sole discretion to be valid and enforceable.
6.7 NO TRUST CREATED. Nothing contained in, and no action taken
pursuant to the provisions of, this Plan shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and the
Participant or any other person. Any funds that may be invested to fund the
obligations of the Company under this Plan shall continue for all purposes to be
part of the general assets of the Company, and no person other than the Company
shall have any interest in such assets by virtue of this Plan. To the extent
that any person acquires the right to receive a payment from the Company under
this Plan, such right shall be no greater than the right of
5
<PAGE>
any unsecured general creditor of the Company. The Company shall at all times
retain title to, and beneficial ownership of, all assets that the Company may
set aside or designate to meet its obligations under this Plan. The Company is
under no obligation to set aside, or actually to invest, funds under this Plan.
7. COSTS; TAX WITHHOLDING; TAX AND INVESTMENT ADVICE.
The Company shall bear all costs and expenses of administering this Plan
and maintaining Reserve Accounts. The Company may deduct from a Participant's
Reserve Accounts, or from distributions from a Reserve Accounts, all federal,
state, local, or foreign withholding (including without limitation, employment
taxes) or other taxes that it determines in its sole discretion are required to
be withheld due to the deferral or payment of amounts pursuant to this Plan.
Each Participant is responsible for his or her own federal, state, local. or
foreign tax liabilities in connection with this Plan. The Company is not
giving, and is not responsible for, any tax, investment, or financial advice to
any Participant in connection with this Plan.
8. NO EMPLOYMENT RIGHTS.
Nothing in this Plan or in any related document confers upon any
Participant or other person any right to continue in the employ of the Company
or affects the right of the Company to terminate the employment of that person
at any time with or without cause.
9. INDEMNIFICATION.
Each member of the Administrator and each officer and employee of the
Company shall, to the fullest extent permissible by law, be indemnified by the
Company against any and all liabilities arising by reason of any action taken or
omitted in connection with this Plan, including expenses reasonably incurred in
the defense of any claim.
10. AMENDMENT, TERMINATION OR SUSPENSION.
The Administrator may, at any time and from time to time, amend this Plan.
Rights and obligations existing at the time of any such amendment shall not be
materially and adversely altered or impaired except with the consent of the
affected Participants. The Administrator may suspend or terminate this Plan at
any time. Termination of this Plan shall not affect the payment of amounts then
credited to a Participant's Reserve Accounts, unless the Participant consents to
a different manner of payment or the Company elects to distribute all
Participants' Reserve Accounts immediately in lump sums (which the Company may
do regardless of tax or other consequences to Participants).
6
<PAGE>
11. CLAIMS AND REVIEW PROCEDURE.
The Administrator shall determine each Participant's and Beneficiary's
right to payments under this Plan. If a Participant or Beneficiary disagrees
with the Administrator's determination, he or she may make a written claim for
payments inconsistent with that determination. Any such claim shall be filed
with the Administrator at the principal executive offices of the Company. The
Administrator shall review the claim and notify the claimant of its decision in
writing within 90 days after the claim is received. If the Administrator denies
the claim, in whole or in part, the notice shall specify the reasons for denial,
references to the Plan provisions upon which denial is based, any additional
information or material necessary to perfect the claim, and procedures for
further review of the claim. Within 60 days after receipt of the notice of
denial, the claimant may file a written appeal of the denial of the claim,
identifying the grounds, facts, and any other matter upon which the appeal is
based. The Administrator shall give the claimant a reasonable opportunity to
review pertinent Plan documents in preparing an appeal. The Administrator shall
furnish the claimant a final decision within 60 days after receipt of the
request for review. If the Administrator affirms the denial of the claim in
whole or in part, it shall specify in writing the reasons for the affirmance,
with specific references to the Plan provisions upon which the affirmance is
based.
12. GOVERNING LAW.
This Plan shall be construed and interpreted in all respects in accordance
with the laws of the State of California as applied to contracts entered into by
residents of that State and entirely to be performed within that State.
13. NO ADDITIONAL BENEFITS.
For purposes of computing benefits to which a Participant may be entitled
at any time under any employee compensation or benefit plan maintained by the
Company, any payments under this Plan shall not be taken into account as
compensation to a Participant.
14. MISCELLANEOUS.
(a) No Participant shall under any circumstances have any interest in any
particular property or assets of the Company under this Plan. The benefits
conferred by this Plan are not intended to be equity interests in the Company,
and Participants shall have no equity interest in the Company by virtue of
participation in this Plan. The individuals entitled to payments under this
Plan shall have no voting or similar rights or rights to financial or other
information concerning the Company. Rights under this Plan shall not be
transferable or assignable under any circumstances, except as specifically
provided in this Plan.
7
<PAGE>
(b) Neither the establishment and operation of, nor the creation of any
interest under, this Plan limits the ability of the Company or any parent
corporation of the Company to reclassify, recapitalize, or otherwise change its
capital or debt structure or to merge, consolidate, convey any or all or its
assets, dissolve, wind up, or otherwise reorganize.
(c) This Plan represents the final, exclusive, and complete statement of
the terms of the Plan, and supersedes any and all prior or contemporaneous
understandings, representations, documents, and communications of the Company,
any parent corporation of the Company, and any employee of the foregoing,
relating to the subject matter of this Plan.
(d) This Plan is intended only to provide cash payments for work performed
for the Company, payment of which is not systematically deferred to the
termination of employment or beyond and does not provide retirement income to
employees within the meaning of Department of Labor Regulation Section 2510.3-
2(c). Payments under this Plan shall be made from the general funds of the
Company, and no special or separate fund shall be established, or other
segregation of assets made, to assure payment.
15. ADOPTION.
This Plan was adopted by the Company on June 3, 1996.
8
<PAGE>
EXHIBIT 10.23
KEY EMPLOYEE RECOGNITION AND COMMITMENT PLAN
OF
LEVI STRAUSS & CO.
CONFIDENTIAL
------------
<PAGE>
ABOUT THIS MATERIAL
- --------------------------------------------------------------------------------
This document describes how the Key Employee Recognition and Commitment Plan of
Levi Strauss & Co. works. It explains:
. The purpose of the Plan;
. Who administers the Plan;
. Who is eligible to receive an award under the Plan;
. How individual awards are determined;
. What a Unit is and how it works;
. When awards are paid; and
. What happens in the event of termination of employment.
This is the official Plan document, which contains the exclusive and complete
description of the terms this Plan. This Plan may be amended from time to time,
at the discretion of the Administrator.
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Key Employee Recognition and Commitment Plan of Levi Strauss & Co. 1
Appendix One: Glossary of Terms 17
Appendix Two: Time Line of Actions Under This Plan 20
</TABLE>
<PAGE>
KEY EMPLOYEE RECOGNITION AND COMMITMENT PLAN
OF LEVI STRAUSS & CO.
- -------------------------------------------------------------------------------
The Key Employee Recognition and Commitment Plan of Levi Strauss & Co. ("Plan")
recognizes and rewards key employees for making contributions, over time, to the
Company's success. Awards are based on achievement of long-term financial and
corporate values objectives of the Company.
PURPOSE OF THE PLAN
- -------------------
. To recognize selected key employees who have made, continue to make,
have the potential to make, or are expected to make substantial
contributions to the Company.
. To engender a commitment to the continued success of the Company.
. To engender a commitment to enhance pride of association with the
Company.
. To provide a financial award for meeting long-term financial objectives
measured by cash flow and for modeling and promoting Company values and
integrating such values into all business decisions.
. To encourage and reward team performance.
EFFECTIVE DATE
- --------------
. The Plan starts on the first day of fiscal year 1997, and ends on the
last day of fiscal year 2003.
PLAN ADMINISTRATION
- -------------------
. The Plan is administered under the direction of the Administrator. The
Administrator's determinations and interpretations (including, without
limitation, those relating to determination of Financial Unit Value,
Settlement Unit Value, Corporate Values Score, and those relating to
payment upon employment termination) shall be binding on all
1
<PAGE>
Participants. In administering the Plan, the Administrator will consult
with the Chief Executive Officer. The Administrator may delegate any of its
duties to others.
. The Administrator's responsibilities include, but are not limited to,
approving:
-- An employee's participation in the Plan, as nominated by the Chief
Executive Officer;
-- Financial and corporate values measures and objectives;
-- Participants' individual target awards;
-- Corporate Values Scores;
-- Settlement Unit Values;
-- Award Payments;
-- Interpretation of the Plan; and
-- Plan amendments.
ELIGIBILITY
- -----------
. Participants are employees of the Company and Subsidiaries who are
nominated by the Chief Executive Officer and approved by the Administrator.
WRITTEN AWARD AGREEMENT
- -----------------------
. A written Award Agreement will be created for each Participant that
documents the number of Units granted and other terms, conditions, and
rights as determined by the Administrator.
TARGET AWARDS FOR PARTICIPANTS
- ------------------------------
2
<PAGE>
. Participants' individual target awards are determined by the
Administrator.
GRANTS
- ------
. A Participant will receive a one-time grant of Units as of the first day
of fiscal year 1997. Subsequently, the Administrator may, at its
discretion, grant additional Units to Participants, including new
Participants.
. The number of Units granted is determined by dividing the Participant's
individual target award by $1,000.
FINANCIAL MEASURES AND OBJECTIVES
- ---------------------------------
. The Company's EBITDA is the measure used to set the Company's financial
objectives and to assess performance against those objectives.
. The Company's EBITDA means the audited net income of the Company on a
consolidated basis before (1) interest, (2) taxes, (3) depreciation, (4)
amortization, (5) costs and expenses relating to the Company's acquisition
of Levi Strauss Associates Inc., including compensation-related expenses
resulting from such acquisition, such as with respect to stock options and
stock appreciation rights, (6) all accruals and expenses directly relating
to the operation of the Global Success Sharing Plan, and (7) all accruals
and expenses directly relating to the operation of this Plan, all as
determined by the Administrator.
. The financial objectives are shown below in Table I on page 5.
. The Company's achievement of financial objectives will be expressed as
Financial Unit Value, as shown in Table II on page 5.
CORPORATE VALUES OBJECTIVES
- ---------------------------
3
<PAGE>
. The use of Corporate Values Score is intended to align the financial
rewards under the Plan with the Company's strategic aim of promoting and
integrating Company values into business decisions and practices.
. The Chief Executive Officer may seek Participants' recommendations in
establishing or revising the corporate values objectives for purposes of
this Plan. The Chief Executive Officer will initially determine the
corporate values objectives during the fiscal year 1997 and may
subsequently revise them. The Administrator may review the initial or
revised corporate values objectives at the Administrator's initiation and
discretion.
. The Company's and the Participants' collective achievement of the
corporate values objectives will be reviewed by the Chief Executive
Officer, with the Participants' input, on a cumulative and on-going basis
at such times as the Chief Executive Officer may decide in his or her sole
discretion.
. The Company's and the Participants' collective achievement of corporate
values objectives, as of the end of fiscal years 2001, 2002, and 2003, will
be expressed as the Corporate Values Score. The range of the Corporate
Values Score will be determined by the Chief Executive Officer, with input
from the Participants', in fiscal year 1997. The Chief Executive Officer
will determine the Corporate Values Score, subject to review and
modification by the Administrator at the Administrator's initiative and
discretion.
. If Corporate Values Score is not measured for any particular fiscal
year, the last measured Corporate Values Score will be used in determining
Settlement Unit Value (as defined below under "Settlement Unit Value and
Award Payment").
SETTLEMENT UNIT VALUE AND AWARD PAYMENT
- ---------------------------------------
. Award Payment is the cash payable to a Participant upon exercise of his
or her vested Units. The amount of Award Payment is determined by
multiplying the number of Units exercised by the applicable Settlement Unit
Value.
. Settlement Unit Value is determined by multiplying the Financial Unit
Value by the Corporate Values Score (each as applicable during the Exercise
Period in which the vested Units are exercised).
. The Financial Unit Value will be determined as of the last day of fiscal
years 2001, 2002, and 2003, based on the Company's achievement of financial
objectives.
4
<PAGE>
. Table I shows the Company's financial objectives, i.e., threshold and
target EBITDA levels for fiscal years 2001, 2002, and 2003:
Table I
<TABLE>
<CAPTION>
===================================================================================================================
CUMULATIVE EBITDA IN END OF FISCAL YEAR END OF FISCAL YEAR END OF FISCAL YEAR
U.S. $ (IN BILLIONS) 2001 2002 2003
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TARGET $6.2 $8.1 $10.2
-------------------------------------------------------------------------------------------------------------------
THRESHOLD $4.8 $6.0 $ 7.2
===================================================================================================================
</TABLE>
. Table II shows the Financial Unit Value upon meeting threshold and target
EBITDA levels for fiscal years 2001, 2002, and 2003.
Table II
<TABLE>
<CAPTION>
===================================================================================================================
FINANCIAL UNIT VALUE END OF FISCAL YEAR END OF FISCAL YEAR END OF FISCAL YEAR
2001 2002 2003
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TARGET $667 $833 $1,000
-------------------------------------------------------------------------------------------------------------------
THRESHOLD $ 0 $ 0 $ 0
===================================================================================================================
</TABLE>
. As of end of each fiscal year 2001, 2002, and 2003,
-- The Financial Unit Value will be zero if the Company's EBITDA meets or
is less than the threshold level.
-- If the Company's EBITDA meets the target level, the Financial Unit
Value will be as shown above in Table II.
-- If the Company's EBITDA is between the threshold level and the target
level, the Financial Unit Value will be interpolated on a straight-
line basis.
-- If the Company's EBITDA exceeds the target level, the Financial Unit
Value will be extrapolated on a straight-line basis.
-- There is no maximum on the Financial Unit Value.
PERFORMANCE PERIOD
- ------------------
5
<PAGE>
. The Performance Period for the Units will be up to 7 years. The
Performance Period of the Units for an individual Participant also depends
on employment termination, as discussed further on pages 8-12 regarding
termination of employment.
VESTING AND EXERCISE SCHEDULE; DEFERRAL OF RECEIPT
- --------------------------------------------------
. The Units granted effective as of the beginning of fiscal year 1997 will
vest in 25% increments on the last day of fiscal years 1997, 1998, 1999,
and 2000, respectively. All other grants will be subject to vesting terms
established by the Administrator.
. The vested Units will become exercisable in 33-1/3% increments on the
last day of fiscal years 2001, 2002, and 2003, respectively. Once vested
Units become exercisable, a Participant can exercise all or any portion of
his or her vested Units, by delivering to the Company, during any Exercise
Period, an exercise notice in a form to be prescribed by the Administrator.
. Vested Units that have not been exercised by the end of fiscal year 2003
will be automatically deemed exercised during the second quarter of fiscal
year 2004, and Award Payment will be paid as soon as practicable
thereafter.
. A Participant who is eligible to participate in the Company's Deferred
Compensation Plan For Executives may defer receipt of Award Payment payable
upon future exercise of his or her vested Units, to the extent permitted
under and in accordance with the terms of the Deferred Compensation Plan
for Executives. A Participant who elects to defer must elect irrevocably,
on a form to be prescribed by the Administrator, during the applicable
Deferral Election Period.
. For any Participant who is not eligible to participate in the Company's
Deferred Compensation Plan For Executives and whose Company-related income
is subject to taxation outside of the United States, deferral of receipt of
Award Payment will be subject to local law and at the discretion of the
Administrator, as of the beginning of the applicable Deferral Election
Period.
. Applicable Deferral Election Periods are as follows:
-- With respect to vested Units that become exercisable at the end of
fiscal year 2001, the Deferral Election Period is the second quarter
of fiscal year 2001.
6
<PAGE>
-- With respect to vested Units that become exercisable at the end of
fiscal year 2002, the Deferral Election Period is the second quarter
of fiscal year 2002.
-- With respect to vested Units that become exercisable at the end of
fiscal year 2003, the Deferral Election Period is the second quarter
of fiscal year 2003.
. Table III shows the vesting and exercise schedule, Exercise Periods, and
the Deferral Election Periods.
Table III
<TABLE>
<CAPTION>
==================================================================================================================================
FISCAL YEAR PERCENTAGE OF UNITS RIGHT TO EXERCISE VESTED PERCENTAGE OF VESTED EXERCISE PERIOD DEFERRAL ELECTION
VESTED (ON THE LAST UNITS (ON THE LAST DAY UNITS EXERCISABLE PERIODS (FOR ELIGIBLE
DAY OF THE FISCAL OF THE FISCAL YEAR) (ON THE LAST DAY OF PARTICIPANTS)
YEAR) THE FISCAL YEAR)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 25% No 0 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
1998 25% No 0 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
1999 25% No 0 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
2000 25% No 0 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
2001 -- Yes first 33-1/3 2nd quarter of 2nd quarter of FY
FY 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------
2002 -- Yes second 33-1/3 2nd quarter of 2nd quarter of FY
FY 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
2003 -- Yes/Automatic third 33-1/3 2nd quarter of 2nd quarter of FY
FY 2004 2003
===============================================================================================================================
</TABLE>
TIME LINE ILLUSTRATION
- ----------------------
. Appendix Two on pages 20-22 shows a time line illustrating when the
corporate values objectives are established, when Corporate Values Scores
are measured, when Financial Unit Values are measured, when Units become
vested and exercisable, the Exercise Periods during which vested Units can
be exercised, and the Deferral Election Periods in which to elect to defer
receipt of Award Payments.
ACCELERATION OF VESTING AND PAYMENTS
- ------------------------------------
7
<PAGE>
. Notwithstanding any other provision of this Plan, the Administrator may,
in its discretion, accelerate the vesting schedule or require any
Participant to cash out or exercise all vested Units at the applicable
Settlement Unit Value, regardless of the tax, financial, or other
consequence to the Participant of such acceleration, exercise, or cashout.
TERMINATION OF EMPLOYMENT DUE TO RETIREMENT
- -------------------------------------------
. A Participant who Retires during the second half of a fiscal year will
be treated for vesting purposes as if he or she had continued in employment
through the end of such fiscal year. A Participant who Retires during the
first half of a fiscal year will not be given any credit for vesting
purposes for employment during such fiscal year.
. A Participant who Retires can exercise his or her vested Units only in
accordance with the vesting and exercise schedule shown in Table III on
page 7.
TERMINATION OF EMPLOYMENT DUE TO DEATH
- --------------------------------------
. A Participant who dies during a fiscal year will be treated for vesting
purposes as if he or she had survived and remained employed through the end
of such fiscal year.
. The Beneficiary of a Participant who terminates employment due to death
will receive a lump-sum cashout of the Participant's unexercised vested
Units as soon as practicable.
. The amount of the lump-sum cashout will be determined by multiplying the
number of unexercised vested Units by the applicable Settlement Unit Value.
. The applicable Settlement Unit Values will be determined as shown in
Table IV:
Table IV
-----------------------------------------------------------------------------
TERMINATION OF EMPLOYMENT DUE TO SETTLEMENT UNIT VALUE
DEATH DURING
-----------------------------------------------------------------------------
FY 1997 $125
-----------------------------------------------------------------------------
FY 1998 $250
-----------------------------------------------------------------------------
FY 1999 $375
-----------------------------------------------------------------------------
FY 2000 $500
-----------------------------------------------------------------------------
1st half of FY 2001 $500
-----------------------------------------------------------------------------
2nd half of FY 2001 Settlement Unit Value based on Financial
Unit Value and Corporate Values Score as
the end of FY 2001
8
<PAGE>
-----------------------------------------------------------------------------
1st half of FY 2002 Settlement Unit Value based on Financial
Unit Value and Corporate Values Score as
the end of FY 2001
-----------------------------------------------------------------------------
2nd half of FY 2002 Settlement Unit Value based on Financial
Unit Value and Corporate Values Score as
the end of FY 2002
-----------------------------------------------------------------------------
1st half of FY 2003 Settlement Unit Value based on Financial
Unit Value and Corporate Values Score as
the end of FY 2002
-----------------------------------------------------------------------------
2nd half of FY 2003 Settlement Unit Value based on Financial
Unit Value and Corporate Values Score as
the end of FY 2003
===============================================================================
TERMINATION OF EMPLOYMENT DUE TO PERMANENT DISABILITY
- -----------------------------------------------------
. A Participant who terminates employment due to Permanent Disability during
a fiscal year will be treated for vesting purposes as if his or her
employment had continued through the end of such fiscal year.
. A Participant who terminates employment due to Permanent Disability can
exercise his or her vested Units only in accordance with the vesting and
exercise schedule shown in Table III on page 7.
. Notwithstanding the preceding provision of this Plan, a Participant who
terminates employment due to Permanent Disability may apply, because of
hardship or other reasons, to the Administrator for a cashout of his or her
unexercised vested Units at any time. The Administrator may grant or deny
the application in the Administrator's sole discretion.
. If the Administrator approves a cashout of unexercised vested Units
before the Participant would otherwise be able to exercise them, the
cashout will be paid as soon as practicable. The amount of such cashout
will be determined by multiplying the number of Units cashed out by the
applicable Settlement Unit Value.
. The applicable Settlement Unit Value depends on when a Participant's
termination of employment occurs. The applicable Settlement Unit Value
will be determined in the same manner as for termination of employment due
to death, as set forth in Table IV on page 9.
TERMINATION OF EMPLOYMENT BY RESIGNATION
- ----------------------------------------
. A Participant who terminates employment by resignation during the second
half of a fiscal year will be treated for vesting purposes as if he or she
had continued in employment through the end of such fiscal year. A
Participant who resigns during the first half of a fiscal year will not be
given any credit for vesting purposes for employment during such fiscal
year.
9
<PAGE>
. A Participant who terminates employment by resignation will receive a
lump- sum cashout of unexercised vested Units as soon as practicable.
. The amount of the lump-sum payment will be determined by multiplying the
number of unexercised vested Units by the applicable Settlement Unit Value.
. The applicable Settlement Unit Value depends on when a Participant's
termination of employment occurs. The applicable Settlement Unit Value
will be determined in the same manner as for termination of employment due
to death, as set forth in Table IV on page 9.
INVOLUNTARY TERMINATION OF EMPLOYMENT DUE TO LAYOFF
- ---------------------------------------------------
. A Participant who terminates employment due to layoff during a fiscal
year will be treated for vesting purposes as if his or her employment had
continued through the end of such fiscal year.
. A Participant who terminates employment due to layoff can exercise his
or her vested Units only in accordance with the vesting and exercise
schedule shown on Table III on page 7.
. Notwithstanding the preceding provision of the Plan, a Participant who
terminates employment due to layoff may apply, because of hardship or other
reason, to the Administrator for a cashout of his or her unexercised vested
Units at any time. The Administrator may grant or deny the application in
the Administrator's sole discretion.
. If the Administrator approves a cashout of unexercised vested Units
before the Participant would otherwise be able to exercise them, the
cashout will be paid as soon as practicable. The amount of such cashout
will be determined by multiplying the number of Units cashed out by the
applicable Settlement Unit Value.
. The applicable Settlement Unit Value depends on when a Participant's
termination of employment occurs. The applicable Settlement Unit Value
will be determined in the same manner as for termination of employment due
to death, as set forth in Table IV on page 9.
10
<PAGE>
INVOLUNTARY TERMINATION OF EMPLOYMENT FOR UNSATISFACTORY PERFORMANCE
- --------------------------------------------------------------------
OR MISCONDUCT
- -------------
. If a Participant's employment is terminated for unsatisfactory
performance or misconduct, the Participant will forfeit all Units, vested
or otherwise, and any other rights under the Plan, and will not be entitled
to any payment under the Plan.
. The Administrator will determine in its sole discretion whether a
termination for unsatisfactory performance or misconduct exists in
individual cases.
DISCIPLINARY FORFEITURE
- -----------------------
. A Participant will forfeit all Units, vested or otherwise, and any other
rights under the Plan, and will not be entitled to any payment under the
Plan, if:
-- The Participant commits an act of misconduct while an employee of the
Company or a Subsidiary, regardless of whether his or her employment
is terminated by the Company or Subsidiary; or
-- The Participant commits a breach of his or her Award Agreement at any
time, including after termination of employment.
. The Administrator will determine in its sole discretion whether a
Participant's act constitutes an act of misconduct or breach.
BENEFICIARY DESIGNATION
- -----------------------
. As part of the Award Agreement, each Participant shall name a person or
persons as the Beneficiary who is to receive any distribution payable under
the Plan in the event of the Participant's death. The most recently
designated Beneficiary will apply to all distributions, unless otherwise
specified by the Participant. In the event that no Beneficiary has been
properly designated, or if no properly designated Beneficiary survives the
Participant, the Participant's estate shall be the Participant's
Beneficiary.
11
<PAGE>
TAX WITHHOLDING
- ---------------
. The Company may deduct from the cash payment to be paid upon exercise or
cashout of vested Units any applicable taxes (e.g., U.S. federal, state,
local or other taxes) required to be withheld by virtue of the exercise of
the Units.
NO TAX, FINANCIAL, LEGAL OR OTHER ADVICE
- ----------------------------------------
. The Company or any Subsidiary has not and will not provide any tax,
financial, legal, or other advice related to participation in the Plan,
including, but not limited to, tax or financial consequences of
participating in the Plan. No provision of the Plan will be interpreted as
giving such advice.
OTHER BENEFITS
- --------------
. Units granted and payments made with respect to those Units will not be
considered compensation when determining any other Company-sponsored
benefits (e.g., pension benefits, CAP benefits), except as provided under
the Deferred Compensation Plan For Executives in the event a Participant
elects to defer receipt of Award Payment under this Plan, as described on
page 6.
NONASSIGNABILITY
- ----------------
. No Units or other rights granted under or provided by this Plan are
assignable or transferable by Participants, or otherwise subject to levy,
attachment, or execution of a judgment of any kind, except as provided for
by a Participant's will or by the laws of descent and distribution.
. Qualified Domestic Relations Order
-- Notwithstanding the preceding provision of the Plan, cash payable
to a Participant under this Plan may be paid to an "alternate payee,"
as such person is defined in section 414(p)(8) of the Code.
12
<PAGE>
-- The amount payable to an alternate payee is as provided by a
domestic relations order with respect to the Plan that would
constitute a qualified domestic relations order within the meaning of
section 404(p)(1)(A) of the Code, as if the Plan were subject to Code
section 414(p).
-- Determination of whether an order would constitute a qualified
domestic relation order will be made by the Administrator, or its
designee, in its sole discretion.
-- The rights of any alternative payee hereunder are subject to the
provisions of the Plan as administered with respect to alternate
payees, and the Administrator may require an alternate payee to
acknowledge that his or her rights are subject to such provisions.
. A Participant's right to exercise Units under the Plan are exercisable
during the Participant's lifetime only by the Participant or his or her
legal representative.
UNFUNDED STATUS
- ---------------
. The Plan is unfunded. A Participant's right to receive payments under
the Plan is an unsecured claim against the general assets of the Company.
Although the Company may establish a bookkeeping reserve to meet its
obligations, any rights acquired by any Participant are no greater than the
right of any unsecured general creditor of the Company.
. No provision of the Plan gives anyone any interest in any particular
property or asset of the Company or any stockholder rights, such as voting
or dividend rights. The Company shall not be required to segregate any
assets that may at any time be represented by cash or Units, nor shall the
Company, Board of Directors, or the Administrator be deemed to be a trustee
of any cash or Units to be paid or granted under this Plan. Any liability
of the Company to any holder with respect to a grant of Units under this
Plan shall be based solely upon any contractual obligations that may be
created by this Plan. No such obligation of the Company shall be deemed to
be secured by any pledge of, or other encumbrance or security interest in,
any property of the Company or any Subsidiary. Neither the Company, the
Board of Directors, nor the Administrator shall be required to give any
security or bond for the performance of any obligation that may be created
by this Plan. No Subsidiary shall have any obligation or liability to any
person under this Plan.
NO LIMIT ON CAPITAL STRUCTURE CHANGES
- -------------------------------------
13
<PAGE>
. The establishment and operation of this Plan, including the grant of
Units under this Plan, will not limit the ability of the Company or of any
Subsidiary to reclassify, recapitalize, or otherwise change its capital or
debt structure; to merge, consolidate, convey any or all of its assets,
dissolve, liquidate, windup, or otherwise reorganize; or to take any action
in respect of its manufacturing, marketing, distribution, merchandising,
management, or any other aspect of its business, regardless of the impact
on EBITDA or otherwise.
NO EMPLOYMENT RIGHTS
- --------------------
. No provision of the Plan gives any Participant or anyone else the right
to remain employed with the Company or its Subsidiary. The Company, and
each Subsidiary, reserves the right to terminate any Participant's
employment at any time, with or without cause and with or without notice.
AMENDMENT, MODIFICATION, OR TERMINATION OF PLAN
- -----------------------------------------------
. The Administrator may modify, amend, or terminate any and all provisions of
the Plan, and establish rules and procedures for its administration, at its
discretion and without notice. Plan termination shall have the effect of
terminating all unvested Units.
SEVERABILITY
- ------------
. If any provision of this Plan is held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan will be construed and enforced as if the illegal or
invalid provision were not part of the Plan.
NO WAIVER
- ---------
. Failure of the Company to enforce at any time any provision of this Plan
shall in no way be construed to be a waiver of such provision or any other
provision of the Plan.
GOVERNING LAW
- -------------
. The Plan and all individual Award Agreements hereunder will be governed
by the laws of the State of California. In applying the laws of the State
of California, its rules on choice of law will be disregarded.
ALL PROVISIONS
- --------------
. This official Plan document represents the exclusive and complete statement
of the terms of the Plan, and supersedes any and all prior or
contemporaneous understandings, representations, documents, and
communications between the Company or any Subsidiary and any Participant,
whether oral or written, relating to its subject matters. The formal name
of this Plan is the "Key Employee Recognition And Commitment Plan of Levi
Strauss & Co." In the event of any conflict between the provisions of this
official
14
<PAGE>
Plan document, as amended from time to time, and any other document
describing or otherwise relating to the Plan, this official Plan document
shall control.
Adoption
- --------
To record the adoption of the Key Employee Recognition and Commitment Plan of
Levi Strauss & Co., the Company has caused its duly authorized officer to
execute this document.
Levi Strauss & Co.
By: _________________________
Title: Chief Executive Officer
Date: _______________________
15
<PAGE>
APPENDIX ONE: GLOSSARY OF TERMS
- --------------------------------------------------------------------------------
Administrator means the Personnel Committee of the Board of Directors of the
- -------------
Company.
Award Agreement means the written agreement between the Company and a
- ---------------
Participant that sets forth the number of Units granted to the Participant and
other terms and conditions of the grant.
Award Payment means the cash payable to a Participant when the Participant
- -------------
exercises his or her vested Units. The amount is based on the applicable
Settlement Unit Value.
Beneficiary means the person or persons designated by a Participant to receive
- -----------
any distribution payable under the Plan in the event of the Participant's death.
The most recently designated Beneficiary will apply to all distributions, unless
otherwise specified by the Participant. If no Beneficiary has been properly
designated, or if no properly designated Beneficiary survives the Participant,
the Participant's estate will be the Participant's Beneficiary.
Code means the Internal Revenue Code of 1986, as amended.
- ----
Company means Levi Strauss & Co.
- -------
Corporate Values Score means a measure of the Company's and the Participants'
- ----------------------
collective achievement against the corporate values objectives. The Chief
Executive Officer may seek the Participants' recommendations in establishing or
revising the corporate values objectives. Corporate values objectives may
include, but are not limited to, corporate reputation, customer satisfaction,
and employee satisfaction. Although the Chief Executive Officer may seek
Participants' recommendations, the Chief Executive Officer has sole discretion
in establishing or revising the corporate values objectives, subject to review
and modification by the Administrator at the Administrator's initiative and
discretion. The Chief Executive Officer will determine the Corporate Values
Score, subject to review and modification by the Administrator at the
Administrator's initiative and discretion. The Corporate Values Score range
(e.g., 0.8 - 1.2) will be determined by the Chief Executive Officer with
Participants' input in fiscal year 1997.
EBITDA means the audited net income of the Company on a consolidated basis
- ------
before (1) interest, (2) taxes, (3) depreciation, (4) amortization, (5) costs
and expenses relating to the Company's acquisition of Levi Strauss Associates
Inc., including compensation-related expenses resulting from such acquisition,
such as with respect to stock options and stock appreciation rights, (6) all
accruals and expenses directly relating to the operation of the Global Success
16
<PAGE>
Sharing Plan, and (7) all accruals and expenses directly relating to the
operation of this Plan, all as determined by the Administrator.
Exercise Period means the period in which a Participant may exercise vested
- ---------------
Units. The Exercise Periods are the second quarter of fiscal years 2002, 2003,
and 2004.
Financial Unit Value means a measure of the Company's achievement against
- --------------------
financial objectives set in the Plan. The Financial Unit Value is zero if the
Company's EBITDA does not exceed the threshold EBITDA level, and increases as
the Company's EBITDA exceeds the threshold level. The rate of increase in
Financial Unit Value is tied to the target EBITDA level. There is no cap on the
Financial Unit Value. Table I on page 5 shows the threshold and target EBITDA
levels for fiscal years 2001, 2002, and 2003, and Table II on page 5 shows the
corresponding Financial Unit Values.
Participant means an employee of the Company or a Subsidiary, nominated by the
- -----------
Chief Executive Officer and approved by the Administrator, who has been granted
Units under this Plan.
Performance Period means, with respect to a Unit, the time period during which
- ------------------
the Company's achievement of financial and corporate values objectives is
measured. If an individual Participant terminates his or her employment during
the term of this Plan, the Performance Period of his or her Units would depend
on the type of termination and when such termination occurs, as described
further on pages 8-12.
Permanent Disability means the Participant is disabled within the meaning of,
- --------------------
and eligible for benefits under, a long-term disability program or equivalent
program maintained by the Company or a Subsidiary employing the Participant; or,
in the opinion of the Administrator or its designee, is unable to engage in any
substantially gainful employment by reason of any physical or mental impairment
which can be expected to result in death or which can be expected to last for
not less than 12 months.
Retirement or Retire means termination of employment by a Participant who meets
- ---------- ------
the age and service requirement as defined and determined under the pension plan
applicable to the Participant and who elects to retire thereunder.
Settlement Unit Value means the monetary value of a Unit upon exercise.
- ---------------------
Settlement Unit Value is determined by multiplying the Financial Unit Value and
the Corporate Values Score applicable during the Exercise Period in which the
Unit is exercised.
17
<PAGE>
Subsidiary means any corporation of which more than 50% of the outstanding
- ----------
shares having ordinary voting power are owned or controlled by the Company, and
any other entity that the Board of Directors of the Company, in its sole
discretion, deems to be a Subsidiary.
Unit means a future right to receive cash under the Plan. Its initial value is
- ----
zero, but the value may increase or decrease over time based on the Company's
achievement of financial and corporate values objectives during the Performance
Period.
Vesting means owning the right to the value of Units granted to a Participant
- -------
under the Plan. For Units granted effective as of the beginning of fiscal year
1997, vesting occurs in 25% increments on the last day of fiscal years 1997,
1998, 1999, and 2000, as shown in Table III on page 7. All other Units will vest
according to the terms established by the Administrator.
18
<PAGE>
<TABLE>
<CAPTION>
APPENDIX TWO: TIME LINE OF ACTIONS UNDER THIS PLAN
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
* FY 1997 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
? . Corporate values objectives are established during FY 1997 and may be ?
revised thereafter.
. The range of the Corporate Values Score will be determined during FY 1997.
?
. 25% Units
Vested
-------------------------------------------------------------------------------------------------------
* FY 1998 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
?
. Additional 25%
Units Vested
-------------------------------------------------------------------------------------------------------
* FY 1999 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
?
. Additional 25%
Units Vested
-------------------------------------------------------------------------------------------------------
* FY 1999 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
?
. Additional 25%
Units Vested
</TABLE>
* The Company's and the Participants' collective achievement of the corporate
values objectives will be reviewed by the Chief Executive Officer, with the
Participants' input, on a cumulative and on-going basis as such times as the
Chief Executive Officer may decide in his or her sole discretion.
19
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* FY 2001 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
. If eligible, may ?
irrevocably elect . First 33-1/3%
to defer receipt of exercisable
payment upon
exercise of first
33-1/3%, which
becomes
exercisable at the
end of FY 2001,
regardless of
when actually
exercised
-------------------------------------------------------------------------------------------------------
* FY 2002 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
. Financial Unit . May exercise ?
Value determined the first 33-1/3% . Second 33-1/3%
. Corporate Values . If eligible, may exercisable
Score determined irrevocably elect
to defer receipt of
payment upon
exercise of
second
33-1/3%, which
becomes
exercisable at the
end of FY 2002,
regardless of
when actually
exercised
</TABLE>
* The Company's and the Participants' collective achievement of the corporate
values objectives will be reviewed by the Chief Executive Officer, with the
Participants' input, on a cumulative and on-going basis as such times as
the Chief Executive Officer may decide in his or her sole discretion.
20
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* FY 2003 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
. Financial Unit . May exercise ?
Value determined second 33-1/3% . Third 33-1/3%
. Corporate Values plus any other exercisable
Score determined unexercised
vested Units
. If eligible, may
irrevocably elect
to defer receipt of
payment upon
exercise of
third
33-1/3%, which
becomes
exercisable at the
end of FY 2003,
regardless of
when actually
exercised
-------------------------------------------------------------------------------------------------------
FY 2004 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
. Financial Unit . Automatic
Value determined exercise of
. Corporate Values unexercised,
Score determined vested Units
</TABLE>
* The Company's and the Participants' collective achievement of the corporate
values objectives will be reviewed by the Chief Executive Officer, with the
Participants' input, on a cumulative and on-going basis as such times as the
Chief Executive Officer may decide in his or her sole discretion.
<PAGE>
EXHIBIT 10.24
GLOBAL SUCCESS SHARING PLAN
ARTICLE I
PURPOSE
Section 1.
Section 1.1. The Global Success Sharing Plan is designed to provide
the world-wide employees of Levi Strauss & Co. ("Company") and its Subsidiaries
with the opportunity to share in the value created during the six-year period
following the acquisition of LSAI by the Company, by providing a cash payment to
them if the Company achieves specified cash flow objectives on a consolidated
basis.
ARTICLE II
DEFINITIONS
"Administrator" means the Human Resources Council of the Company.
"Adjusted Pool Amount" means the Aggregate Pool Amount less the sum of
all Interim Payouts.
"Aggregate Pool Amount" is the applicable portion (if any) of
cumulative EBITDA during the Measurement Period available for distribution to
Eligible Participants, which will be calculated in accordance with Section 6.1.
"Aggregate Target Payout Amount" means an amount, which will be
calculated as of the last day of the Measurement Period, equal to the sum of all
individual Target Payout Amounts excluding the Target Payout Amount for any
Eligible Participant who receives an Interim Payout.
"Applicable EBITDA Percentage" means, the percentage corresponding to
a specific level of cumulative EBITDA as set forth in Annex A.
-------
"Board" means the Board of Directors of the Company.
"Cause" means good reason for termination of employment, as determined
by the Administrator, in its sole discretion, including, but not limited to,
substandard performance, unacceptable behavior, or poor attendance. For the
purposes of the Plan, misconduct is not included in this definition and is
outlined separately under "Misconduct". The fact that an employee is terminated
for "cause" within the meaning of a particular jurisdiction's laws, regulations,
governing judicial precedents or employment practice, will not mean that such
employee has been
<PAGE>
terminated for Cause for purposes of this Plan unless the Administrator, in its
sole discretion, so determines.
"Company" means Levi Strauss & Co., a Delaware corporation, and any
successor by operation of law thereto, including by reason of merger,
consolidation or similar transaction, or otherwise.
"Compensation" means the amount of a Participant's annual compensation
in effect as of April 17, 1996 (stated in non-U.S. currency, where applicable),
determined in accordance with the formula applicable to such Participant, as set
forth in Article V. Compensation is used to determine the U.S. Dollar-based
Target Payout Amount.
"EBITDA" means the audited net income of the Company on a consolidated
basis before (1) interest, (2) taxes, (3) depreciation, (4) amortization, (5)
costs and expenses relating to the Company's acquisition of LSAI, including
compensation-related expenses resulting from such acquisition, such as with
respect to stock options and stock appreciation rights, and (6) all accruals and
expenses directly relating to the operation of the Plan.
"Effective Date" means November 27, 1995, which was the first day of
fiscal 1996.
"Eligible Participant" has the meaning set forth in Section 4.3.
"Eligible Quarters" means the number of full fiscal quarters a
Participant is employed during the Measurement Period. Eligible Quarters are
used to determine whether a Plan Participant is an Eligible Participant, as
outlined in Section 4.3, and to determine such Eligible Participant's Eligible
Quarter Percent. The following three factors exist in calculating Eligible
Quarters:
1. For most Participants, Eligible Quarters equals the number of full
fiscal quarters between the Employment Date and the earlier of (1)
the termination of such Participant's status as an employee of the
Company or any Subsidiary of the Company and (2) the last day of
the Measurement Period;
2. For Participants who terminate (other than for Misconduct) during
the Measurement Period and subsequently are rehired within one
year of that termination date, the calculation of Eligible
Quarters is different. It equals the sum of (1) the number of full
consecutive fiscal quarters worked by such Participant during the
Measurement Period before such termination plus (2) the number of
full consecutive fiscal quarters worked by such Participant during
the Measurement Period after such rehiring;
-2-
<PAGE>
3. Normally, an approved leave of absence would not constitute a
break in service, and the time of such leave would be included in
calculating the number of full fiscal quarters served. The
Administrator, however, reserves the right to approve whether
particular leaves of absence will constitute a break in service.
"Eligible Quarter Percent" equals, except as noted in the exception
below, a fraction, the numerator of which is an Eligible Participant's Eligible
Quarters and the denominator of which is 24 (the number of full fiscal quarters
over the life of the Plan). As an example, the equation for an Eligible
Participant's Eligible Quarter Percent is:
----------------------------------------------
Eligible Quarters / 24 Total Plan Quarters
----------------------------------------------
For any Eligible Participant (1) who is a U.S. Hourly Participant, and (2) who
was employed throughout 1996 and (3) who is terminated due to Plant Closure
after the last day of fiscal year 1996, the "Eligible Quarter Percent" will
equal 100% regardless of number of actual quarters worked.
"Employment Date" means, for any Participant, the later of (1) the
Effective Date and (2) the date of such Participant's initial employment with
the Company or a Subsidiary of the Company.
"Final Exchange Rate" means the Company's internal balance sheet
exchange rate in effect as of the end of fiscal year 2001. It is used for
converting U.S. Dollars amounts into the applicable non-U.S. currency at the end
of the Plan. In the event that an exchange rate is needed that is not listed on
the Company's internal balance sheet, one will be determined by the
Administrator. This determination, which will be conclusive and binding on all
Participants, will be arrived at in consultation with the Company's treasury
department and based on one or more published applicable exchange rates in
effect as of the end of fiscal year 2001.
"Final Payout Factor" equals a fraction, the numerator of which is the
Adjusted Pool Amount and the denominator of which is the Aggregate Target Payout
Amount. This percent will then be applied to each Eligible Participant's Target
Payout Amount to determine his or her ultimate payout. As an example, the
equation for the Final Payout Factor is:
--------------------------------------------------------
Adjusted Pool Amount / Aggregate Target Payout Amount
--------------------------------------------------------
"Hourly" means those employees within the U.S. which include, without
limitation, Union employees, others in similar types of work situations or who
similarly participate in Levi's annual Cash Performance Plan. In all events,
Hourly status will be determined by the Administrator and will be conclusive and
binding on all Participants.
-3-
<PAGE>
"Initial Exchange Rate" means the Company's internal balance sheet
exchange rate in effect for April, 17 1996, as set forth in Annex B. It is used
-------
for converting any applicable non-U.S. currency into U.S. Dollars during the
Plan. In the event that an exchange rate is needed, but is not listed on the
Company's internal balance sheet, one will be determined by the Administrator.
This determination, which will be conclusive and binding on all Participants,
will be arrived at in consultation with the Company's treasury department and
based on one or more published applicable exchange rates in effect on April 17,
1996.
"Interim Exchange Rate" as of any date in a given fiscal quarter,
means the Company's internal balance sheet exchange rate for converting U.S.
Dollars into any applicable non-U.S. currency, at the end of that fiscal
quarter. The Interim Exchange Rate is used to determine Interim Payouts. In
the event that an exchange rate is needed, but is not listed on the Company's
internal balance sheet, one will be determined by the Administrator. This
determination, which will be conclusive and binding on all Participants, will be
arrived at in consultation with the Company's treasury department and based on
one or more published applicable exchange rates in effect at the end of the
affected fiscal quarter.
"Interim Payout" means the amount of any payment made to a Participant
prior to the expiration of the Measurement Period. The rules for the
calculation of this amount are set forth in Section 6.2 (b).
"Measurement Period" means the period from the Effective Date through
the end of fiscal year 2001.
"Misconduct" means termination of employment for reasons of
misconduct, as determined by the Administrator, in its sole discretion. The fact
that an employee is terminated for "misconduct" within the meaning of a
particular jurisdiction's laws, regulations, governing judicial precedents or
employment practice, will not mean that such employee has been terminated for
Misconduct for purposes of this Plan unless the Administrator, in its sole
discretion, so determines.
"Participant" has the meaning set forth in Section 4.1.
"Plan" means the Global Success Sharing Plan.
"Projected Cumulative EBITDA" for any given fiscal quarter, means the
amount of projected cumulative EBITDA set forth in Annex C for such fiscal
-------
quarter.
"Subsidiary" means any corporation of which more than 50% of the
outstanding shares having ordinary voting power are owned or controlled by the
Company, and any other entity that the Board, in its sole discretion, deems to
be a Subsidiary.
-4-
<PAGE>
"Target Payout Amount" equals an amount calculated for an Eligible
Participant which is the product of such Eligible Participant's Compensation
multiplied by the Eligible Participant's Eligible Quarter Percent. This amount
is U.S. Dollar-based, using the Initial Exchange Rate, and is used to determine
the Aggregate Target Payout Amount. As an example, the equation for an Eligible
Participant's Target Payout Amount is:
------------------------------------------------------------
Participant Participant Initial
Compensation X Eligible X Exchange
(In Local Currency) Quarter Percent Rate
------------------------------------------------------------
ARTICLE III
ADMINISTRATOR
Section 3.
Section 3.1. Plan Administration. The Plan will be administered by
-------------------
the Administrator with the assistance of such other person or persons as the
Administrator designates from time to time. In administering the Plan, the
Administrator may at its option employ compensation consultants, accountants and
counsel (who may be the independent auditors and outside counsel and
compensation consultants of the Company) and other persons to assist or render
advice to the Administrator, all at the expense of the Company. The
Administrator may delegate some or all of its responsibilities to officers or
employees of the Company or its Subsidiaries and/or to such other parties as the
Administrator may deem appropriate. The Administrator's determinations as to
all matters, including calculations of cumulative EBITDA, and amounts which may
be due under the Plan, will be conclusive and binding on all Participants.
ARTICLE IV
ELIGIBILITY
Section 4.
Section 4.1. General. Subject to the other provisions of this Plan,
-------
each person (a) who on or after the Effective Date and on or before the first
day of fiscal year 1999 is listed in the records of the Company or any of its
Subsidiaries as an employee in accordance with the practices of the Company and
the Subsidiaries with respect to listing employees in the records and (b) who is
eligible to participate in any of the incentive plans or cash sharing plans of
the Company or any of its Subsidiaries (without regard to any eligibility-
related waiting period under any such incentive or cash sharing plan), will be a
"Participant" in the Plan. Participants will only become eligible for cash
payments under the Plan if they are Eligible Participants as defined in Section
4.3.
-5-
<PAGE>
Section 4.2. Temporary Employees, Independent Contractors, not
-------------------------------------------------
Eligible. For purposes of the Plan, employment as a term or temporary employee
- --------
and service as an independent contractor will not be treated as employment and a
person who is so employed or who so serves will not be treated for purposes of
this Plan as a Participant.
Section 4.3. Continuous Employment Requirement.
---------------------------------
(a) Subject to paragraphs (b) through (c), and to the other terms and
conditions of the Plan, an individual will be an "Eligible Participant", and
thereby eligible to receive a cash payment under the Plan, only if he or she
qualifies as a Participant, as defined in Section 4.1, for a period of at least
12 Eligible Quarters during the Measurement Period. A Participant need not be
an employee on the last date of the Measurement Period in order to be an
Eligible Participant.
(b) Notwithstanding the foregoing provisions of this Section 4.3, if
a Participant's employment is terminated, the minimum threshold of Eligible
Quarters listed in the following table are required for the Participant to be
deemed an Eligible Participant:
- ----------------------------------------------------------------------------
ELIGIBLE
QUARTER
TERMINATION TYPE THRESHOLD COMMENTS/PROVISIONS
----------------------------------------------------------------------------
Death 4
- ----------------------------------------------------------------------------
Disability 4
- ----------------------------------------------------------------------------
Involuntary with Cause 12 Cause as defined in Plan
- ----------------------------------------------------------------------------
Involuntary without Cause 4 Cause as defined in Plan
- ----------------------------------------------------------------------------
Layoff 4
- ----------------------------------------------------------------------------
Misconduct Not Eligible Misconduct as defined in Plan
- ----------------------------------------------------------------------------
Retirement 4 In accordance with applicable
pension plans
- ----------------------------------------------------------------------------
Voluntary 12
- ----------------------------------------------------------------------------
For purposes of this Section 4.3(b), if a Subsidiary or other business unit of
the Company is sold or otherwise disposed of during the Measurement Period,
persons who are employed by that Subsidiary or business unit immediately prior
to the time such sale or disposition is consummated shall be deemed terminated
involuntarily and not for Cause as of the date such sale or disposition is
consummated.
(c) For purposes of Article IV, where reference is made to an
individual being "listed in the records" of the Company or its Subsidiaries as
an employee, the
-6-
<PAGE>
presumption will be that the records of the Company and its Subsidiaries are
accurate, but actual employment status will govern. Consequently, if, in
accordance with Company practice, an individual should have been listed in the
records as an employee, but was not so listed, such individual will be deemed so
listed and, conversely, if, in accordance with Company practice, an employee
should not have been listed in the records as an employee, such individual will
be deemed not so listed. The fact that an individual may be characterized as an
"employee" for purposes other than the Plan (for example, taxes, or tort law)
will not govern whether an employee was, or should have been "listed in the
records" as employee in accordance with Company practice. In the event of any
dispute as to employment status, the Administrator will determine, based on the
records of the Company and its Subsidiaries and such other evidence as the
Administrator takes into account whether, and during what period, an individual
should have been listed in the records as an employee, and the Administrator's
decision will be conclusive and binding on all parties.
ARTICLE V
DETERMINATION OF "COMPENSATION"
Section 5.
Section 5.1. Hourly Employees. For purposes of the Plan, (a)
----------------
"Compensation" for any Hourly Participant who is employed in the United States
will mean $17,597 and (b) "Compensation" for any Participant paid on a similar
basis who is employed outside the United States is intended to be based on
compensation levels in effect on April 17, 1996 and will be determined by the
Administrator.
Section 5.2. Salaried Employees.
------------------
(a) For purposes of the Plan, "Compensation" for any non-Hourly
Participant who is employed by the Company or a Subsidiary of the Company on
April 17, 1996 means such Participant's annual base salary as of April 17, 1996.
For purposes of Section 5.2, "annual base salary" will be calculated before any
salary reduction contribution made to 401(k) or deferred compensation plans but
will not include (1) awards under any bonus, profit, cash sharing plan
(including, without limitation, the Partners in Performance program and the
Long-Term Performance Plan), or stock options, restricted stock or stock
appreciation rights, (2) any cash payments relating to the impact of the
acquisition of LSAI by the Company on the EIP, ELTIS or ESAP plans, (3) any
Company matching contribution under any plan, (4) overtime, or (5) any other
special awards, and portions of any Participant's salary that were voluntarily
deferred by the Participant will be deemed to have been paid to such Participant
in the year earned, not in the year received.
(b) For purposes of the Plan, "Compensation" for any non-Hourly
Participant who is hired after April 17, 1996 means an amount equal to the
implied 1996
-7-
<PAGE>
annual base salary for such Participant, which will be calculated by applying
the "compa ratio" relating to such Participant's annual base salary as of the
date of hire to the salary range used as of April 17, 1996.
ARTICLE VI
DETERMINATION AND PAYMENT OF POOL
Section 6.
Section 6.1. Determination of Aggregate Pool Amount. Except as
--------------------------------------
specifically provided in this Article VI, no Participant will receive any cash
payment under the Plan unless (a) such Participant is an Eligible Participant
and (b) cumulative EBITDA during the Measurement Period equals or exceeds $5.0
billion. If cumulative EBITDA during the Measurement Period reaches that level,
a percentage of that cumulative EBITDA will be payable to Eligible Participants
as set forth herein. For purposes of any payment to an Eligible Participant
following the end of the Measurement Period, the Aggregate Pool Amount will be a
percentage of cumulative EBITDA during the Measurement Period equal to the
Applicable EBITDA Percentage.
Section 6.2. Determination of Individual Cash Payments.
-----------------------------------------
(a) Except as provided in Section 6.2(b), the amount paid to each
Eligible Participant under the Plan will be equal to the product of (1) such
Eligible Participant's Target Payout Amount and (2) the Final Payout Factor. As
an example, the equation for an Eligible Participant's payout amount is:
-----------------------
Target Final
Payout X Payout
Amount Factor
-----------------------
(b) The amount paid to an Eligible Participant under the Plan as an
Interim Payout pursuant to Section 6.3(c) as a result of death will be equal to
the product of (1) such Participant's Target Payout Amount, (2) a fraction, the
numerator of which will be actual cumulative EBITDA from the beginning of the
Measurement Period through the end of the last full fiscal quarter the
Participant was employed, and the denominator of which will be Projected
Cumulative EBITDA, as set forth in Annex C, for the last full fiscal quarter the
--------
Participant was employed. As an example, the equation for an Eligible
Participant's Interim Payout Amount is:
--------------------------------------------------------------------
Target Actual Cumulative Projected Cumulative
Payout X EBITDA as of / EBITDA as of
Amount Last Quarter Employed Last Quarter Employed
--------------------------------------------------------------------
-8-
<PAGE>
(c) The amount paid to an Eligible Participant under the Plan who
receives an Interim Payout pursuant to Section 6.3(b) for a reason other than
death will be determined by the Administrator, in its sole discretion.
(d) Amounts payable pursuant to this Section 6.2 will be first
calculated in U.S. Dollars based on the Initial Exchange Rate (which is used to
convert Compensation into U.S. Dollars in order to calculate Target Payout
Amounts). Payments to individuals employed outside of the United States will,
however, be made in the applicable local currency in an amount calculated by
converting the U.S. Dollar amount calculated hereunder into the local currency
based on (1) the Final Exchange Rate for payouts under Section 6.2(a) and (2)
the Interim Exchange Rate of the last fiscal quarter the Eligible Participant
was employed for payouts under Sections 6.2(b) or (c).
Section 6.3. Timing of Cash Payments; Interim Payouts.
----------------------------------------
(a) Except as otherwise provided in this Section 6.3, all payments
under the Plan will be made as soon as practicable following the end of the
Measurement Period.
(b) Payments under the Plan to any Eligible Participant whose
employment is terminated for any reason other than death will be made only at
the end of the Measurement Period.
(c) All Eligible Participants whose employment is terminated by
reason of death will be entitled to an Interim Payout. Such Interim Payout will
be made as soon as practicable following the employee's death, taking into
account reasonable time periods for making the necessary calculations hereunder.
ARTICLE VII
SPECIAL PROVISIONS
Section 7.
Section 7.1. Interpretation. The Administrator will have the power
--------------
in its sole discretion to interpret the Plan and to adopt such rules and
procedures as it may deem appropriate for the administration and implementation
of the Plan. Such rules and procedures may include, without limitation,
procedures for making required calculations and applying formulas including as
to the amount of "Compensation" for employees, the amount of cumulative EBITDA,
procedures for conversion of amounts denominated in U.S. dollars into foreign
currency and vice-versa, as well as procedures for Plan payments before the end
of, or at the end of, the Measurement Period.
Section 7.2. Certain Amendments. Notwithstanding the provisions of
------------------
Section 8.1, the Administrator may make such amendments and modifications to the
-9-
<PAGE>
Plan as may be required to comply or conform with local law, regulation or
custom. Such amendments and modifications may have limited application to a
specific Subsidiary, division or jurisdiction and need not apply to all
Participants. Any amendment made in accordance with this Section 7.2 which the
Administrator reasonably believes is a material amendment will require approval
of the Board. Each such amendment or modification will be in writing and
attached to this Plan.
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.
Section 8.1. The Board will have the right in its sole discretion to
amend or terminate the Plan.
ARTICLE IX
MISCELLANEOUS
Section 9.
Section 9.1. Withholding of Employee Taxes. The Company and its
-----------------------------
Subsidiaries, as appropriate, will be entitled to withhold from all payments
under the Plan any and all Federal, state, or local taxes of any kind required
by law to be withheld with respect to such payments.
Section 9.2. No Right to Employment. Nothing contained in the Plan
----------------------
will be construed as or be evidence of any contract of employment with any
Participant for a term of any length. Neither the adoption of the Plan nor the
participation in the Plan by a Participant will confer upon any employee any
right to continued employment nor will it interfere in any way with the right of
the Company or any of its Subsidiaries to terminate the employment of any
employee to the extent otherwise permitted at any time.
Section 9.3. Nature of Plan Payments.
-----------------------
(a) The Plan is intended to provide only for a one-time special cash
payment, payment of which is not systematically deferred to the termination of
employment or beyond and which does not provide retirement income to employees,
within the meaning of Department of Labor Regulation Section 2510.3-2(c).
Payments under the Plan will be paid from the general funds of the Company or
its Subsidiaries, as appropriate, and no special or separate fund will be
established or other segregation of assets made to assure payment.
-10-
<PAGE>
(b) No Participant or other person will have under any circumstances
any interest in any particular property or assets of the Company or its
Subsidiaries. The benefits conferred by the Plan and the interests thereunder
are not intended to be equity interests in the Company or its Subsidiaries and
Participants will have no equity interest in the Company or its Subsidiaries by
virtue of their participation in the Plan. The individuals entitled to benefits
conferred by the Plan and the interests thereunder will have no voting or
similar rights, or rights to financial or other information concerning the
Company or its Subsidiaries. Such benefits and interests will not be
transferable or assignable under any circumstances, other than payments under
the Plan in the event of an Eligible Participant's death, which will be
transferable by will or the laws of descent and distribution.
Section 9.4. No Limit on Capital Structure Changes. Neither the
-------------------------------------
establishment and operation of, nor the creation of any interests under, this
Plan, limits the ability of the Company or of any Subsidiary to reclassify,
recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any or all of its assets, dissolve, liquidate, windup or
otherwise reorganize.
Section 9.5. Other Benefits. No creation of interests, or payment of
--------------
cash, under this Plan shall be taken into account in determining any benefits
under any compensation, pension, retirement, savings, profit sharing, group
insurance, welfare or other employee benefit plan of the Company or any
Subsidiary.
Section 9.6. All Provisions; Name. This Plan, together with the
--------------------
Annexes, represents the final, exclusive and complete statement of the terms of
the Plan, and supersedes any and all prior or contemporaneous understandings,
representations, documents and communications of the Company, its Subsidiaries
and the Employees, whether oral or written, relating to its subject matter. The
formal name of this Plan is the "Global Success Sharing Plan" of Levi Strauss &
Co.
Section 9.7. Governing Law. The Plan will be governed by and
-------------
construed in accordance with the laws of the State of California, without regard
to its principles of conflict of laws.
This Plan was adopted by the Board of Directors of the Company on
April 23, 1996.
Levi Strauss & Co.
By: ___________________
Robert D. Haas
Chairman and
Chief Executive Officer
-11-
<PAGE>
ANNEX A
APPLICABLE EBITDA PERCENTAGES
Level of Cumulative
EBITDA during the Applicable
Measurement Period Percentage
------------------ ----------
Greater than $0 and less than
$5.0 billion 0%
Greater than or equal to $5.0
billion and less than $6.0 billion 3%
Greater than or equal to $6.0
billion and less than $7.0 billion 5%
Greater than or equal to $7.0
billion and less than $7.58 billion 8%
Greater than or equal to $7.58 billion 10%
A-1
<PAGE>
ANNEX B
CURRENCY APRIL 17, 1996 RATE
-------- -------------------
Argentinean Peso 1.00
Austrian Schilling 10.6304
Australian Dollar .79
Belgian Franc 30.95
Brazilian Real .99
Canadian Dollar .74
Swiss Franc 1.23
Chilean Peso 407
Colombian Peso 1,054
Costa Rican Colon 203
Deutsche Mark 1.51
Danish Krone 5.81
European Currency Unit 1.24
Spanish Peseta 126
Finish Markka 4.73
French Franc 5.12
British Pound 1.51
Greek Drachma 242
Hong Kong Dollar 7.74
Hungarian Forint 149
Indonesian Rupiah 2,327
Irish Pound 1.56
Israeli Shekel 3.17
Indian Rupee 34.20
Italian Lira 1,577
Japanese Yen 108
South Korean Won 779
Moroccan Dirham 8.68
Netherlands Guilder 1.68
Maltese Pound .36
Mexican Peso 7.42
Malaysian Ringgit 2.49
Norwegian Krone 6.50
New Zealand Dollar .68
B-1
<PAGE>
ANNEX B
CURRENCY APRIL 17, 1996 RATE
-------- -------------------
Peruvian Sol 2.36
Philippine Peso 26.18
Pakistani Rupee 34.63
Polish Zloty 2.6235
Portuguese Escudo 155
Swedish Krona 6.75
Singapore Dollar 1.41
Thai Baht 25.33
Turkish Lira 73,402
New Taiwan Dollar 27.15
Venezuelan Bolivar 285
Czech Republic Crowns 27.61
South African Rand 4.23
Russian Ruble 4,912
Mauritian Rupee 19.28
Slovak Republic Crowns 30.45
Uruguayan Peso 7.53
Honduran Lempura 11.02
Dominican Peso 13.71
El Salvador Colon 8.73
Guatemala Quetzal 6.12
Tunisian Dinar .98
B-2
<PAGE>
ANNEX C
Projected
Cumulative
EBITDA
------
Fiscal 1996 (In millions)
Q1 $ 238
2 476
3 714
4 952
Fiscal 1997
Q1 1,211
2 1,470
3 1,729
4 1,988
Fiscal 1998
Q1 2,272
2 2,556
3 2,840
4 3,124
Fiscal 1999
Q1 3,460
2 3,796
3 4,132
4 4,468
Fiscal 2000
Q1 4,845
2 5,222
3 5,599
4 5,976
Fiscal 2001
Q1 6,377
2 6,778
3 7,179
4 7,580
For purposes of the Plan, all references to fiscal quarters or fiscal years will
mean fiscal quarters and years in accordance with the Company's fiscal year in
effect as of the end of fiscal year 2001.
C-1
<PAGE>
EXHIBIT 10.25
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
ARTICLE 1 - EFFECTIVE DATE
- --------------------------
The Levi Strauss Associates Inc. Deferred Compensation Plan for Executives
(hereinafter the "Plan") is maintained by Levi Strauss Associates Inc. (the
"Company") for the benefit of employees who are eligible pursuant to the terms
of the Plan.. The Plan became effective upon approval of the Board of Directors
of Levi Strauss & Co. in 1971. The Plan has been amended or restated from time
to time.
ARTICLE 2 - ELIGIBILITY
- -----------------------
(1) General Rule. Any employee of the Company or a participating domestic
------------
subsidiary (including a wholly-owned subsidiary of a wholly-owner subsidiary of
the Company and Battery Street Enterprises, Inc. or any subsidiary thereof) (a
"Participating Subsidiary"), who (i) is customarily employed 30 or more hours
per week by the Company or such subsidiary, (ii) is employed with the United
States or a designated participant in the Revised Home Office Pension Plan of
Levi Strauss Associates Inc., and (iii) is compensated on a salary basis
(hereinafter, the "Eligible Employee") shall be eligible to participate in the
Plan during a calendar year; provided that, either (i) the grade for the
employee is equivalent to Home Office grade 9 or above, or (ii) (except for
purposes of current deferrals) the employee has an undistributed balance of
Deferred Compensation (within the meaning of Articles 4 and 5). Notwithstanding
the aforesaid, no employee shall be eligible to participate in the Plan if said
employee has entered into an employment agreement with the Company or subsidiary
thereof
<PAGE>
which precludes the employee from participating in a deferred compensation plan
offered by the Company.
(2) Exclusions. Notwithstanding the foregoing, an individual
----------
employed on a commission basis shall not be eligible to participate in the Plan.
ARTICLE 3- DEFINITION OF COMPENSATION
- -------------------------------------
For all purposes under the Plan: (a) "total compensation" shall mean
base salary, but shall not include any payments under or contributions to the
Company's Long Term Disability Plan or other group insurance or any employee
benefit plan maintained by the Company; (b) "total bonuses" shall mean payments
made under the Company's Management Incentive Plan (hereinafter "MIP") or under
any regularly paid bonus program other than the Long Term Performance Plan, and
any non-recurring special bonus which is designated as being part of "total
bonuses" in writing by the Administrator (identified as set forth in Article 9
below); and (c) for individual on expatriate assignment, "total compensation"
shall be defined as base salary adjusted by appropriate expatriate-related
deductions and allowances as determined by the Administrator.
ARTICLE 4 - DEFERRED COMPENSATION
- ---------------------------------
(a) Total Compensation Eligible for Deferral.
----------------------------------------
Election to Defer Compensation. (i) Any Eligible Employee may
------------------------------
elect that a portion not to exceed one-third (1/3) of his or her total
compensation shall be payable only as Deferred Compensation under this Plan.
Amounts of total compensation deferred by an Eligible Employee shall not be less
than five percent (5%) of his or her total base salary.
(ii) Total Bonuses Eligible for Deferral. Any Eligible Employee may
-----------------------------------
elect that a portion or all of his or her total bonuses shall be payable only as
Deferred Compensation
2
<PAGE>
under this Plan. Amounts of total bonuses deferred by an Eligible Employee shall
not be less than the greater of (i) $5,000 or (ii) five percent (5%) of his or
her total bonuses.
(iii) Time for Filing Elections. Except as provided in paragraph
-------------------------
(iv) below, a deferral election shall be made in writing to the Administrator
(A) in the case of base salary or non-recurring special bonuses or a regularly
paid bonus program other than the MIP at least two weeks prior to the
commencement of the first payroll period ending in the calendar year in which
payment otherwise would have been made; or (B) in the case of amounts payable
under MIP prior to May 15. All elections are irrevocable once the final date for
elections has passed.
(iv) First Year of Employment. (A) An Eligible Employee may
------------------------
also make an election during the first year of employment with respect to his
base salary for services performed after the effective day of the election. Such
election shall be made in writing to the Administrator within 30 days after
commencement of employment with the Company or a Participating Subsidiary and at
least two weeks prior to commencement of the first payroll period with respect
to which the election is to be effective, but no such election shall be
permitted after November 15 of any calendar year.
(B) Newly Eligible Employee. An employee of the
-----------------------
Company or subsidiary thereof who becomes an Eligible Employee during any
calendar year may make an election with respect to his or her base salary for
services performed after the effective day of the election. Such election shall
be made in writing to the Administrator within 30 days after the date as of
which such employee becomes an Eligible Employee (or if the employee becomes an
Eligible Employee in 1991 but before the effective date of this Section
3
<PAGE>
5(d)(ii), within 30 days after such effective date) and at least two weeks prior
to commencement of the first payroll period with respect to which the election
is to be effective, but no such election shall be permitted after November 15 of
any calendar year.
(a) Additional Deferred Compensation. When an Eligible Employee
--------------------------------
elects that a portion of his or her total compensation or total bonus for a
calendar year shall be payable as Deferred Compensation under the Plan, there
shall also be credited as Additional Deferred Compensation for such calendar
year an amount equal to the difference between (a) the aggregate amount of
contributions by the Company which would have been allocated in respect of such
Eligible Employee under the Employee Investment Plan ("EIP") if such Eligible
Employee has not made such election under this Plan and, (b) the actual
aggregate amount of contributions by the Company so allocated in respect of such
Eligible Employees for the EIP for such calendar year. The Additional Deferred
Compensation determined pursuant to the preceding sentence shall be credited
during the next following calendar year and shall coincide with the time that
profit sharing allocations are made to participants in the EIP.
(b) Pension Make-Up Deferred Compensation. Further, there shall be
-------------------------------------
payable to or in respect of an Eligible Employee the difference between (i) the
amount of benefits which would have been payable to or in respect of the
Eligible Employee under the Revised Home Office Pension Plan of Levi Strauss
Associates Inc., or any successor defined benefit plan (the "HOPP"), the Levi
Strauss Associates Inc. Excess Benefit Restoration Plan (the "Excess BRP") and
the Levi Strauss Associates Inc. Supplemental Benefits Restoration Plan (the
"Supplemental BRP") if not for the deferral of compensation under this Plan, and
(ii) the amount actually payable to or in respect of the Eligible Employee under
the HOPP, the Excess BRP and the Supplemental BRP, such difference being
referred to herein as "Pension Make-Up Deferred Compensation"; provided;
however, that the Pension Make-Up Deferred
4
<PAGE>
Compensation shall be vested only to the extent that such amounts would be
vested under the HOPP, the Excess BRP and the Supplemental BRP, as applicable.
(c) The Deferred Compensation of an Eligible Employee at any time
shall include Deferred Compensation arising under prior provisions of the Plan.
(d) Effect on Other Plan. Compensation Deferred under this Plan shall
--------------------
not be included in "covered compensation" for crediting benefits or
contributions to any qualified retirement, profit-sharing, stock purchase plan,
employee saving plan or employee stock ownership plan. Other benefit plans shall
not be affected by deferral of compensation under this Plan.
ARTICLE 5 - CREDITING DEFERRED COMPENSATION
- -------------------------------------------
(a) In General. The Deferred Compensation of an Eligible Employee
----------
will be credited with increases and, as appropriate, decreases to reflect the
performance of the measurement standard offered by the Administrator pursuant to
this Article 5 and selected by the Eligible Employee. If, with respect to all or
a portion of his or her Deferred Compensation, an Eligible Employee fails to
elect a measurement standard or if a measurement standard becomes unavailable
under the Plan without an effective successor election by the eligible employee,
such Deferred Compensation thereof shall be credited pursuant to Article
5(b)(1).
(b)(1) Interest Measurement Standard. Interest shall be computed
-----------------------------
monthly as of the last day of each calendar month on the undistributed balance
of each Eligible Employee's Deferred Compensation at the end of such calendar
month. For amounts deferred pursuant to an election prior to January 1, 1983,
interest shall be computed at a monthly interest rate equal to the sum of (i)
one-twelfth (1/12) of the annual reference rate charged for commercial loans, as
most recently
5
<PAGE>
announced by Bank of America in San Francisco, California, effective as of the
last day of the calendar month on which such interest in computed, plus (ii)
one-twelfth (1/12) of two percent (2%) per annum; except that for any calendar
year beginning prior to January 1, 1980, interest shall be credited in
accordance with the procedures specified in the Plan as then in effect.
Except as provided below, for amounts deferred pursuant to an election
after January 1, 1983, interest shall be computed at a monthly interest rate
equal to one-twelfth (1/12) of the annual reference rate charged for commercial
loans, as most recently announced by Bank of America in San Francisco,
California, effective as of the last day of the calendar month on which such
interest is computed.
For amounts deferred by an Eligible Employee whose grade is equivalent to
Home Office grade 9 or above representing a 1985 bonus payable under the MIP or
his or her total base salary for calendar year 1986, interest shall be computed
at a monthly interest rate equal to one-twelfth (1/12) of (i) the annual rate
charged for commercial loans to most credit-worthy customers, as most recently
announced by Bank of America in San Francisco, California, effective as of the
last day of the calendar month in which such interest is computed, plus (ii) two
----
percent (2%) for the period through December 31,1990, and thereafter such
amount, if any, as the Board of Directors of the Company or its delegatee shall
determine in its sole discretion.
Such interest shall be credited to the account of each participating
Eligible Employee on the books of the Company or Participating Subsidiary as of
December 31 of such calendar year.
(2) Alternative Measurement Standards. The Administrator may
---------------------------------
from time to time offer one or more measurement standards in addition to the
standard prescribed in Article 5(b)(1) above. Such alternative measurement
standards offered by the Administrator may include standards which have
different potential for risk and return, and could result in
6
<PAGE>
reductions in value of the Deferred Compensation of an Eligible Employee who
elects such standards. The availability of any such alternative measurement
standard and the terms applicable to such standard (including, but not limited
to, the method and frequency with which increases or decreases are reflected in
the amount of Deferred Compensation) are solely in the discretion of the
Administrator.
(3) Election of Standard. The Administrator, in its discretion,
--------------------
shall prescribe procedures participating Eligible Employees to elect and change
measurement standards applicable to Deferred Compensation Accounts.
(c) An Eligible Employee's Pension Make-Up Deferred Compensation shall
not be credited with interest or otherwise available for additions or
deletions pursuant to any measurement standard offered pursuant to
Article 5(b).
ARTICLE 6 - PAYMENT OF DEFERRED COMPENSATION
- --------------------------------------------
All Deferred Compensation under the Plan shall be payable as follows:
(a) Termination for Any Reason Other Than Death or Involuntary
----------------------------------------------------------
Discharge. In the event that the Eligible Employee's employment shall
---------
be terminated by reason of disability, retirement, voluntary
termination, layoff due to job elimination or job relocation or for
any other reason other than his death or other involuntary discharge,
the amount of his Deferred Compensation Plan shall be paid to him over
a ten (10) year period in one hundred twenty (120) ratable monthly
installments commencing on the first day of the calendar month
following the later of the Eligible Employee's attainment of age
seventy and one-half (70-1/2) or the date of the Eligible Employee's
termination of employment. An Eligible Employee may, however, at the
time he
7
<PAGE>
notifies the Administrator of his election to have a portion of his total
compensation for a given calendar year payable as Deferred Compensation
under the Plan:
(i) Specify a date for either a lump sum payment of his or
her Deferred Compensation or commencement of payment of his or her Deferred
Compensation in ratable annual installments over a period longer than five (5)
years, but not to exceed ten (10) years; and/or
(ii) Specify that such monthly installments commence on
other than the date of retirement but no later than his or her attainment of age
seventy and one-half (70-1/2).
(a) Termination of Employment by Death. In the event that the
----------------------------------
Eligible Employee's employment is terminated by death, or in the event
of an Eligible Employee's death after termination of employment, and
payments have not commenced, the unpaid balance of his or her Deferred
Compensation shall be paid to his or her Beneficiary over a ten (10)
year period in one hundred and twenty (120) ratable month installments
commencing on the first day of the calendar month following the later
of (i) the month in which the Eligible Employee died, or (ii) the month
in which the Eligible Employee would have attained age seventy and one-
half (70-1/2); except that at the time an Eligible Employee notifies
the Administrator of his or her election to have a portion of his total
compensation for a given calendar year payable as Deferred Compensation
under the Plan, such Eligible Employee may elect that such unpaid
balance be paid in a lump sum at a designated time within five (5) year
period following his or her death or in ratable monthly installments
over a five (5) year period or a specified longer period not to exceed
ten (10) years.
8
<PAGE>
(b) Termination of Employment by Involuntary Discharge. In the event
--------------------------------------------------
that an Eligible Employee's employment is terminated by involuntary
termination other than death, disability or layoff due to job
elimination or job relocation, the amount of his or her Deferred
Compensation shall be paid in a lump sum within thirty (30) days after
his or her termination of employment.
(c) Change in Timing or Manner of Payment. With respect to Deferred
-------------------------------------
Compensation for which no effective elections as to time and method of
payment has been filed,
(i) the Eligible Employee or, in the case of death of the
Eligible Employee prior to the commencement of payment of Deferred Compensation
for any year, the Eligible Employee's Beneficiary, may file a request to
accelerate payment of such Deferred Compensation. Such petition shall specify a
date for lump sum payment or a period for payment which commences not later than
the Eligible Employee's attainment of age seventy and one-half (70-1/2) or
actual retirement, whichever is later, and ends no later than one hundred and
twenty (120) months after the Eligible Employee would attain age seventy and
one-half (70-1/2).
(ii) The Eligible Employee or, in the case of the death of the
Eligible Employee prior to the commencement of payment of Deferred Compensation
for any year, the Eligible Employee's surviving spouse if such spouse is the
Eligible Employee's Beneficiary, may file a request to have the Deferred
Compensation applied towards the purchase of an annuity contract which satisfies
the criteria set forth herein; provided that the amount of Deferred Compensation
available for such purchase equals or exceeds $50,000. Such annuity contract
shall be purchased with a single premium, owned by the Company, have an annuity
starting date within one (1) year from the date of purchase and provide for
substantially equal
9
<PAGE>
periodic payments during the annuity period. The petition for purchase of an
annuity shall specify whether the annuity period is to be over the life of the
Eligible Employee, the joint lives of the Eligible Employee and the Eligible
Employee's spouse, or over the life of the Eligible Employee's spouse. The
petition also shall specify an annuity starting date, which shall not be later
than the later of the Eligible Employee's retirement date or the Eligible
Employee's attainment of age seventy and one-half (70-1/2).
(iii) A request filed by an Eligible Employee on an Eligible
Employee's surviving spouse or Beneficiary under Section 6(d)(i) or (ii) shall
be filed with Personnel Committee (the "Committee") of the Board of Directors of
LSAI Holding Corp. ("Holdings"), and the disposition of such a request shall be
determined by the Committee, or its delegate, in its sole discretion.
(a) In Service Payments. In the case of an Eligible Employee whose
-------------------
grade is equivalent to Home Office grade 9 or above, at the time he or
she notifies the Administrator of his or her election to have amounts
deferred representing a bonus payable under MIP for calendar year 1987
or later, in lieu of the provisions for payment of deferred
compensation set forth Subsections (a),(b), (c) and (d) above, he or
she may elect payment to be made as follows: Twenty percent (20%) of
the MIP bonus to be paid as soon as practical after the amounts have
been determined by the awarding company; thereafter in ratable annual
installments in January of each of the following four years.
(b) Hardship. Upon a showing of financial hardship, the
--------
Administrative Committee for the Retirement Plans of Levi Strauss
Associates Inc., in its sole discretion, may direct the Company or
Participating Subsidiary to pay an Eligible
10
<PAGE>
Employee (or, in the event of death, to an Eligible Employee's
Beneficiary) in one lump sum a portion or all of the unpaid balance of
such Eligible Employee's Deferred Compensation to the extent necessary
to alleviate the hardship. For purposes of the Plan, a hardship shall
include any need, circumstance or event which is considered a hardship
under the then current provisions of the Employee Investment Plan of
Levi Strauss Associates Inc. (whether or not the Eligible Employee
participates in such plan) and such other needs, circumstances or
events which the Administration, in its sole discretion, determines are
consistent with the goals of the Company for the Plan and the
requirements of administration of the Plan.
In the event the Administrative Committee approves a hardship
distribution to an Eligible Employee under this Section 6(f), deferrals of such
Eligible Employee's total compensation automatically shall be cancelled for the
remaining portion of the calendar year in which the Eligible Employee's request
is filed with the Administrative Committee.
(c) Minimum Balance. Notwithstanding the foregoing, in the event that
---------------
an Eligible Employee's employment is terminated for any reason and his
or her aggregate undistributed balance of all Deferred Compensation
Accounts under the Plan is $50,000 or less, without regard to any
balance to which in-service payment has been elected on the last day of
the full payroll period immediately prior to such termination of
employment, the amount of his or her Deferred Compensation Accounts,
without regard to any balance to which in-service payment has been
elected, shall be paid in a lump sum within thirty (30) days after his
or her termination of employment. Nothing herein shall require the
payment of Deferred Compensation
11
<PAGE>
for which an election was made prior to January 1, 1983, and
reaffirmed prior to June 15, 1985.
(d) Elections. An Eligible Employee who was employed by the Company
---------
or a Participating Subsidiary on October 1, 1985, and who prior to
October 1, 1985, filed with the Administrator a confirmation of each
prior election, shall have his or her Deferred Compensation paid
pursuant to such elections. Any Deferred Compensation with respect to
any other participant in the Plan will be paid according to the
participant's election or, if no election was made, according to the
provisions of the Plan in effect at the time of deferral.
(i) Notwithstanding any other provisions of this Plan to the
contrary and subject to the following sentence, the vested Pension Make-Up
Deferred Compensation shall be paid to the Eligible Employee, his or her
surviving spouse or his beneficiary in the same time or times, in the same form
and subject to the same form and subject to the same adjustments as his or her
benefit under HOPP, the Excess BRP and the Supplemental BRP, as applicable;
provided, that if the Pension Make-Up Deferred Compensation is attributable to
two or more of such plans, then the time and form shall be determined separately
for each of such components. The foregoing notwithstanding, if the Eligible
Employee is not a participant in the Excess BRP or the Supplemental BRP and the
present value of his or her vested Pension Make-Up Deferred Compensation is
$50,000 or less, such present value shall be paid to the Eligible Employee or
the Eligible Employee's Beneficiary in a lump sum, and such payment shall
extinguish such Eligible Employee's or Beneficiary's right to Pension Make-Up
Deferred Compensation with respect to employment prior to the date of such
payment. For the purposes of the preceding sentence, the
12
<PAGE>
present value of the Pension Make-Up Deferred Compensation shall be determined
by the Administrator in a uniform and nondiscriminatory manner.
(i) For purposes of this Plan:
(i) the term "disability" shall have the same meaning as the term
"Total and Permanent Disability" (or any successor term) under the Revised Home
Office Pension Plan of the Company, or any successor thereto (the "HOPP");
(ii) the term "retirement" shall mean the termination of employment
with the Company or any subsidiary thereof with the right to an immediate
benefit under (the "HOPP"), providing that an Eligible Employee who is not a
participant in the HOPP at the time of his or her termination of employment
shall be deemed to have incurred a retirement if the Eligible Employee would
have been eligible for an immediate benefit under the HOPP if he or she had been
participating in the HOPP at such time.
ARTICLE 7 - SOURCE OF PAYMENT
- -----------------------------
All payments of Deferred Compensation hereunder shall be paid in cash from
the general funds of the Company or the Participating Subsidiary, whichever was
the employer at the time of the deferral, and no special or separate fund shall,
trust or account be established in the name of any Eligible Employee or
beneficiary or other segregation of assets made to assure such payments;
provided, however, that the Company or the Participating Subsidiary, as the case
may be, may establish a bookkeeping reserve to meet its obligation hereunder. No
sponsor of any financial entity which is utilized as a measurement standard,
such as a designated mutual fund sponsor or bank, shall have any responsibility
for payment of Deferred Compensation hereunder, and no Eligible Employee shall
have an account with such a sponsor in connection with the Eligible Employee's
participation in the Plan. Any account which the Company may, from time
13
<PAGE>
to time, establish with any financial entity which is utilized as a measurement
standard under the Plan, and any increases to or distributions from such
account, shall remain the property of the Company. Nothing contained in the Plan
and no action taken pursuant to the provisions of the Plan shall create or be
construed to create a trust of any kind or a fiduciary relationship between the
Company or the Participating Subsidiary or the Administrator and any employee or
other person. To the extent that any person acquires a right to receive payments
from the Company or the Participating Subsidiary under the Plan, such right
shall be no greater than the right of any unsecured general creditor of the
Company or the Participating Subsidiary.
ARTICLE 8 - DESIGNATION OF BENEFICIARIES
- ----------------------------------------
(a) Designation by Eligible Employee. Each Eligible Employee shall file
--------------------------------
with the Administrator a written designation of one or more persons as the
"Beneficiary" who shall be entitled to receive the amount, if any, payable under
the Plan upon his or her death. An Eligible Employee may from time to time
revoke or change his or her beneficiary designation without the consent of any
prior Beneficiary by filing a new designation with the Administrator. The last
such designation received by the Administrator shall be controlling; provided,
however, that no designations, or change or revocation thereof, shall be
effective unless received by the Administrator prior to the Eligible Employee's
death, and in no event shall it be effective as of a date prior to such receipt.
(b) Lack of Designation. If no beneficiary designation is in effect at the
-------------------
time of an Eligible Employee's death, if no designated Beneficiary survives the
Eligible Employee or if such designation conflicts with law, then the Eligible
Employee's estate shall be the Beneficiary entitled to receive the amount. The
Administrator may direct the Company or Participating Subsidiary to retain such
amount, without liability for any interest thereon, until the rights thereto
14
<PAGE>
are determined, or the Administrator may direct the Company or Participating
Subsidiary to pay such amount into any court of appropriate jurisdiction, and
such payment shall completely discharge the liability of the Plan, the Company
and Participating Subsidiary therefor.
ARTICLE 9 - ADMINISTRATION OF PLAN
- ----------------------------------
For purposes of this Plan, the "Administrator" shall be the Director of
Employee Benefits or such other person as the Chief Executive Officer of the
Company may designate from time to time. The Plan, except for Sections 6(d) and
6(f), shall be administrated by the Administrator, who shall have full power,
discretion and authority to interpret, construe and administer the Plan and any
part thereof. The Administrator's interpretations and constructions of the Plan
and actions thereunder shall, except as otherwise determined by the Board of
Directors of the Company or the Personnel Committee thereof, be binding and
conclusive on all person for all purposes. The Administrator's interpretations
and constructions of the Plan and actions thereunder, except as otherwise
determined by the Board of Directors of Holdings, the Committee or the
Administrative Committee (for the purposes referenced in Section 6(f)), shall be
binding and conclusive on all persons for all purposes.
ARTICLE 10 - AMENDMENT
- ----------------------
The Plan may be amended, suspended or terminated, in whole or in part, by
the Board of Directors of Holdings or the Committee, or the delegate of either,
but no such action shall retroactively impair or otherwise adversely affect the
rights of any person to Deferred Compensation under the Plan which has accrued
prior to the date of such action, as determined by the Administrator.
ARTICLE 11 - GENERAL PROVISIONS
- -------------------------------
15
<PAGE>
(a) No Assignment. The right of any Eligible Employee or other
-------------
person to the payment of Deferred Compensation under the Plan shall
not be assigned, transferred, pledged or encumbered, either
voluntarily or by operation of law, except as provided in Section 8
with respect to designations of Beneficiaries hereunder or as may
otherwise be required by law or in the final paragraph of this Section
11(a) with respect to domestic relations orders. If any person shall
attempt to, or shall assign, transfer, pledge or encumber any amount
payable hereunder, or if by reason of his or her bankruptcy or other
event happening at any time any such payment would be made subject to
his or her debts or liabilities or would otherwise devolve upon anyone
else and not be enjoyed by him or her or his or her Beneficiary, the
Administrator may, in its sole discretion, terminate such person's
interest in any such payment and direct that the same be held and
applied to or for the benefit of such Person, his or her spouse,
children or other dependents, or any other Persons deemed to be the
natural objects of his or her bounty, or any of them, in such manner
as the Administrator may deem proper.
Any other provision of this Plan notwithstanding, an Eligible Employee's
Deferred Compensation under the Plan shall be payable to any "alternate payee,"
as such person is defined in section 414(p)(8) of the Code, as provided in any
domestic relations order with respect to the Plan which would constitute a
qualified domestic relations order within the meaning of section 414(p)(1)(A) of
the Code if the Plan were subject to section 414(p) of the Code. Determinations
under this section (a), including but not limited to determination of whether an
order would constitute a qualified domestic relations order, shall be made by
the Administrator, or its designee, in its sole discretion. The rights of any
alternate payee hereunder are subject to the
16
<PAGE>
provisions of the Plan as administered with respect to alternate payees, and the
Administrator may require an alternate payee to acknowledge that his or her
rights are subject to such provisions.
(b) Incapacity. If the Administrator shall find that any person to
----------
whom any payment is payable under the Plan is unable to care for his
or her affairs because of illness or accident or is a minor, then any
payment due (unless a prior claim therefor shall have been made by a
duly appointed guardian, committee or other legal representative), in
the sole discretion of the Administrator, may be paid to his or her
spouse, a child, a parent, or a brother or sister, or any other person
deemed by the Administrator to have incurred expenses for such person
otherwise entitled to payment, in such manner and proportions as the
Administrator may determine. Any such payment shall constitute a
complete discharge of the liability of the Company or Participating
Subsidiary under the Plan.
(c) Information Required. Each Eligible Employee shall provide the
--------------------
Administrator with such pertinent information concerning himself or
herself and his or her Beneficiary relating to Plan administration or
participation by the Eligible Employee as the Administrator may
specify, and no Eligible Employee or Beneficiary or other person shall
have any rights or be entitled to any benefits under the Plan unless
such information is provided by or with respect to him or her.
(d) Election by Employee. All elections, designations, requests,
--------------------
notices, instructions and other communications from an Eligible
Employee, Beneficiary or other person to the Administrator required or
permitted under the Plan shall be in
17
<PAGE>
such form as is prescribed from time to time by the Administrator,
shall be mailed by first-class mail, transmitted by facsimile or
delivered to such location as shall be specified by the Administrator
and shall be deemed to have been given and delivered only upon actual
receipt thereof by the Administrator at such location.
(e) Notices by Company. All notices, statements, reports and other
------------------
communications from the Administrator to any employee, Eligible
Employee, Beneficiary or other person required or permitted under the
Plan shall be deemed to have been duly given when delivered to, or
when mailed first-class mail, postage prepaid and addressed to, such
employee, Eligible Employee, Beneficiary or other person at his or her
address last appearing on the records of the Company.
(f) No Employment Rights. Neither the Plan nor any action taken,
--------------------
hereunder shall be construed as giving to any employee the right to be
retained in the employ of the Company or Participating Subsidiary or
as affecting the right of the Company or Participating Subsidiary to
dismiss any employee at any time, with or without cause.
(g) Captions. The caption preceding the sections and subsections
--------
hereof have been inserted solely as a matter of convenience and in no
way define or limit the scope or intent of any provisions thereof.
(h) Choice of Law. The Plan and all rights thereunder shall be
-------------
governed by and construed in accordance with the law of the State of
California.
18
<PAGE>
APPENDIX A
(EFFECTIVE AS OF MARCH 11, 1996)
1. The provisions of Section 4(a)(iii)(A) notwithstanding a deferral
election with respect to compensation to be paid in calendar year 1996 may
be made on or before December 26, 1995.
2. On or after March 12, 1996 and before March 30, 1996, an eligible
employee who is an expatriate (as defined below) may make a deferral
election, including an amendment of a deferral election previously
submitted, with respect to compensation to be paid for services performed
in pay periods commencing in 1996, but after March 31, 1996; provided,
however, that any amendment of or substitution for a previously filed
deferral election under this Appendix A cannot decrease the amount of
compensation deferred pursuant to the previously filed election. For
purposes of this Section 2 of Appendix A, an expatriate is an employee who
is on an expatriate assignment outside of the United States.
<PAGE>
LEVI STRAUSS & CO.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
JANUARY 1998
APPENDIX
During the period from January 1, 1998 through February 13, 1998, any
individual with Deferred Compensation credited to him or her under the Plan may,
but is not required to, file with the Administrator a revised election with
respect to the payment of such Deferred Compensation. However, any revised
election must satisfy the following conditions:
1. The effective date for a revised election shall be twelve months after the
date on which it is received by the Administrator;
2. No revised election shall require payments to be made as of any date prior
to the effective date of the revised election not prevent any payment
otherwise scheduled to be made as of any date prior to the effective date
of the revised election;
3. A revised election must be in a form prescribed by the Administrator;
4. A revised election must be received by the Administrator before February
14, 1998; and
5. A revised election shall be effective only for Deferred Compensation with
respect to which an individual may make a distribution election under the
Plan.
Any distribution election made under provisions of the Plan other than
a revised election made under this Appendix shall be effective except to the
extent that such election is superseded by a revised election under this
Appendix.
<PAGE>
EXHIBIT 10.26
LEVI STRAUSS ASSOCIATES INC.
----------------------------
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
------------------------------------------------
(As adopted January 17, 1977 and as amended through July 19, 1988)
1. Effective Date
--------------
The Levi Strauss Associates Inc. Deferred Compensation Plan for Outside
Directors (hereinafter the "Plan") became effective upon approval by the
Executive Committee of the Board of Directors of Levi Strauss & Co. on
January 17, 1977 and amended and restated most recently on July 19, 1988 by
the delegate of the Board of Directors of Levi Strauss Associates Inc. (the
"Company").
2. Eligibility
-----------
The persons eligible to participate in this Plan shall be those members of
the Board of Directors of the Company who are not otherwise employed by the
Company as an executive or in any other capacity. These persons are
generally referred to by the Company as "outside directors".
3. Definitions of Compensation and LTPP Payment
--------------------------------------------
For all purposes under the Plan, "total compensation" shall mean all fees
or other compensation for services as an outside director of the Company,
but shall not include any LTPP Payment and further shall not include any
payments under or contributions to any group insurance or other benefit
plan maintained by the company or any reimbursement for expenses. For all
purposes under the Plan, "LTPP Payment" shall mean any payment under the
Levi Strauss Associates Inc. Long-Term Performance Plan.
4. Election to Defer Compensation
------------------------------
Any person eligible to participate in this Plan may elect that a portion or
all of this total compensation for a calendar year shall be payable only as
Deferred Compensation under the Plan. Such election shall be made in
writing to the Corporate Secretary at least two (2) weeks prior to the'
commencement of such calendar year.
In addition, an eligible outside director may make an election during the
first year of service as a director of the Company. Such election under
the Plan shall be made in writing to the Corporate Secretary on the date of
election to the Board of Directors of the
<PAGE>
Company. In no case, however, shall such election under the plan be
permitted after December 15, of any calendar year. An election for a given
year shall be irrevocable.
5. Election to Defer LTPP Payment
------------------------------
Any person eligible to participate in the Plan may elect that a portion or
all of any LTPP Payment shall be payable as Deferred Compensation under the
Plan; provided, however, that the minimum amount that may be deferred is
the greater of $5,000 or five percent (5$) of each LTPP Payment than
payable. Deferral elections shall be made at the same time and in the same
manner as elections to defer LTPP Payments are made under Article 5 of the
Levi Strauss Associates Inc. Long-Term Performance Plan.
6. Interest Credit
---------------
Beginning on January 1, 1982, interest shall be computed monthly as of the
last day of each calendar month on the undistributed balance of each
eligible outside director's Deferred Compensation at the end of such
calendar month. Such interest shall be computed at a monthly interest rate
equal to one-twelfth (1/12) of the annual interest rate charged for
commercial loans to most creditworthy customers, as most recently announced
by Bank of America in San Francisco, California, effective as of the last
day of the calendar month on which such interest is computed; except that
for any calendar year beginning prior to January 1, 1982, interest shall be
credited in accordance with the procedures specified in the Plan as then in
effect. Such interest shall be credited to the account of each outside
director on the books of the Company as of December 31 of such calendar
year.
7. Payment of Deferred Compensation
--------------------------------
All Deferred Compensation under the Plan (including interest credited under
Section 6) shall be payable as follows:
a. Outside director ceases to be a director of the Company or retires from
-----------------------------------------------------------------------
principal occupation
--------------------
At the time that an outside director notifies the Corporate Secretary of
his election to defer compensation, he shall specify that payment of the
Deferred Compensation shall commence (1) when the outside director ceases
to be a director of the Company, (2) when the outside director retires from
his or her principal occupation, or (3) the later of (1) or (2). The amount
of the outside director's Deferred Compensation shall be paid to him over a
five (5) year period in sixty (60) ratable monthly installments commencing
on the first day of the calendar month following the date selected above.
An eligible outside director may, however, at the time that he notifies the
Corporate Secretary of his election
<PAGE>
to have all or a portion of his total compensation for a given calendar
year payable as Deferred Compensation under the Plan:
(i) specify a longer period, not to exceed ten (10) years, over which his
Deferred Compensation for such year shall be paid for him, or
(ii) specify the payment shall be in the form of a lump sum.
Notwithstanding the outside director's election, all payments of Deferred
Compensation must be completed prior to ten years after the outside
director reaches or would have reached age 70 1/2.
b. Termination of Service by Death
-------------------------------
In the event that the eligible outside director's service is terminated by
death, or in the event of an eligible outside director's death after
termination of services, the unpaid balance of his Deferred Compensation
shall be paid in a lump sum to his Beneficiary within thirty (30) days
after his death; except that at the time an eligible outside director
notifies the Corporate Secretary of his election to have all or a portion
of his total compensation for a given calendar year payable as Deferred
Compensation under the Plan, such eligible outside director may elect that
such unpaid balance be paid in a lump sum at a designated time within the
five (5) year period following death of the eligible outside director or in
ratable monthly installments over a five (5) year period or a specified
longer period not to exceed ten (l0) years.
Notwithstanding the outside director's election, all payments of Deferred
Compensation must be completed prior to ten years after the outside
director would-have reached age 70 1/2.
c. Hardship
--------
Upon a showing of financial hardship, the Personnel Committee of the Board
of Directors may, in its sole discretion, direct the Company to pay to an
eligible outside director (or, in the event of death, to an eligible
outside director's Beneficiary) in one lump sum, a portion, or all of the
unpaid balance of such eligible outside director's Deferred Compensation to
the extent necessary to alleviate the hardship. A hardship is an emergency
beyond the control of the eligible outside director and his Beneficiary.
<PAGE>
d. Acceleration of Payments
------------------------
An outside director who is no longer a outside director or, in the case of
the death of an outside director prior to the commencement of payment of
Deferred Compensation for any year, the outside director's Beneficiary, may
file a petition to accelerate payment of Deferred Compensation. The
Outside Director appointed by the Personnel Committee of the Board of
Directors of the Company pursuant to Section 6(d) of the Levi Strauss
Associates Inc. Deferred Compensation Plan for Executives shall consider
and act upon such petitions and the Outside Director shall have the sole
discretion to approve or disapprove such petitions. In the petition, the
outside director or Beneficiary, as the case may be, shall with respect to
the Deferred Compensation specify (1) a date for lump sum payment or (2) a
period to receive payments which is not later or longer than the date for
lump sum payment or period to commence specified in the election pursuant
to Section 6(a) or 7(b).
e. Payment of LTPP Payment Over Five Years
---------------------------------------
In lieu of the provisions for payment of Deferred Compensation set forth
Subsections (a), (b), (c) and (d) above, the outside director may elect
payment of his LTPP Payment to be made as follows: Twenty percent (20%) of
the LTPP Payment to be paid as soon as practical after the amounts have
been determined by the awarding company; thereafter in ratable annual
installments in July of each of the following four years.
8. Source of Payment
-----------------
All payments of Deferred Compensation hereunder shall be paid in cash from
the general funds of the company, and no special or separate fund shall be
established or other segregation of assets made to assure such payments;
provided, however, that the Company may establish a bookkeeping reserve to
meet its obligations hereunder. Nothing contained in the Plan and no action
taken pursuant to the provisions of the Plan shall, create, or be construed
to create, a trust of any kind, or a fiduciary relationship between the
Company or the Corporate Secretary and any outside director or other
person. To the extent that any person acquires a right to receive payments
from the Company under the Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company.
9. Designation of Beneficiaries
----------------------------
Each eligible outside director shall file with the Corporate Secretary a
written designation of one or more persons as the Beneficiary who shall be
entitled to receive the amount of compensation, if any, payable under the
Plan upon his death. An eligible outside director may from time to time
revoke or change his Beneficiary designation without the consent of
<PAGE>
any prior Beneficiary by filing a new designation with the Corporate
Secretary. 'the last such designation received by the Corporate Secretary
shall be controlling; provided, however, that no designation or change or
revocation thereof, shall be effective unless received by the corporate
Secretary prior to the eligible outside director's death, and in no event
shall it be effective as of a date prior to such receipt.
If no such Beneficiary designation is in effect at the time of an eligible
outside director's death, or if no designated Beneficiary survives the
eligible outside director, or if such designation conflicts with law, the
eligible outside director's estate shall be the Beneficiary entitled to
receive the amount. The Corporate Secretary may direct the Company to
retain such amount, without liability for any interest thereon, until the
rights thereto are determined, or he may direct the Company to pay such
amount into any court of appropriate jurisdiction and such payment shall be
a complete discharge of the liability of the Plan and the Company therefor.
10. Administration of Plan
----------------------
The Plan, except for Sections 7(c) and 7(d), shall be administered by the
Corporate Secretary who shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof. The
Corporate Secretary's interpretations and constructions of the Plan and
actions thereunder shall, except as otherwise determined by the Board of
Directors of the Company or the Personnel Committee thereof, be binding and
conclusive on all persons for all purposes.
11. Amendment
---------
The Plan may be amended, suspended or terminated, in whole or in part, by
the Board of Directors of the Company or the Personnel Committee thereof,
or the delegate of either, but no such action shall retroactively impair or
otherwise adversely affect the rights of any person to payment of Deferred
Compensation under the Plan which has accrued prior to the date of such
action, as determined by the Corporate Secretary.
12. General Provisions
------------------
The right of any eligible outside director or other person to the payment
of Deferred Compensation under the Plan may not be assigned, transferred,
pledged or encumbered, either voluntarily or by operation of law, except as
provided in Section 9 above with respect to designations of Beneficiaries
hereunder or as may otherwise be required by law. If any person shall
attempt to, or shall, assign, transfer, pledge or encumber any amount
payable hereunder, or if by reason of his bankruptcy or other event
happening at any time any such payment would be made subject to his debts
or liabilities or would otherwise devolve upon anyone else and not be
enjoyed by him or his Beneficiary, the
<PAGE>
Corporate Secretary may, in his sole discretion, terminate such persons
interest in any such payment and direct that the same be held and applied
to, or for the benefit of such person, his spouse, children or other
dependents, or any other persons deemed to be the natural objects of his
bounty, or any of them, in such manner as the Corporate Secretary may deem
proper.
If the Corporate Secretary shall find that any person to whom any payment
is payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, then any payment due .(unless a prior
claim therefor shall have been made by a duly appointed guardian, committee
or other legal representative) may be paid to his spouse, a child, a
parent, or a brother or sister, or any other-person deemed by the Corporate
Secretary to have incurred expenses for such person otherwise entitled to
payment, in such manner and proportions as the Corporate secretary may
determine. Any such payment shall be a complete discharge of the
liabilities of the Company under the Plan.
Each eligible outside director shall file with the Corporate Secretary such
pertinent information concerning himself and his Beneficiary as the
Corporate Secretary may specify, and no eligible outside director or
Beneficiary or other person shall have any rights or be entitled to any
benefits under the Plan unless-such information is filed by or with respect
to him.
All elections, designations, requests, notices, instructions, and other
communications from an eligible outside director, Beneficiary or other
person to the Corporate Secretary required or permitted under the Plan
shall be in such form as is prescribed from time to time by the Corporate
Secretary, shall be mailed by first class mail or delivered to such
location as shall be specified by the.- Corporate Secretary and shall be
deemed to have been given and delivered only upon actual receipt thereof by
the Corporate Secretary at such location.
All notices, statements, reports and other communications from the
Corporate Secretary to any eligible outside director, Beneficiary or other
person required or permitted under the Plan shall be deemed to have been
duly given when delivered to, or when mailed by first-class mail, postage
prepaid and addressed to, such eligible outside director, Beneficiary or
other person at his address last appearing on the records of the Company.
Neither the Plan nor any action taken hereunder shall be construed as
giving to any outside director the right to be retained as a director of
the Company.
The captions preceding the Sections hereof have been inserted solely as a
matter of convenience and in no way define or limit the scope or intent of
any provisions hereof.
The Plan and all rights thereunder shall be governed by and construed in
accordance with the laws of the State of California.
<PAGE>
13. Execution
---------
To record the restatement of the Plan, the following duly authorized
officer pursuant to delegated authority has executed this document.
LEVI STRAUSS ASSOCIATES INC.
By__________________________
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN
FOR
OUTSIDE DIRECTORS
__________________
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Deferred Compensation Plan for Outside Directors
(the "Plan");
WHEREAS, the Company desires to amend the Plan in order to provide outside
directors of the Company with alternative measurements for growth of Deferred
Compensation under the Plan;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends Article
6 of the Plan in its entirety to read as set forth below:
6. Addition Credits With Respect to Deferred Compensation
------------------------------------------------------
a. In General
----------
The Deferred Compensation of an eligible outside director
shall be credited with increases and, as appropriate,
decreases to reflect the performance of the measurement
standard offered by the Company pursuant to this Article 6
and selected by the eligible outside director. If with
respect to all or a portion an eligible outside director's
Deferred Compensation, such outside director fails to elect
a measurement standard or if a measurement standard becomes
unavailable under the Plan without an effective successor
election by the eligible outside director, such Deferred
Compensation shall receive credits pursuant to Article
6(b)(i) below.
<PAGE>
b(i) Interest Measurement Standard
-----------------------------
With respect to amounts of Deferred Compensation for which
the interest measurement standard is applicable, interest
shall be computed monthly as of the last day of each
calendar month on the undistributed balance of each eligible
outside director's Deferred Compensation at the end of such
calendar month. Such interest shall be computed at a monthly
interest rate equal to one-twelfth (1/ 12) of the annual
interest rate charged for commercial loans to most
creditworthy customers, as most recently announced by Bank
of America in San Francisco, California, effective as of the
last day of the calendar month on which such interest is
computed; except that for any calendar year beginning prior
to January 1, 1982, interest shall be credited in accordance
with the procedures specified in the Plan as then in effect.
Such interest shall be credited to the account of each
outside director on the books of the Company as of December
31 of such calendar year.
(ii) Alternative Measurement Standard
--------------------------------
The Company may from time to time offer one or more
measurement standards in addition to the standard described
in Article 6(b)(i) above. Such alternative measurement
standards offered by the Company may include standards which
have different potential for risk and return and could
result in reductions in value of the Deferred Compensation
of an Outside Director who elects such standards. The
availability of any such alternative measurement standard,
and the terms applicable to such standard (including, but
not limited to, the method and frequency with which
increases or decreases are reflected in the amount of
Deferred Compensation) are solely in the discretion of the
Company.
(iii) Election of Standard
--------------------
The Administrator, in its discretion, shall prescribe
procedures for election of measurement standards and changes
in measurement standards applicable to Deferred
Compensation.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on ________
__,1994.
<PAGE>
_____________________________
Donna J. Goya
Senior Vice President
<PAGE>
EXHIBIT 10.27
EXCESS BENEFIT RESTORATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 27, 1989)
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EXCESS BENEFIT RESTORATION PLAN
LEVI STRAUSS ASSOCIATES INC.
SUPPLEMENTAL BENEFITS RESTORATION PLAN
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP", respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs in order to assist certain
persons associated with the Company in avoiding transactions which could result
in liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended;
WHEREAS, by resolutions duly adopted on June 22, 1989 and June 18, 1992,
the Board of Directors of the Company authorized Robert D. Haas, Chairman of the
Board and Chief Executive Officer, to adopt certain amendments to the employee
benefit plans of the Company and to delegate to any other officer of the Company
the authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on October 20, 1989, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. Section 4 of the Excess BRP is amended by the addition of a new
subsection (c), to read as set forth below:
(c) Any contrary provision of the Plan notwithstanding, to the extent
that any portion of the benefit hereunder of an Eligible Employee who
is an Insider is attributable to amounts deemed to have been invested
in the Stock Fund pursuant to the second paragraph of Section 3(b),
such portion shall not be payable prior to the earlier of the
termination of employment, death, retirement or disability of such
Eligible Employee. For purposes of this Section 4(c), (i) the term
"Insider" shall mean an Eligible Employee who is subject to Section
16(a) of the Securities Exchange Act of 1934, as amended, and (ii) the
phrases or terms "termination of employment", "retirement" and
"disability" shall have the meaning that such phrases or
1
<PAGE>
terms, or the equivalent phrases or terms, have under the Qualified
Plan which maintain such Stock Fund.
2. Section 4 of the Supplemental BRP is amended by the addition of a new
subsection (c), to read as set forth below:
(c) Any contrary provision of the Plan notwithstanding, to the extent
that any portion of the benefit hereunder of an Eligible Employee who
is an Insider is attributable to amounts deemed to have been invested
in the Stock Fund pursuant to Section 3(c)(2), such portion shall not
be payable prior to the earlier of the termination of employment,
death, retirement or disability of such Eligible Employee. For
purposes of this Section 4(c), (i) the term "Insider" shall mean an
Eligible Employee who is subject to Section 16(a) of the Securities
Exchange Act of 1934, as amended, and (ii) the phrases or terms
"termination of employment", "retirement" and "disability" shall have
the meaning that such phrases or terms, or the equivalent phrases or
terms, have under the Qualified Plan which maintains such Stock Fund.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on February
9, 1993.
_____________________________
Donna J. Goya
Senior Vice President
2
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EXCESS BENEFIT RESTORATION PLAN
LEVI STRAUSS ASSOCIATES INC.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP," respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs to provide for an orderly
and systematic division of interests under the BRPs pursuant to an appropriate
domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. The Excess BRP is amended by the addition of a new Section 10 to read
as set forth below:
Section 10
Alienation in Response to Qualified Domestic Relations Order
------------------------------------------------------------
Any other provision of this Plan notwithstanding, an Eligible
Employee's benefit under the Plan shall be payable to any "alternate
payee," as such person is defined in section 414(p)(8) of the Code, as
provided in a domestic relations order with respect to the Plan which
would constitute a qualified domestic relations order within the
meaning of section 414(p)(1)(A) of the Code if the Plan were subject
to section
3
<PAGE>
414(p) of the Code. Determinations under this Section 10, including
but not limited to determination of whether an order would constitute
a qualified domestic relations order, shall be made by the Committee,
or its designee, in its sole discretion. The rights of any alternate
payee hereunder are subject to the provisions of the Plan as
administered with respect to alternate payees, and the Committee may
require an alternate payee to acknowledge that his or her rights are
subject to such provisions.
2. The Supplemental BRP is amended by the addition of a new Section X to
read as set forth below:
Section X
Alienation in Response to Qualified Domestic Relations Order
------------------------------------------------------------
Any other provision of this plan notwithstanding, an Eligible
Employee's benefit under the Plan shall be payable to any "alternate
payee," as such person is defined in section 414(p)(8) of the Code, as
provided in a domestic relations order with respect to the Plan which
would constitute a qualified domestic relations order within the
meaning of section 414(p)(1)(A) of the Code if the Plan were subject
to section 414(p) of the Code. Determinations under this Section 10,
including but not limited to determination of whether an order would
constitute a qualified domestic relations order, shall be made by the
Committee, or its designee, in its sole discretion. The rights of any
alternate payee hereunder are subject to the provisions of the Plan as
administered with respect to alternate payees, and the Committee may
require an alternate payee to acknowledge that his or her rights are
subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
_____________________ _______________________________
Date Donna J. Goya
4
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EXCESS BENEFIT RESTORATION PLAN
LEVI STRAUSS ASSOCIATES INC.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP", respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs to permit the expansion of
options for crediting certain bookkeeping accounts maintained under the BRPs;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof,
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. Section 3(b) of the Excess BRP is amended in its entirety to read as
set forth below:
(b) The difference between the aggregate amount of contributions which
would have been allocated for plan years beginning before November 26, 1990
in respect of the Eligible Employee under the Qualified Plans that are
defined contribution plans without regard to the Benefit Limitation and the
aggregate amount of contributions actually allocated in respect of such
Eligible Employee thereunder, adjusted to reflect the performance of any
measurement standard selected pursuant to Section 3(d) ("performance
adjustments"); provided, however, that to the extent that such amount would
have consisted of pre-tax or post-tax employee contributions, such amount
will be credited hereunder only to the extent that the Eligible Employee
executes a salary
5
<PAGE>
reduction agreement in a form suitable to the Committee. For purposes of
determining performance adjustments hereunder, amounts payable pursuant to
this Section 3(b) shall be deemed to be subject to the applicable
performance standard as of the date such amounts would have been allocated
under the Qualified Plan if not for the Benefit Limitation.
At any time that participants under a Qualified Plan invest amounts
contributed on their behalf to such Plan in a fund which invests primarily
in the common stock of the Company (the "Stock Fund"), the Eligible
Employee shall be permitted to elect whether any portion of the amount
described in the immediately preceding paragraph shall be deemed to be
invested in the Stock Fund, provided that such amount would have been
available for investment in the Stock Fund at such time if not for the
Benefit Limitation. If the Eligible Employee elects to have such amount
deemed to be invested in the Stock Fund, the Eligible Employee's benefit
under this Section 3(b) shall include (i) an amount equal to any employer
matching contribution which would have been made to the Qualified Plan had
such investment been made in the Stock Fund, and (ii) in lieu of
performance adjustments as described in the immediately preceding
paragraph, gains or losses in respect of the deemed contributions to the
Stock Fund to reflect the gains or losses in the Stock Fund during the same
period. In addition, any amounts credited to an Eligible Employee pursuant
to the first paragraph of this Section 3(b) with respect to Nonelective
Contributions which, by reason of the Benefit Limitation, could not be made
to a Qualified Plan shall be deemed to be invested in the Stock Fund as of
the next purchase of common stock of the Company by the Stock Fund which
occurs after such amounts are credited under this Plan, and, thereafter,
such amounts shall, in lieu of performance adjustments, reflect gains and
losses in the manner prescribed in clause "(ii)" of the immediately
preceding sentence. The election permitted under this paragraph generally
shall be subject to the same limitations as are applicable to similar
elections under the relevant Qualified Plan, except as provided otherwise
by the Committee.
2. Section 3 of the Excess BRP is amended by the addition of a new
subsection (d), to read as set forth below:
(d)(1) Performance adjustments effected with respect to Plan benefits
described in Section 3(b) above shall be determined pursuant to paragraph 2
below, except to the extent that the Committee offers, and the Eligible
Employee elects, alternative measurement standards pursuant to paragraph 3
below.
(2) The performance adjustment pursuant to this paragraph 2 shall be
interest, computed monthly, at a rate determined by the Committee to be
equivalent to the reference rate charged for commercial loans by the Bank
of America N.T. & S.A. on the last day of each such month.
6
<PAGE>
(3) The Committee may, but is not required to, offer one or more
measurement standards in addition to the standard described in paragraph 2.
Such alternative measurement standards offered by the Committee may include
standards which have different potential for risk and return and could
result in reductions in value of the Plan benefits of an Eligible Employee
who elects such standards. The determination of such standards, terms and
conditions for electing such standards and receiving credits for gains and
losses attributable to such standards, shall be in the sole discretion of
the Committee.
3. Section 3(c) of the Supplemental BRP is amended in its entirety to
read as set forth below:
(c) An amount determined as follows: (1) If any Eligible Employee's
contributions to the Qualified Plans for a fiscal year are limited by
section 401(a)(17) or 401(m) of the Code and the Eligible Employee executes
a salary reduction agreement in a form suitable to the Committee, the
Eligible Employee's compensation for the remainder of such fiscal year
shall be reduced by an amount equal to the contributions that the Eligible
Employee cannot make to the Qualified Plans, and such amount shall be
credited to a bookkeeping account under the Plan. The bookkeeping account
also shall be credited with an amount equal to any profit sharing
contribution or nonelective contribution that would have been made with
respect to such Employee under the Qualified Plans, adjusted to reflect the
performance of any measurement standard selected pursuant to Section 3(e)
("performance adjustments"). For purposes of determining performance
adjustments hereunder, amounts payable pursuant to this Section 3(c) shall
be deemed to be subject to the applicable performance standard as of the
date such amounts would have been allocated under the Qualified Plan if not
for the limitations pursuant to section 401(a)(17) and 401(m) of the Code.
(2) At any time that participants under a Qualified Plan invest
amounts contributed on their behalf to such Plan in a fund which invests
primarily in the common stock of the Company (the "Stock Fund"), the
Eligible Employee shall be permitted to elect to have amounts credited to
the bookkeeping account deemed to be invested in the Stock Fund, provided
that such amounts would have been available for investment in the Stock
Fund at such time if not for the limitations imposed by sections 401(a)(17)
and 401(m) of the Code. In addition, amounts credited with respect to
nonelective contributions which would have been made to the Qualified Plans
shall be deemed to be invested in the Stock Fund. If the Eligible Employee
elects to have such amounts deemed to be invested in the Stock Fund, the
bookkeeping account also shall be credited with the amount equal to any
employer matching contribution which would have been made to the Qualified
Plan if such investment had been made in the Stock Fund, and such amount
also shall be deemed to be invested in the Stock Fund. With respect to
amounts deemed to be invested in the Stock Fund pursuant to this
7
<PAGE>
Section 3(c)(2), the bookkeeping account, in lieu of performance
adjustments pursuant to the immediately preceding paragraph, shall be
credited with gains and losses as if such amounts were invested in the
Stock Fund. The election permitted under this paragraph generally shall be
subject to the same limitations which are applicable to similar elections
under the relevant Qualified Plan, except as provided otherwise by the
Committee.
4. Section 3 of the Supplemental BRP is amended by the addition of a new
subsection (e), to read as set forth below:
(e)(1) Performance adjustments effected with respect to Plan benefits
described in Section 3(c) above shall be determined pursuant to paragraph 2
below, except to the extent that the Committee offers, and the Eligible
Employee elects, alternative measurement standards pursuant to paragraph 3
below.
(2) The performance adjustment pursuant to this paragraph 2 shall
be interest, computed monthly, at a rate determined by the Committee to be
equivalent to the reference rate charged for commercial loans by the Bank
of America N.T. & S.A. on the last day of each such month.
(3) The Committee may but is not required to, offer one or more
measurement standards in addition to the standard described in paragraph 2.
Such alternative measurement standards offered by the Committee may include
standards which have different potential for risk and return and could
result in reductions in value of the Plan benefits of an Eligible Employee
who elects such standards. The determination of such standards, terms and
conditions for electing such standards and receiving credits for gains and
losses attributable to such standards, shall be in the sole discretion of
the Committee.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on _________,
1994.
________________________________
Donna J. Goya
Senior Vice President
8
<PAGE>
LEVI STRAUSS & CO.
EXCESS BENEFIT RESTORATION PLAN
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Levi Strauss &
Co. Excess Benefit Restoration Plan (the "Excess BRP") and the Levi Strauss &
Co. Supplemental Benefit Restoration Plan (the "Supplemental BRP" (collectively
referred to as the "BRPs").
WHEREAS, the Company desires to amend the BRPs, effective November 30,
1998, to provide a method of paying benefits under the 1999 Enhanced Early
Retirement Program for Laid Off Employees (the "1999 Enhancement") to certain
Members who could not receive the benefit under the applicable tax-qualified
plan due to nondiscrimination rules under the Internal Revenue Code;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the BRPs and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the BRPs;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya, Senior
Vice President for Global Human Resources, the authority to amend the BRPs,
subject to specified limits, and such delegation has not been amended, rescinded
or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW THEREFORE, effective November 30, 1998, the BRPs are hereby amended as
follows:
1. Current paragraphs (c) and (d) of Section III of the Excess BRP are hereby
redesignated as paragraphs (e) and (f).
2. Section 3 of the Excess BRP is amended by adding a new paragraph (c) to
read as follows:
"(c) The amount of benefits which would have been payable to or
in respect of the Eligible Employee under Section 3(d) of the Supplemental
BRP
9
<PAGE>
but for the application of the Benefit Limitation to the amount payable
thereunder,"
3. The first sentence of the second paragraph of the Preamble to the
Supplemental BRP is hereby amended in its entirety to read as follows:
"The Plan is intended to supplement benefits under the Revised
Home Office Pension Plan of Levi Strauss & Co., the Levi Strauss & Co.
Retirement Plan for Over-the-Road Truck Drivers and Dispatchers and the
Levi Strauss & Co. Revised Employee Retirement Plan (the "Qualified Plans")
maintained by Levi Strauss & Co. (the "Company,") to the extent such
benefits are reduced due to the limits of section 401(a)(17) of the Code,
to permit the deferral of compensation and the restoration of matching
contributions that are reduced under the Qualified Plans due to the limits
of sections 401(a)(17) and 401(m) of the Code, and to provide benefits
pursuant to the 1999 Enhancement that cannot be paid under the Qualified
Plans due to nondiscrimination rules under the Code."
4. Paragraph (c) of Section I of the Supplemental BRP is hereby amended in its
entirety to read as follows:
"(c) 'Eligible Employee' means each employee of the Company or
any of its subsidiaries who is eligible for benefits under one of the
Qualified Plans who has compensation (as defined therein) of $125,000 or
more during the prior fiscal year or who is eligible for the 1999
Enhancement but who could not receive payment (for the 1999 Enhancement)
under the applicable Qualified Plan due to nondiscrimination rules under
the Code; provided, however, that the Company may further restrict
participation in the Plan to the extent it deems necessary in order for the
Plan to be considered a Top Hat Plan.
5. Section II of the Supplemental BRP is hereby amended in its entirety to
read as follows:
"Each employee whose benefits or allocations of contributions
under the Qualified Plans are reduced as a result of the limitations on
benefits and contributions imposed by sections 401(a)(17), 401(m) of the
Code, or as a result of the application of the nondiscrimination rules
under the Code to benefits under the 1999 Enhancement shall participate in
the Plan unless he shall elect not to participate in the Plan by written
notice to the Committee whereby he waives all present and future rights to
benefits under the Plan. "
6. The first sentence of Section III of the Supplemental BRP is hereby amended
in its entirely to read as follows:
10
<PAGE>
"Subject to paragraph (e) below, the amount of the benefit payable to or in
respect of an Eligible Employee hereunder shall be the sum of the amounts
described in paragraphs (a), (b), (c) and (d):"
7. Current paragraphs (d) and (e) of Section III of the Supplemental BRP are
hereby redesignated as paragraphs (e) and (f).
8. Section III of the Supplemental BRP is hereby amended by adding the
following new paragraph (d) to read as follows:
"(d) The difference between (i) and (ii) below, where (i) is the
amount of benefits which would have been payable to or in respect of the
Eligible Employee under the applicable Qualified Plan that is a defined
benefit plan if such Eligible Employee would have been eligible to receive
payment of the 1999 Enhancement under such Qualified Plan but for
applicable nondiscrimination rules under the Code, and (ii) is the amount
of benefits payable to or in respect of the Eligible Employee under the
applicable Qualified Plan but without regard to any limits imposed under
Section 415 of the Code;"
9. The first sentence of paragraph (a)(1) of Section IV of the Supplemental
BRP is hereby amended in its entirety to read as follows:
"(1) A benefit described in Section 3(a) or 3(b) shall be paid to
the Eligible Employee, his surviving spouse or his beneficiary at the same
time or times, in the same form and subject to the same adjustments as his
benefit under the Qualified Plans that are defined benefit plans. The
benefit described in Section 3(d) shall be paid to the Eligible Employee,
his surviving spouse or his beneficiary commencing on the early retirement
date as specified in the Acceptance Notice under the 1999 Enhancement and
in the form of payment specified in that Notice. "
10. The Supplemental BRP is further amended by the addition of Addendums I, II
and III attached hereto.
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this _____ day of November, 1998.
LEVI STRAUSS & CO.
__________________________
By:
Donna J. Goya
11
<PAGE>
Senior Vice President
12
<PAGE>
ADDENDUM I TO THE
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the "1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Revised Home Office Pension Plan of
Levi Strauss & Co. (the "Pension Plan"). Benefits that are not paid from the
Pension Plan may be paid from the Levi Strauss & Co. Supplemental Benefit
Restoration Plan (the "Supplemental BR-P") and the Levi Strauss & Co. Excess
Benefit Restoration Plan (the "Excess BRP"). An Eligible Member must submit to
Levi Strauss & Co. a valid General Release in order to receive benefits under
the 1999 Enhancement through the BRPs.
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November 29,
1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is completely
-------------
voluntary. In order to participate in the 1999 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1999 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be deemed complete if it includes a retirement date that
occurs not earlier than December 1, 1998, and not later than December 1, 1999.
13
<PAGE>
4. Benefits.
--------
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible for
an immediate benefit under the 1999 Enhancement as of the
retirement date described in Section 3 above and such retirement
date shall be deemed to be an Early Retirement Date for purposes
of the Pension Plan.
b. Amount. The benefit under the 1999 Enhancement is the greater
------
of the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Pension Plan; or
ii. If applicable to the Participating Member, the Benefit based
on the application of the Percentage Factor provided in
Table A of Section 7.1 of the Pension Plan opposite the
Participating Member's actual age (as of the retirement date
approved pursuant to Section 3 above).
c. Method of Payment. The benefits under the 1999 Enhancement
-----------------
shall be paid from the Pension Plan, provided that such payment
does not cause the Pension Plan to violate applicable
nondiscrimination rules under the Code. If the payment of the
1999 Enhancement benefits would cause the Pension Plan to violate
such nondiscrimination rules, benefits to Members whose 1998
Compensation (as defined in the Pension Plan) is $125,000 or
higher shall be paid from the Supplemental BRP and, if
applicable, the Excess BRP.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
6. Transferred Eligible Members. An Employee who is transferred to a new
----------------------------
position prior to retirement under the 1999 Enhancement shall no longer be
eligible to retire under the 1999 Enhancement unless such Employee is Laid Off
and eligible to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off'. An Employee is Laid Off if he or she is
---------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a lay off.
14
<PAGE>
ADDENDUM II TO THE
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the "1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Levi Strauss & Co. Retirement Plan for
Over-the-Road Truck Drivers and Dispatchers (the "Pension Plan"). Benefits that
are not paid from the Pension Plan may be paid from the Levi Strauss & Co.
Supplemental Benefit Restoration Plan (the "Supplemental BRP") and the Levi
Strauss & Co. Excess Benefit Restoration Plan (the "Excess BRP"). An Eligible
Member must submit to Levi Strauss & Co. a valid General Release in order to
receive benefits under the 1999 Enhancement through the BRPs.
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November 29,
1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is completely
-------------
voluntary. In order to participate in the 1999 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1999 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be
15
<PAGE>
deemed complete if it includes a retirement date that occurs not earlier than
December 1, 1998, and not later than December 1, 1999.
4. Benefits.
--------
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible for
an immediate benefit under the 1999 Enhancement as of the
retirement date described in Section 3 above and such retirement
date shall be deemed to be an Early Retirement Date for purposes
of the Pension Plan.
b. Amount. The benefit under the 1999 Enhancement is the greater
------
of the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Pension Plan; or
ii. If applicable to the Participating Member, the Benefit based
on the application of the Percentage Factor provided in
Table A of Section 7.1 (b) of the Pension Plan opposite the
Participating Member's actual age (as of the retirement date
approved pursuant to Section 3 above); or
iii. If the Participating Member's total attained age plus Years
of Service equals or exceeds 80, or would have equaled or
exceeded 80 as of November 29,1999, if not for being Laid
Off; 100% of his or her Retirement Benefit.
c. Method of Payment. The benefits under the 1999 Enhancement
-----------------
shall be paid from the Pension Plan, provided that such payment
does not cause the Pension Plan to violate applicable
nondiscrimination rules under the Code. If the payment of the
1999 Enhancement benefits would cause the Pension Plan to violate
such nondiscrimination rules, benefits to Members whose 1998
Compensation (as defined in the Pension Plan) is $125,000 or
higher shall be paid from the Supplemental BRP and, if
applicable, the Excess BRP.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
16
<PAGE>
6. Transferred Eligible Members. An Employee who is transferred to a new
----------------------------
position prior to retirement under the 1999 Enhancement shall no longer be
eligible to retire under the 1999 Enhancement unless such Employee is Laid Off
and eligible to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off'. An Employee is Laid Off if he or she is
---------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a layoff.
17
<PAGE>
ADDENDUM III TO THE
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the "1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Levi Strauss & Co. Revised Employee
Retirement Plan (the "Pension Plan"). Benefits that are not paid from the
Pension Plan may be paid from the Levi Strauss & Co. Supplemental Benefit
Restoration Plan (the "Supplemental BRP") and the Levi Strauss & Co. Excess
Benefit Restoration Plan (the "Excess BRP"). An Eligible Member must submit to
Levi Strauss & Co. a valid General Release in order to receive benefits under
the 1999 Enhancement through the BRPs.
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November 29,
1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is completely
-------------
voluntary. In order to participate in the 1999 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1999 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be deemed complete if it includes a retirement date that
occurs not earlier than December 1, 1998, and not later than December 1, 1999.
18
<PAGE>
4. Benefits.
--------
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible for
an immediate benefit under the 1999 Enhancement as of the
retirement date described in Section 3 above and such retirement
date shall be deemed to be an Early Retirement Date for purposes
of the Pension Plan.
b. Amount. The benefit under the 1999 Enhancement is the greater of
------
the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Pension Plan; or
ii. If applicable to the Participating Member, the Benefit based
on the application of the Percentage Factor provided in
Table A of Section 8.1 (b) of the Pension Plan opposite the
Participating Member's actual age (as of the retirement date
approved pursuant to Section 3 above); or
iii. If the Participating Member's total attained age plus Years
of Service equals or exceeds 80, or would have equaled or
exceeded 80 as of November 29,1999, if not for being Laid
Off; 100% of his or her Retirement Benefit.
c. Method of Paying. The benefits under the 1999 Enhancement shall
----------------
be paid from the Pension Plan, provided that such payment does
not cause the Pension Plan to violate applicable
nondiscrimination rules under the Code, If the payment of the
1999 Enhancement benefits would cause the Pension Plan to violate
such nondiscrimination rules, benefits to Members whose 1998
Compensation (as defined in the Pension Plan) is $125,000 or
higher shall be paid from the Supplemental BRP and, if
applicable, the Excess BRP.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
6. Transferred Eligible Members. An Employee who is transferred to a new
----------------------------
position prior to retirement under the 1999 Enhancement shall no longer be
eligible to
19
<PAGE>
retire under the 1999 Enhancement unless such Employee is Laid Off and eligible
to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off'. An Employee is Laid Off if he or she is
---------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a layoff.
20
<PAGE>
EXHIBIT 10.28
LEVI STRAUSS ASSOCIATES INC.
----------------------------
SUPPLEMENTAL BENEFIT RESTORATION PLAN
-------------------------------------
Preamble
--------
The Supplemental Benefit Restoration Plan (the "Plan") is established
effective as of November 27, 1989, to read as set forth herein.
The Plan is intended to supplement benefits under the tax-qualified
employee retirement benefit plans (the "Qualified Plans") maintained by Levi
Strauss Associates, Inc. (the "Company") to the extent such benefits are reduced
due to the limits of section 401(a)(17) of the Code and to permit the deferral
of compensation and the restoration of matching contributions that are reduced
under the Qualified Plans due to the limits of sections 401(a)(17) and 401(m) of
the Code. The Plan is intended to be an unfunded plan maintained primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees (a "Top Hat Plan"), as described in section
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
Section I
---------
Definitions
-----------
As used herein, the following terms shall have the following meanings:
(a) Words and phrases defined in the Qualified Plans shall have the
same meanings when used herein unless expressly provided to the contrary herein.
<PAGE>
(b) "Committee" means the Administrative Committee of the Retirement
Plans.
(c) "Eligible Employee" means each employee of the Company or any of
its subsidiaries who is eligible for the Levi Strauss Associates, Inc.
Management Incentive Program; provided, however, that the Company may further
restrict participation in the Plan to the extent it deems necessary in order for
the Plan to be considered a Top Hat Plan.
Section II
----------
Participation
-------------
Each employee whose benefits or allocations of contributions under the
Qualified Plans are reduced as a result of the limitations on benefits and
contributions imposed by section 401(a)(17) or 401(m) of the Code shall
participate in the Plan unless he shall elect not to participate in the Plan by
written notice to the Committee whereby he waives all present and future rights
to benefits under the Plan.
Section III
-----------
Amount of Plan Benefit
----------------------
Subject to paragraph (d) below, the amount of the benefit payable to
or in respect of an Eligible Employee hereunder shall be the sum of the amounts
described in paragraphs (a), (b) and (c):
(a) The difference between the amount of benefits which would have
been payable to or in respect of the Eligible Employee under the Qualified Plans
that are defined
-2-
<PAGE>
benefit plans without regard to the limitation imposed by section 401(a)(17) of
the Code and the amount of benefits actually. payable to or in respect of the
Eligible Employee thereunder; plus
(b) The difference between the amount of benefits which would have
been payable to or in respect of the Eligible Employee under the Qualified Plans
that are defined benefit plans if compensation that is reduced and credited to a
bookkeeping account pursuant to (c) below had been recognized as "Compensation"
under the Qualified Plans and the amount of benefits actually payable to or in
respect of the Eligible Employee thereunder; plus
(c) An amount determined as follows: (1) If any Eligible Employee's
contributions to the Qualified Plans for a fiscal year are limited by section
401(a)(17) or 401(m) of the Code and the Eligible Employee executes a salary
reduction agreement in a form suitable to the Committee, the Eligible Employee's
compensation for the remainder of such fiscal year shall be reduced by an amount
equal to the contributions that the Eligible Employee cannot make to the
Qualified Plans, and such amount shall be credited to a bookkeeping account
under the Plan. The bookkeeping account also shall be credited with an amount
equal to any profit sharing contribution or nonelective contribution that would
have been made with respect to such Employee under the Qualified Plans, plus
interest on all amounts credited to such account at a rate determined by the
Committee to be equivalent to the prime or reference rate charged for commercial
loans by the Bank of America N. T. & S.A. on the last day of each month during
any such period. For purposes of determining interest hereunder, amounts
payable pursuant to this Section 3(c) shall be deemed to be earning interest as
of the date such amounts would have been
-3-
<PAGE>
allocated under the Qualified Plan if not for the limitations pursuant to
section 401(a)(17) and 401(m) of the Code.
(2) At any time that participants under a Qualified Plan invest
amounts contributed on their behalf to such Plan in a fund which invests
primarily in the common stock of the Company (the "Stock Fund"), the Eligible
Employee shall be permitted to elect to have amounts credited to the bookkeeping
account deemed to be invested in the Stock Fund, provided that such amounts
would have been available for investment in the Stock Fund at such time if not
for the limitations imposed by sections 401(a)(17) and 401(m) of the Code. In
addition, amounts credited with respect to nonelective contributions which would
have been made to the Qualified Plans shall be deemed to be invested in the
Stock Fund. If the Eligible Employee elects to have such amounts deemed to be
invested in the Stock Fund, the bookkeeping account also shall be credited with
the amount equal to any employer matching contribution which would have been
made to the Qualified Plan if such investment had been made in the Stock Fund,
and such amount also shall be deemed to be invested in the Stock Fund. With
respect to amounts deemed to be invested in the Stock Fund pursuant to this
Section 3(c)(2), the bookkeeping account, in lieu of interest pursuant to the
immediately preceding paragraph, shall be credited with gains and losses as if
such amounts were invested in the Stock Fund. The election permitted under this
paragraph generally shall be subject to the same limitations which are
applicable to similar elections under the relevant Qualified Plan, except as
provided otherwise by the Committee.
(d) The benefits described above shall be vested only to the extent
that such benefits would have been vested pursuant to the terms of the Qualified
Plans.
-4-
<PAGE>
Section IV
----------
Payment of Benefit
------------------
(a) Except as provided in Section 4(b) below, vested benefits shall be
paid hereunder as follows:
(1) A benefit described in Section 3(a) or 3(b) shall be paid to the
Eligible Employee, his surviving spouse or his beneficiary at the same time or
times, in the same form and subject to the same adjustments as his benefit under
the Qualified Plans that are defined benefit plans. If such benefit consists of
two or more components derived from two or more such Qualified Plans, then the
recipient and the time and form of payment shall be determined separately for
each of such components. The foregoing notwithstanding, a benefit described in
this Section 4(a)(1) shall not be paid in the form of a single lump sum without
the Committee's express consent. If the Committee does not consent to a lump
sum distribution, the Eligible Employee may elect to have the benefit paid in
any other form available under the applicable Qualified Plan.
(2) A benefit described in Section 3(c) shall be paid to the Eligible
Employee or his beneficiary at the same time or times and in the same form as
his benefit under the Qualified Plans that are defined contribution plans. If
such benefit consists of two or more components derived from two or more such
Qualified Plans, then the recipient and the time and form of payment shall be
determined separately for each of such components. The foregoing
notwithstanding, a benefit described in this Section 4(a)(2) shall not be paid
in the form of a single lump sum without the Committee's express, consent. If
the Committee does not consent to
-5-
<PAGE>
a lump sum distribution, the Eligible Employee may elect to have the benefit
paid in any other form available under the applicable Qualified Plan.
(b) If an Eligible Employee's employment is terminated for any reason
other than retirement from the Company or one of its subsidiaries with the right
to receive an immediate benefit under a Qualified Plan which is a defined
benefit plan and such Eligible Employee's aggregate vested benefit under this
Plan and the Excess Benefit Restoration Plan is $50,000 or less, the Committee
shall pay the present value of such Eligible Employee's vested benefit under
this Plan in a lump sum, and such payment shall extinguish the Eligible
Employee's right to a benefit under this Plan with respect to employment prior
to the date of such payment. For purposes of this Section 4(b), the present
value of the benefit of any Eligible Employee shall be determined by the
Committee in a uniform and undiscriminatory manner.
Section V
---------
Determination of Beneficiaries
------------------------------
With respect to any component of a benefit payable under the Plan, an
Eligible Employee's beneficiary shall be the person or persons designated in
writing by the Eligible Employee or, if no such person is so designated, the
Eligible Employee's estate.
Section VI
----------
Source of Payment
-----------------
All payments of benefits hereunder shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established or other segregation of assets
-6-
<PAGE>
made to assure such payments; provided, however, that the Company may establish
a bookkeeping reserve to meet its obligations hereunder. Nothing contained in
the Plan and no action taken pursuant to the provisions of the Plan shall create
or be construed to create a trust of any kind, or a fiduciary relationship
between the Company or the Committee and any employee or other person. If any
employee or other person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company.
Section VII
-----------
Administration of Plan
----------------------
The Plan shall be administered by the Committee, which shall have full
power, discretion and authority to interpret, construe and administer the Plan
and any part thereof, and the Committee's interpretation and construction
thereof, and actions thereunder, shall be binding and conclusive on all persons
for all purposes; provided, however, that no member of the Committee shall
participate in any determination in respect of the benefit of such member or the
benefit of a member of such member's family.
Section VIII
------------
Amendment
---------
The Plan may be amended, suspended or terminated, in whole or in part,
by the Board of Directors of the Company, but no such action shall retroactively
impair or otherwise adversely affect the rights of any person to benefits under
the Plan which have accrued prior to the date of such action, as determined by
the Committee.
-7-
<PAGE>
Section IX
----------
General Provisions
------------------
(a) The right of any Eligible Employee or other person to the payment
of benefits under the Plan may not be assigned, transferred, pledged or
encumbered, either voluntarily or by operation of law, except as provided in
Section 5 above with respect to determination of beneficiaries or as provided
below. If any person shall attempt to, or shall, assign, transfer, pledge or
encumber any amount payable hereunder, or if by reason of his bankruptcy or
other event happening at any time any such payment would be made subject to his
debts or liabilities or would otherwise devolve upon anyone else and not be
enjoyed by him or his beneficiary, the Committee may, in its sole discretion,
terminate his interest in any such payment and direct that the same be held and
applied to or for the benefit of such person, his spouse, children or other
dependents, or any other persons deemed to be the natural objects of his bounty,
or any of them, in such manner as the Committee may deem proper.
(b) If the Committee shall find that any person to whom any payment is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, then any payment due (unless a prior claim therefor
shall have been made by a duly appointed guardian, committee or other legal
representative) may be paid to his spouse, a child, a parent, or sibling, or any
other person deemed by the Committee to have incurred expenses for such person
otherwise entitled to payment, in such manner and proportions as the Committee
may determine. Any such payment shall be a complete discharge of the
liabilities of the Company under the Plan.
-8-
<PAGE>
(c) The Committee, shall make appropriate arrangements for
satisfaction of any federal or state payroll withholding tax required upon the
accrual or payment of any Plan benefits.
(d) Neither the Plan nor any action taken hereunder shall be construed
as giving to any employee the right to be retained in the employ of the Company
or any of its subsidiaries or as affecting the right of the Company or any of
its subsidiaries to dismiss any employee.
(e) The captions preceding the sections hereof have been inserted
solely as a matter of convenience and in no way define or limit the scope or
intent of any provisions hereof.
(f) The Plan and all rights thereunder shall be governed by the
construed in accordance with the laws of the State of California.
(g) Whenever used in the Plan, the masculine gender includes the
feminine.
-9-
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
BENEFIT RESTORATION PLANS
Pursuant to the authority delegated to me by the Board of Directors of
Levi Strauss Associates Inc., I hereby approve the Levi Strauss Associates Inc.
Excess Benefit Restoration Plan and the Levi Strauss Associates Inc.
Supplemental Benefit Restoration Plan, each in the form attached hereto,
effective November 27, 1989.
__________________________ ___________________________
Date Donna J. Goya
Senior Vice President
-10-
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EXCESS BENEFIT RESTORATION PLAN
-------------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
SUPPLEMENTAL BENEFITS RESTORATION PLAN
--------------------------------------
AMENDMENTS
----------
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP", respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs in order to assist certain
persons associated with the Company in avoiding transactions which could result
in liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended;
WHEREAS, by resolutions duly adopted on June 22, 1989 and June 18, 1992,
the Board of Directors of the Company authorized Robert D. Haas, Chairman of the
Board and Chief Executive Officer, to adopt certain amendments to the employee
benefit plans of the Company and to delegate to any other officer of the Company
the authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on October 20, 1989, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. Section 4 of the Excess BRP is amended by the addition of a new
subsection (c), to read as set forth below:
(c) Any contrary provision of the Plan notwithstanding, to the extent
that any portion of the benefit hereunder of an Eligible Employee who
is an Insider is attributable to amounts deemed to have been invested
in the Stock Fund pursuant to the second paragraph of Section 3(b),
such portion shall not be payable prior to the earlier of the
termination of employment, death, retirement or disability of such
Eligible Employee. For purposes of this
<PAGE>
Section 4(c), (i) the term "Insider" shall mean an Eligible Employee
who is subject to Section 16(a) of the Securities Exchange Act of
1934, as amended, and (ii) the phrases or terms "termination of
employment", "retirement" and "disability" shall have the meaning that
such phrases or terms, or the equivalent phrases or terms, have under
the Qualified Plan which maintain such Stock Fund.
2. Section 4 of the Supplemental BRP is amended by the addition of a
new subsection (c), to read as set forth below:
(c) Any contrary provision of the Plan notwithstanding, to the extent
that any portion of the benefit hereunder of an Eligible Employee who
is an Insider is attributable to amounts deemed to have been invested
in the Stock Fund pursuant to Section 3(c)(2), such portion shall not
be payable prior to the earlier of the termination of employment,
death, retirement or disability of such Eligible Employee. For
purposes of this Section 4(c), (i) the term "Insider" shall mean an
Eligible Employee who is subject to Section 16(a) of the Securities
Exchange Act of 1934, as amended, and (ii) the phrases or terms
"termination of employment", "retirement" and "disability" shall have
the meaning that such phrases or terms, or the equivalent phrases or
terms, have under the Qualified Plan which maintains such Stock Fund.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on February
9, 1993.
___________________________________
Donna J. Goya
Senior Vice President
-12-
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EXCESS BENEFIT RESTORATION PLAN
-------------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
SUPPLEMENTAL BENEFIT RESTORATION PLAN
-------------------------------------
AMENDMENTS
----------
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP," respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs to provide for an orderly
and systematic division of interests under the BRPs pursuant to an appropriate
domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. The Excess BRP is amended by the addition of a new Section 10 to read
as set forth below:
Section 10
Alienation in Response to Qualified Domestic Relations Order
------------------------------------------------------------
Any other provision of this Plan notwithstanding, an Eligible
Employee's benefit under the Plan shall be payable to any "alternate
payee," as such person is defined in section 414(p)(8) of the Code, as
provided in a domestic relations order with respect to the Plan which
would constitute a qualified domestic relations order within the
meaning of section 414(p)(1)(A) of the Code if the Plan were subject
to section 414(p) of the Code. Determinations under this Section 10,
including but not limited to determination of
<PAGE>
whether an order would constitute a qualified domestic relations
order, shall be made by the Committee, or its designee, in its sole
discretion. The rights of any alternate payee hereunder are subject to
the provisions of the Plan as administered with respect to alternate
payees, and the Committee may require an alternate payee to
acknowledge that his or her rights are subject to such provisions.
2. The Supplemental BRP is amended by the addition of a new Section X to
read as set forth below:
Section X
Alienation in Response to Qualified Domestic Relations Order
------------------------------------------------------------
Any other provision of this plan notwithstanding, an Eligible
Employee's benefit under the Plan shall be payable to any "alternate
payee," as such person is defined in section 414(p)(8) of the Code, as
provided in a domestic relations order with respect to the Plan which
would constitute a qualified domestic relations order within the
meaning of section 414(p)(1)(A) of the Code if the Plan were subject
to section 414(p) of the Code. Determinations under this Section 10,
including but not limited to determination of whether an order would
constitute a qualified domestic relations order, shall be made by the
Committee, or its designee, in its sole discretion. The rights of any
alternate payee hereunder are subject to the provisions of the Plan as
administered with respect to alternate payees, and the Committee may
require an alternate payee to acknowledge that his or her rights are
subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
___________________ ____________________________________
Date Donna J. Goya
-14-
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EXCESS BENEFIT RESTORATION PLAN
LEVI STRAUSS ASSOCIATES INC.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP", respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs to permit the expansion of
options for crediting certain bookkeeping accounts maintained under the BRPs;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof,
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. Section 3(b) of the Excess BRP is amended in its entirety to read
as set forth below:
(b) The difference between the aggregate amount of contributions
which would have been allocated for plan years beginning before November
26, 1990 in respect of the Eligible Employee under the Qualified Plans that
are defined contribution plans without regard to the Benefit Limitation and
the aggregate amount of contributions actually allocated in respect of such
Eligible Employee thereunder, adjusted to reflect the performance of any
measurement standard selected pursuant to Section 3(d) ("performance
adjustments"); provided, however, that to the extent that such amount would
have consisted of pre-tax or post-tax employee contributions, such amount
will be credited hereunder only to the extent that the Eligible Employee
executes a salary reduction agreement in a form suitable to the Committee.
For purposes of determining performance adjustments hereunder, amounts
payable pursuant to this Section 3(b) shall be
<PAGE>
deemed to be subject to the applicable performance standard as of the date
such amounts would have been allocated under the Qualified Plan if not for
the Benefit Limitation.
At any time that participants under a Qualified Plan invest amounts
contributed on their behalf to such Plan in a fund which invests primarily
in the common stock of the Company (the "Stock Fund"), the Eligible
Employee shall be permitted to elect whether any portion of the amount
described in the immediately preceding paragraph shall be deemed to be
invested in the Stock Fund, provided that such amount would have been
available for investment in the Stock Fund at such time if not for the
Benefit Limitation. If the Eligible Employee elects to have such amount
deemed to be invested in the Stock Fund, the Eligible Employee's benefit
under this Section 3(b) shall include (i) an amount equal to any employer
matching contribution which would have been made to the Qualified Plan had
such investment been made in the Stock Fund, and (ii) in lieu of
performance adjustments as described in the immediately preceding
paragraph, gains or losses in respect of the deemed contributions to the
Stock Fund to reflect the gains or losses in the Stock Fund during the same
period. In addition, any amounts credited to an Eligible Employee pursuant
to the first paragraph of this Section 3(b) with respect to Nonelective
Contributions which, by reason of the Benefit Limitation, could not be made
to a Qualified Plan shall be deemed to be invested in the Stock Fund as of
the next purchase of common stock of the Company by the Stock Fund which
occurs after such amounts are credited under this Plan, and, thereafter,
such amounts shall, in lieu of performance adjustments, reflect gains and
losses in the manner prescribed in clause "(ii)" of the immediately
preceding sentence. The election permitted under this paragraph generally
shall be subject to the same limitations as are applicable to similar
elections under the relevant Qualified Plan, except as provided otherwise
by the Committee.
2. Section 3 of the Excess BRP is amended by the addition of a new
subsection (d), to read as set forth below:
(d)(1) Performance adjustments effected with respect to Plan benefits
described in Section 3(b) above shall be determined pursuant to paragraph 2
below, except to the extent that the Committee offers, and the Eligible Employee
elects, alternative measurement standards pursuant to paragraph 3 below.
(2) The performance adjustment pursuant to this paragraph 2 shall
be interest, computed monthly, at a rate determined by the Committee to be
equivalent to the reference rate charged for commercial loans by the Bank of
America N.T. & S.A. on the last day of each such month.
16
<PAGE>
(3) The Committee may, but is not required to, offer one or more
measurement standards in addition to the standard described in paragraph 2.
Such alternative measurement standards offered by the Committee may include
standards which have different potential for risk and return and could result in
reductions in value of the Plan benefits of an Eligible Employee who elects such
standards. The determination of such standards, terms and conditions for
electing such standards and receiving credits for gains and losses attributable
to such standards, shall be in the sole discretion of the Committee.
3. Section 3(c) of the Supplemental BRP is amended in its entirety to
read as set forth below:
(c) An amount determined as follows: (1) If any Eligible Employee's
contributions to the Qualified Plans for a fiscal year are limited by
section 401(a)(17) or 401(m) of the Code and the Eligible Employee executes
a salary reduction agreement in a form suitable to the Committee, the
Eligible Employee's compensation for the remainder of such fiscal year
shall be reduced by an amount equal to the contributions that the Eligible
Employee cannot make to the Qualified Plans, and such amount shall be
credited to a bookkeeping account under the Plan. The bookkeeping account
also shall be credited with an amount equal to any profit sharing
contribution or nonelective contribution that would have been made with
respect to such Employee under the Qualified Plans, adjusted to reflect the
performance of any measurement standard selected pursuant to Section 3(e)
("performance adjustments"). For purposes of determining performance
adjustments hereunder, amounts payable pursuant to this Section 3(c) shall
be deemed to be subject to the applicable performance standard as of the
date such amounts would have been allocated under the Qualified Plan if not
for the limitations pursuant to section 401(a)(17) and 401(m) of the Code.
(2) At any time that participants under a Qualified Plan invest
amounts contributed on their behalf to such Plan in a fund winch invests
primarily in the common stock of the Company (the "Stock Fund"), the
Eligible Employee shall be permitted to elect to have amounts credited to
the bookkeeping account deemed to be invested in the Stock Fund, provided
that such amounts would have been available for investment in the Stock
Fund at such time if not for the limitations imposed by sections 401(a)(17)
and 401(m) of the Code. In addition, amounts credited with respect to
nonelective contributions which would have been made to the Qualified Plans
shall be deemed to be invested in the Stock Fund. If the Eligible Employee
elects to have such amounts deemed to be invested in the Stock Fund, the
bookkeeping account also shall be credited with the amount equal to any
employer matching contribution which would have been made to the Qualified
Plan if such investment had been made in the Stock Fund, and such amount
also shall be deemed to be invested in the Stock Fund. With respect to
amounts deemed to be invested in the Stock Fund pursuant to this
17
<PAGE>
Section 3(c)(2), the bookkeeping account, in lieu of performance
adjustments pursuant to the immediately preceding paragraph, shall be
credited with gains and losses as if such amounts were invested in the
Stock Fund. The election permitted under this paragraph generally shall be
subject to the same limitations which are applicable to similar elections
under the relevant Qualified Plan, except as provided otherwise by the
Committee.
4. Section 3 of the Supplemental BRP is amended by the addition of a new
subsection (e), to read as set forth below:
(e)(1) Performance adjustments effected with respect to Plan benefits
described in Section 3(c) above shall be determined pursuant to paragraph 2
below, except to the extent that the Committee offers, and the Eligible
Employee elects, alternative measurement standards pursuant to paragraph 3
below.
(2) The performance adjustment pursuant to this paragraph 2 shall
be interest, computed monthly, at a rate determined by the Committee to be
equivalent to the reference rate charged for commercial loans by the Bank
of America N.T. & S.A. on the last day of each such month.
(3) The Committee may but is not required to, offer one or more
measurement standards in addition to the standard described in paragraph 2.
Such alternative measurement standards offered by the Committee may include
standards which have different potential for risk and return and could
result in reductions in value of the Plan benefits of an Eligible Employee
who elects such standards. The determination of such standards, terms and
conditions for electing such standards and receiving credits for gains and
losses attributable to such standards, shall be in the sole discretion of
the Committee.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on ________,
1994.
_____________________________
Donna J. Goya
Senior Vice President
18
<PAGE>
LEVI STRAUSS ASSOCIATES, INC.
EXCESS BENEFIT RESTORATION PLAN
____________________________________
LEVI STRAUSS ASSOCIATES, INC.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
____________________________________
AMENDMENTS
WHEREAS, Levi Strauss Associates, Inc. (the "Company") has established the
Levi Strauss Associates, Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates, Inc. Supplemental Benefit Restoration Plan (individually,
the "Excess BRP" and the "Supplemental BRP," respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs to provide participants with
increased flexibility with respect to distributions from the BRPs;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to certain other officers of the Company
the authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on May 2, 1996, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President for Global Human Resources,
the authority to amend the employee benefit plans of the Company subject to
specified limits, and such delegation has not been amended, rescinded or
superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. Section 4(a) of the Excess BRP is amended by the addition of a new
paragraph (3) to read as set forth below:
(3) The foregoing provisions of this Section 4(a) notwithstanding,
the Committee may allow an Eligible Employee to elect that his benefit
described in Section 3(b) be paid in any form permitted by the
Committee, provided that such election is (I) made in writing, (ii)
irrevocable and (iii) submitted to the Committee at least 12 months
before the Eligible Employee's benefit under the Company's Qualified
Plans which are defined contribution plans commences. In the event
that the Eligible Employee's benefit under the such defined
contribution plans commences sooner than 12 months after the eligible
Employee's election described in the prior sentence for reasons other
than the Eligible Employee's death, such benefit shall be payable
pursuant to the provisions of Section 4(a)(2), above.
<PAGE>
2. Section 4(a) of the Supplemental BRP is amended by the addition of a
new paragraph (3) to read as set forth below:
(3) The foregoing provisions of this Section 4(a) notwithstanding,
the Committee may allow an Eligible Employee to elect that this
benefit described in Section 3(c) be paid in any form permitted by the
Committee, provided that such election is (i) made in writing, (ii)
irrevocable and (iii) submitted to the Committee at least 12 months
before the Eligible Employee's benefit under the Company's Qualified
Plans which are defined contribution plans commences. In the event
that the Eligible Employee's benefit under the such defined
contribution plans commences sooner than 12 months after the Eligible
Employee's election described in the prior sentence for reasons other
than the Eligible Employee's death, such benefit shall be payable
pursuant to the provisions of Section 4(a)(2), above.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
______________________ ______________________________
Date Donna J. Goya
20
<PAGE>
LEVI STRAUSS & CO.
EXCESS BENEFIT RESTORATION PLAN
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
AMENDMENT
WHEREAS, LEVI STRAUSS & CO. (the "Company") has adopted the Levi Strauss &
Co. Excess Benefit Restoration Plan (the "Excess BRP") and the Levi Strauss &
Co. Supplemental Benefit Restoration Plan (the "Supplemental BRP" (collectively
referred to as the "BRPs");
WHEREAS, the Company desires to amend the BRPs, effective November 30,
1998, to provide a method of paying benefits under the 1999 Enhanced Early
Retirement Program for Laid Off Employees (the "1999 Enhancement") to certain
Members who could not receive the benefit under the applicable tax-qualified
plan due to nondiscrimination rules under the Internal Revenue Code;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the BRPs and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the BRPs;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya, Senior
Vice President for Global Human Resources, the authority to amend the BRPs,
subject to specified limits, and such delegation has not been amended, rescinded
or superseded as of the date hereof; and
WHEREAS, the amendment herein is within such limits to the delegated
authority of Donna J. Goya;
NOW THEREFORE, effective November 30, 1998, the BRPs are hereby amended as
follows:
1. Current paragraphs (c) and (d) of Section III of the Excess BRP are hereby
redesignated as paragraphs (e) and (f).
2. Section 3 of the Excess BRP is amended by adding a new paragraph (c) to
read as follows:
"(c) The amount of benefits which would have been payable to or
in respect of the Eligible Employee under Section 3(d) of the Supplemental
BRP but for the application of the Benefit Limitation to the amount payable
thereunder,"
<PAGE>
3. The first sentence of the second paragraph of the Preamble to the
Supplemental BRP is hereby amended in its entirety to read as follows:
"The Plan is intended to supplement benefits under the Revised
Home Office Pension Plan of Levi Strauss & Co., the Levi Strauss & Co.
Retirement Plan for Over-the-Road Truck Drivers and Dispatchers and the
Levi Strauss & Co. Revised Employee Retirement Plan (the "Qualified Plans")
maintained by Levi Strauss & Co. (the "Company,") to the extent such
benefits are reduced due to the limits of section 401(a)(17) of the Code,
to permit the deferral of compensation and the restoration of matching
contributions that are reduced under the Qualified Plans due to the limits
of sections 401(a)(17) and 401(m) of the Code, and to provide benefits
pursuant to the 1999 Enhancement that cannot be paid under the Qualified
Plans due to nondiscrimination rules under the Code."
4. Paragraph (c) of Section I of the Supplemental BRP is hereby amended in its
entirety to read as follows:
"(c) 'Eligible Employee' means each employee of the Company or
any of its subsidiaries who is eligible for benefits under one of the
Qualified Plans who has compensation (as defined therein) of $125,000 or
more during the prior fiscal year or who is eligible for the 1999
Enhancement but who could not receive payment (for the 1999 Enhancement)
under the applicable Qualified Plan due to nondiscrimination rules under
the Code; provided, however, that the Company may further restrict
participation in the Plan to the extent it deems necessary in order for the
Plan to be considered a Top Hat Plan.
5. Section II of the Supplemental BRP is hereby amended in its entirety to
read as follows:
"Each employee whose benefits or allocations of contributions
under the Qualified Plans are reduced as a result of the limitations on
benefits and contributions imposed by sections 401(a)(17), 401(m) of the
Code, or as a result of the application of the nondiscrimination rules
under the Code to benefits under the 1999 Enhancement shall participate in
the Plan unless he shall elect not to participate in the Plan by written
notice to the Committee whereby he waives all present and future rights to
benefits under the Plan. "
6. The first sentence of Section III of the Supplemental BRP is hereby amended
in its entirely to read as follows:
"Subject to paragraph (e) below, the amount of the benefit payable to or in
respect of an Eligible Employee hereunder shall be the sum of the amounts
described in paragraphs (a), (b), (c) and (d):"
22
<PAGE>
7. Current paragraphs (d) and (e) of Section III of the Supplemental BRP are
hereby redesignated as paragraphs (e) and (f).
8. Section III of the Supplemental BRP is hereby amended by adding the
following new paragraph (d) to read as follows:
"(d) The difference between (i) and (ii) below, where (i) is the
amount of benefits which would have been payable to or in respect of the
Eligible Employee under the applicable Qualified Plan that is a defined
benefit plan if such Eligible Employee would have been eligible to receive
payment of the 1999 Enhancement under such Qualified Plan but for
applicable nondiscrimination rules under the Code, and (ii) is the amount
of benefits payable to or in respect of the Eligible Employee under the
applicable Qualified Plan but without regard to any limits imposed under
Section 415 of the Code;"
9. The first sentence of paragraph (a)(1) of Section IV of the Supplemental
BRP is hereby amended in its entirety to read as follows:
"(1) A benefit described in Section 3(a) or 3(b) shall be paid to
the Eligible Employee, his surviving spouse or his beneficiary at the same
time or times, in the same form and subject to the same adjustments as his
benefit under the Qualified Plans that are defined benefit plans. The
benefit described in Section 3(d) shall be paid to the Eligible Employee,
his surviving spouse or his beneficiary commencing on the early retirement
date as specified in the Acceptance Notice under the 1999 Enhancement and
in the form of payment specified in that Notice."
10. The Supplemental BRP is further amended by the addition of Addendums I, II
and III attached hereto.
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this __ day of November, 1998.
LEVI STRAUSS & CO.
By:_________________________________
Donna J. Goya
Senior Vice President
23
<PAGE>
ADDENDUM I TO THE
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the "1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Revised Home Office Pension Plan of
Levi Strauss & Co. (the "Pension Plan"). Benefits that are not paid from the
Pension Plan may be paid from the Levi Strauss & Co. Supplemental Benefit
Restoration Plan (the "Supplemental BRP") and the Levi Strauss & Co. Excess
Benefit Restoration Plan (the "Excess BRP"). An Eligible Member must submit to
Levi Strauss & Co. a valid General Release in order to receive benefits under
the 1999 Enhancement through the BRPs.
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November 29,
1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is completely
-------------
voluntary. In order to participate in the 1999 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1999 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be deemed complete if it includes a retirement date that
occurs not earlier than December 1, 1998, and not later than December 1, 1999.
4. Benefits.
--------
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible for
an immediate benefit under the 1999 Enhancement as of the
retirement date
<PAGE>
described in Section 3 above and such retirement date shall be
deemed to be an Early Retirement Date for purposes of the Pension
Plan.
b. Amount. The benefit under the 1999 Enhancement is the greater of
------
the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Pension Plan; or
ii. If applicable to the Participating Member, the Benefit based
on the application of the Percentage Factor provided in
Table A of Section 7.1 of the Pension Plan opposite the
Participating Member's actual age (as of the retirement date
approved pursuant to Section 3 above).
c. Method of Payment. The benefits under the 1999 Enhancement
-----------------
shall be paid from the Pension Plan, provided that such payment
does not cause the Pension Plan to violate applicable
nondiscrimination rules under the Code. If the payment of the
1999 Enhancement benefits would cause the Pension Plan to violate
such nondiscrimination rules, benefits to Members whose 1998
Compensation (as defined in the Pension Plan) is $125,000 or
higher shall be paid from the Supplemental BRP and, if
applicable, the Excess BRP.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
6. Transferred Eligible Members. An Employee who is transferred to a
----------------------------
new position prior to retirement under the 1999 Enhancement shall no longer be
eligible to retire under the 1999 Enhancement unless such Employee is Laid Off
and eligible to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off". An Employee is Laid Off if he or she is
---------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a lay off.
25
<PAGE>
ADDENDUM II TO THE
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the "1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Levi Strauss & Co. Retirement Plan for
Over-the-Road Truck Drivers and Dispatchers (the "Pension Plan"). Benefits that
are not paid from the Pension Plan may be paid from the Levi Strauss & Co.
Supplemental Benefit Restoration Plan (the "Supplemental BRP") and the Levi
Strauss & Co. Excess Benefit Restoration Plan (the "Excess BRP"). An Eligible
Member must submit to Levi Strauss & Co. a valid General Release in order to
receive benefits under the 1999 Enhancement through the BRPs.
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November 29,
1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is completely
-------------
voluntary. In order to participate in the 1999 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1999 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be deemed complete if it includes a retirement date that
occurs not earlier than December 1, 1998, and not later than December 1, 1999.
4. Benefits.
--------
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible for
an
<PAGE>
immediate benefit under the 1999 Enhancement as of the retirement
date described in Section 3 above and such retirement date shall
be deemed to be an Early Retirement Date for purposes of the
Pension Plan.
b. Amount. The benefit under the 1999 Enhancement is the greater of
the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Pension Plan; or
ii. If applicable to the Participating Member, the Benefit based
on the application of the Percentage Factor provided in
Table A of Section 7.1(b) of the Pension Plan opposite the
Participating Member's actual age (as of the retirement date
approved pursuant to Section 3 above); or
iii. If the Participating Member's total attained age plus Years
of Service equals or exceeds 80, or would have equaled or
exceeded 80 as of November 29,1999, if not for being Laid
Off; 100% of his or her Retirement Benefit.
c. Method of Payment. The benefits under the 1999 Enhancement shall
-----------------
be paid from the Pension Plan, provided that such payment does
not cause the Pension Plan to violate applicable
nondiscrimination rules under the Code. If the payment of the
1999 Enhancement benefits would cause the Pension Plan to violate
such nondiscrimination rules, benefits to Members whose 1998
Compensation (as defined in the Pension Plan) is $125,000 or
higher shall be paid from the Supplemental BRP and, if
applicable, the Excess BRP.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
6. Transferred Eligible Members. An Employee who is transferred to a new
----------------------------
position prior to retirement under the 1999 Enhancement shall no longer be
eligible to retire under the 1999 Enhancement unless such Employee is Laid Off
and eligible to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off". An Employee is Laid Off if he or she is
---------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a layoff.
27
<PAGE>
ADDENDUM III TO THE
LEVI STRAUSS & CO.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
FISCAL 1999 ENHANCED EARLY RETIREMENT PROGRAM
FOR LAID OFF EMPLOYEES
1. Scope. This is the Fiscal 1999 Enhanced Early Retirement Program for
-----
Laid Off Employees (the " 1999 Enhancement"), under which Eligible Members (as
defined in Section 2 below) may retire and receive the enhanced benefits
described under Section 4b, below. Except as provided under Section 4c below,
such benefits shall be provided under the Levi Strauss & Co. Revised Employee
Retirement Plan (the "Pension Plan"). Benefits that are not paid from the
Pension Plan may be paid from the Levi Strauss & Co. Supplemental Benefit
Restoration Plan (the "Supplemental BRP") and the Levi Strauss & Co. Excess
Benefit Restoration Plan (the "Excess BRP"). An Eligible Member must submit to
Levi Strauss & Co. a valid General Release in order to receive benefits under
the 1999 Enhancement through the BRPs.
2. Eligibility. A Member is eligible for the 1999 Enhancement (an
-----------
"Eligible Member") if:
a. Such Member is Laid Off (as defined herein) by the Company and
terminates employment between November 30, 1998 and November 29,
1999;
b. Such Member has at least 15 Years of Service at the time of
termination of employment or would have had 15 Years of Service
as of November 29, 1999, if not for being Laid Off by the
Company; and
c. Such Member is at least age 50, or will attain age 50 on or
before November 29, 1999.
3. Participation. Participation in the 1999 Enhancement is completely
-------------
voluntary. In order to participate in the 1999 Enhancement, an Eligible Member
shall complete a written notice ("Acceptance Notice") of the 1999 Enhancement on
the form prescribed for such purpose by the Administrative Committee. The
Acceptance Notice must be received by the Administrative Committee on or before
5:00 p.m. Pacific Standard Time on November 29, 1999. In addition, the
Acceptance Notice shall be deemed complete if it includes a retirement date that
occurs not earlier than December 1, 1998, and not later than December 1, 1999.
4. Benefits.
--------
a. In General. An Eligible Member who elects to participate in the
----------
1999 Enhancement (a "Participating Member") shall be eligible for
an immediate benefit under the 1999 Enhancement as of the
retirement date
28
<PAGE>
described in Section 3 above and such retirement date shall be
deemed to be an Early Retirement Date for purposes of the Pension
Plan.
b. Amount. The benefit under the 1999 Enhancement is the greater of
------
the following which is applicable:
i. 70% of the Participating Member's Retirement Benefit under
the Pension Plan; or
ii. If applicable to the Participating Member, the Benefit based
on the application of the Percentage Factor provided in
Table A of Section 8.1(b) of the Pension Plan opposite the
Participating Member's actual age (as of the retirement date
approved pursuant to Section 3 above); or
iii. If the Participating Member's total attained age plus Years
of Service equals or exceeds 80, or would have equaled or
exceeded 80 as of November 29,1999, if not for being Laid
Off; 100% of his or her Retirement Benefit.
c. Method of Paying. The benefits under the 1999 Enhancement shall
----------------
be paid from the Pension Plan, provided that such payment does
not cause the Pension Plan to violate applicable
nondiscrimination rules under the Code, If the payment of the
1999 Enhancement benefits would cause the Pension Plan to violate
such nondiscrimination rules, benefits to Members whose 1998
Compensation (as defined in the Pension Plan) is $125,000 or
higher shall be paid from the Supplemental BRP and, if
applicable, the Excess BRP.
5. Benefits for Alternate Payee. An Alternate Payee with respect to a
----------------------------
Participating Member may elect to receive benefits during the election period
set forth in Section 3 above to the extent provided in, and in accordance with,
the applicable Qualified Domestic Relations Order.
6. Transferred Eligible Members. An Employee who is transferred to a new
----------------------------
position prior to retirement under the 1999 Enhancement shall no longer be
eligible to retire under the 1999 Enhancement unless such Employee is Laid Off
and eligible to participate within the period set forth in Section 3 above.
7. Meaning of "Laid Off". An Employee is Laid Off if he or she is
---------------------
involuntarily separated from employment with the Company at the written
direction of the Company in connection with a program specified by the Company
as a layoff.
29
<PAGE>
EXHIBIT 10.29
LEADERSHIP SHARES PLAN
OF
LEVI STRAUSS & CO.
--CONFIDENTIAL--
<PAGE>
CONTENTS
==========================================================================
This document describes how the Leadership Shares Plan works. It explains:
Page
----
. The purpose of the Plan; 1
. Who is eligible to receive an Award Payment under the Plan; 1
. How individual Awards are determined; 2
. What a Leadership Share is and how it works; 3
. When and in what form Awards are paid; 5
. What happens in the event of employment termination; and 6
. Who administers the Plan 9
This is the official Plan document, which contains the exclusive and complete
description of the terms of this Plan. The Company reserves the right to amend
the Plan from time to time or to terminate the Plan.
Throughout this document, certain terms are capitalized (for example, "Plan" or
"Company"). Capitalization indicates that the term is defined in the document
with the definition listed in the Glossary at the end of the document.
<PAGE>
LEADERSHIP SHARES PLAN OF LEVI STRAUSS & CO.
===============================================================================
The Leadership Shares Plan of Levi Strauss & Co. (Plan) is a component of the
Company's Partners in Performance cash compensation program. It is designed to
provide Eligible Employees worldwide with the opportunity to share in the
Company's financial success by providing cash payments to them when the Company
achieves its long-term financial objectives on a consolidated basis, as measured
by Leadership Value Added.
PURPOSE OF THE PLAN
. Serve as a single Plan covering Eligible Employees worldwide;
. Align Eligible Employee and shareholder interests;
. Provide a financial incentive for meeting long-term financial objectives
and increasing shareholder value;
. Recognize and reward Eligible Employees who make substantial contributions
to the Company;
. Tie incentive opportunity to external competitive pay practices and
internally to the Company's total compensation objectives; and
EFFECTIVE DATE
. The Plan starts on the first day of the Company's 1999 fiscal year.
ELIGIBILITY AND PARTICIPATION
. All employees in U.S. salary grade 7 and above (or the non-U.S. equivalent,
as determined by the Committee) worldwide are automatically eligible to
participate, and are Eligible Employees, in the Plan.
. Participation in this Plan does not require any sign-up, decision making,
investment or contribution of money on the part of an Eligible Employee who
receives Leadership Shares (a Participant).
GRANT CYCLE
. Each Grant Cycle consists of a five-year Performance Period. The
Performance Period of the Leadership Shares for an individual Participant
may be affected by the Participant's
1
<PAGE>
employment termination, or by his or her job status change as discussed in
this Plan.
. A new Grant Cycle begins each fiscal year with a new grant and
Performance/Award Schedule, which will be used (as described below) to
calculate any payments with respect to the Leadership Shares granted in
that Grant Cycle.
. Each Grant Cycle is identified by its first fiscal year.
DETERMINATION OF LEADERSHIP SHARE GRANTS
. Leadership Share grants for Participants are set for each Grant Cycle at
the beginning of that Grant Cycle.
. The Committee will establish the permissible range of Leadership Share
grants for Participants at each Organization Level for the Grant Cycle.
. The number of Leadership Shares, if any, granted to each Participant for
the Grant Cycle will be within the range for his or her Organization Level
as of the first day of the Grant Cycle and will be effective only after it
is reviewed and approved by at least two levels of management, the
Participant's manager and one level above. An Eligible Employee is not
required to receive Leadership Shares for a Grant Cycle.
. In the event of a job status change during the first year of a Grant Cycle,
such as a new hire or promotion, Leadership Shares (or additional
Leadership Shares) may be granted to the Eligible Employee or Participant.
FINANCIAL MEASURE, OBJECTIVES, AND LEADERSHIP SHARE VALUES
. At the beginning of each Grant Cycle, the Committee will establish the
relationship between Leadership Share Value and the Company's possible
performance against financial objectives. LVA will be the financial
performance measure used to assess the Company's performance. Such
relationship shall be incorporated into a Performance Award/Schedule for
such Grant Cycle.
. There is no maximum value for a Leadership Share.
. LVA and Leadership Share Value are expressed in U.S. dollars.
VESTING OF LEADERSHIP SHARES
. The Leadership Shares granted in each Grant Cycle vest starting on the last
day of the third fiscal year of the Grant Cycle. Vesting is in 33 1/3%
increments effective on the last
2
<PAGE>
day of the third, fourth and fifth fiscal years of the Grant Cycle (each, a
"Vesting Date"), respectively, except as otherwise described under the
"Termination of Employment . . ." sections below. The chart below
summarizes the Leadership Share vesting schedule:
Cumulative
Last Day of Fiscal Year Percent Vested
----------------------- --------------
1 0%
2 0%
3 33 1/3%
4 66 2/3%
5 100%
. For each Participant, the total number of vested Leadership Shares for each
Grant Cycle is equal to the total number of Leadership Shares granted to
the Participant for that Grant Cycle multiplied by the Cumulative Percent
Vested.
AWARD PAYMENT
. Within a reasonable period of time after each Vesting Date, the Company
will make an Award Payment with respect to each Grant Cycle. The Award
Payment is the cash payable to a Participant under the Plan. It is
determined as follows:
- first, the Vested Award as of the Vesting Date is calculated by
multiplying the number of vested Leadership Shares by the Leadership
Share Value.
- second, the sum of any prior Award Payments already made from the same
Grant Cycle will be subtracted from the Vested Award value
. Award Payments are calculated and automatically paid to Participants as
soon as administratively possible, unless deferred by Participants who are
eligible to participate in the (US) Deferred Compensation Plan for
Executives.
. If Vested Awards should ever be less than the sum of previous Award
Payments in a Grant Cycle, those Award Payment are not subject to repayment
back to the Company.
TERMINATION OF EMPLOYMENT DUE TO RETIREMENT
. If a Participant Retires on or after the first Vesting Date of a Grant
Cycle, the Participant will be eligible to continue vesting and receive
Award Payments at the applicable Payment Dates of the Grant Cycle for any
outstanding Leadership Shares attributable to that Grant Cycle.
3
<PAGE>
TERMINATION OF EMPLOYMENT DUE TO DEATH
. If a Participant dies on or after the first Vesting Date of a Grant Cycle,
the Participant's Leadership Shares attributable to that Grant Cycle will
become fully vested on the date of death.
. The beneficiary of a Participant who terminates employment due to death
will receive a final Award Payment of the Participant's vested Leadership
Shares as soon as administratively possible. The Leadership Share Value as
of the vesting date preceding the death will be used if death occurs within
the first 6 months of the fiscal year. If death occurs in the last 6 months
of the fiscal year, the value as of the vesting date following death will
be used.
TERMINATION OF PARTICIPATION DUE TO LONG-TERM DISABILITY
. If a Participant terminates active plan participation due to an authorized
Long-term Disability on or after the first Vesting Date of a Grant Cycle,
the Participant will be eligible to continue vesting and receive Award
Payments at the applicable Payment Dates of the Grant Cycle for any
outstanding Leadership Shares attributable to that Grant Cycle.
. Notwithstanding the preceding provision of the Plan, a Participant who
terminates active plan participation due to Long-term Disability may apply
at any time, because of hardship, to the Administrator for an acceleration
of vesting for any outstanding Leadership Share grants in which a
Participant has already begun to vest and Award Payment of such vested
Leadership Shares. The Administrator, at its sole discretion, may grant or
deny the application.
. If the Administrator approves an accelerated vesting and Award Payment
application before the Participant would otherwise be eligible for vesting
and Award Payment, the Award Payment will be made as soon as
administratively possible after the application is approved using the most
recent Leadership ShareValue.
TERMINATION OF EMPLOYMENT BY VOLUNTARY RESIGNATION
. A Participant who terminates employment by voluntary resignation will not
be eligible for additional Award Payments after the effective termination
date.
. Notwithstanding the prior statement, if the effective termination date for
a Participant who terminates employment by voluntary resignation occurs
after a Vesting Date, but prior to the related Award Payment, the
Participant is entitled to receive the related Award Payment.
4
<PAGE>
INVOLUNTARY TERMINATION OF EMPLOYMENT DUE TO LAYOFF
. If a Participant terminates employment due to Layoff on or after the first
Vesting Date of a Grant Cycle, the Participant will be eligible to receive
Award Payments at the applicable Payment Dates of the Grant Cycle for any
outstanding Leadership Shares attributable to that Grant Cycle.
INVOLUNTARY TERMINATION OF EMPLOYMENT FOR UNSATISFACTORY PERFORMANCE OR
MISCONDUCT
. If a Participant's employment is terminated for unsatisfactory performance
or misconduct, the Participant will forfeit all Leadership Shares, vested
or otherwise, and any other rights under the Plan, and will not, on or
after the effective termination date, be entitled to any Award Payment
under the Plan.
BENEFICIARY DESIGNATION
. Each Participant will name a person or persons as the beneficiary who is to
receive any Award Payments under the Plan in the event of the Participant's
death. The most recently designated beneficiary will apply to all Award
Payments, unless otherwise specified by the Participant. No consent of any
beneficiary or other person other than the Participant is necessary in
connection with the designation of a beneficiary. In the event that no
beneficiary has been properly designated, or if no properly designated
beneficiary survives the Participant, the Participant's estate will be the
Participant's beneficiary.
TAX WITHHOLDING
. The Company, or appropriate Subsidiary, will deduct from all Award Payments
under the Plan any and all applicable taxes (e.g., federal, state, local or
other taxes of any kind) required by law to be withheld with respect to
such Award Payments.
NO TAX, FINANCIAL, LEGAL OR OTHER ADVICE
. The Company or any Subsidiary has not provided and will not provide any
tax, financial, legal, or other advice related to participation in the
Plan, including, but not limited to, tax or financial consequences of
participating in the Plan. No provision of the Plan, or any document or
presentation about the Plan given to Participants, will be interpreted as
reflecting such advice.
5
<PAGE>
OTHER BENEFITS
. No creation of interests, or payment of cash, under this Plan will be taken
into account in determining any benefits under any compensation, pension,
retirement, savings, profit sharing, group insurance, welfare or other
employee benefit plan of the Company or any Subsidiary, except as provided
under the (US) Deferred Compensation Plan for Executives in the event a
Participant elects to defer receipt of Award Payment under this Plan.
UNFUNDED STATUS
. The Plan is unfunded. A Participant's right to receive Award Payments under
the Plan is an unsecured claim against the general assets of the Company.
Although the Company may establish a bookkeeping reserve to meet its
obligations, any rights acquired by any Participant are no greater than the
right of any unsecured general creditor of the Company. References to LVA
Award Pools do not refer to or represent actual, segregated assets of the
Company.
. The Company is not required to segregate any assets that may at any time be
represented by cash, and neither the Company, Board of Directors, Committee
or the Administrator is deemed to be a trustee of any cash or Leadership
Shares to be paid or granted under this Plan. Any liability of the Company
to any Participant under this Plan is based solely upon any contractual
obligations that may be created by this Plan. No provision of the Plan,
under any circumstances, gives a Participant or other person any interest
in any particular property or assets of the Company or its Subsidiaries. No
such obligation of the Company is deemed to be secured by any pledge of, or
other encumbrance or security interest in, any property of the Company, or
any Subsidiary. Neither the Company, the Board of Directors, the Committee,
nor the Administrator is required to give any security or bond for the
performance of any obligation that may be created under this Plan.
NOT STOCK; NO STOCKHOLDER RIGHTS
. The term "Shares" is used in the Plan and the name "Leadership Shares" to
connote "sharing" and not to suggest or imply "stock" or equity interest.
Leadership Shares are not stock, stock options, stock appreciation rights,
or similar rights or instruments. The awards granted under the Plan are not
equity or other interests in the Company or its Subsidiaries and
Participants will have no equity interest in the Company or its
Subsidiaries by virtue of their participation in the Plan. Participants
have no stockholder rights, such as voting or dividend rights, or similar
rights, or rights to financial or other information concerning the Company
or its Subsidiaries by reason of participation in the Plan, the grant of
Leadership Shares or otherwise.
6
<PAGE>
NO LIMIT ON CAPITAL STRUCTURE CHANGES
. The establishment and operation of this Plan, including the grant of
Leadership Shares under this Plan, will not limit the ability of the
Company or of any Subsidiary to reclassify, recapitalize, or otherwise
change its capital or debt structure; to merge, consolidate, convey any or
all of its assets, dissolve, liquidate, windup, or otherwise reorganize; to
pay dividends or make other distributions to stockholders; to repurchase
stock or to issue stock; or to take any action in respect of its
manufacturing, marketing, distribution, merchandising, operations,
management, or any other aspect of its business, regardless of the impact
on Leadership Value Added, determination of Threshold Cumulative LVA, or
otherwise.
. Participants under the Plan are not entitled to anything (other than as may
be reflected through LVA performance and calculated Leadership Share Value)
if the Company completes any transaction or takes any action contemplated
by the preceding paragraph.
. Notwithstanding the above, the Committee may, in its discretion, adjust the
manner in which Leadership Share Value is calculated at any time or from
time to time to take account of changes in the Company's business that the
Committee believes affect the relationship between the Company's
performance and such value.
NON ASSIGNABILITY
. No Leadership Shares or other rights granted under or provided by this Plan
are assignable or transferable by a Participant during the Participant's
lifetime, or otherwise subject to levy, attachment, or execution of a
judgment of any kind, except as provided for by a Participant's will or by
the laws of descent and distribution.
NO EMPLOYMENT RIGHTS
. No provision of the Plan gives any Participant or anyone else the right to
remain employed with the Company or its Subsidiary. The Company, and each
Subsidiary, reserves the right to terminate any Participant's employment at
any time, with or without cause and with or without notice regardless of
the Participant's receipt of Leadership Shares, or the impact of such
termination on such Shares.
PLAN ADMINISTRATION
. The Plan is administered under the direction of the Committee with the
assistance of such other person or persons (the Administrator) as the
Committee designates from time to time. In administering the Plan, the
Committee or the Administrator may, at its option,
7
<PAGE>
employ compensation consultants, accountants and counsel and other persons
to assist or render advice and other services, all at the expense of the
Company.
. The Committee has the power, in its sole discretion, to interpret the Plan
and to adopt rules and procedures it deems appropriate for the
administration and implementation of the Plan. Such rules and procedures
include, without limitation:
- Procedures for making required calculations and applying formulas
including the definition and amount of cumulative LVA;
- Applicable LVA Percentage Rate; and
- Total number of Leadership Shares authorized for grant in a specific
Grant Cycle.
. Notwithstanding any other provision of this Plan, the Committee or the
Administrator may, in its sole discretion, accelerate the vesting schedule
and Award Payment for any Participant at the applicable Leadership Share
Value, regardless of the tax, financial, or other consequence to the
Participant of such acceleration or Award Payment.
. All determinations and interpretations under the Plan, whether made by the
Committee, or the Administrator for all matters including, without
limitation, determination of the Performance/Award Schedules, Leadership
Share Value and Award Payments due under the Plan, are conclusive and
binding on all affected individuals.
AMENDMENT, MODIFICATION, OR TERMINATION OF PLAN
. The Committee can modify, amend, or terminate any and all provisions of the
Plan, and establish rules and procedures for its administration, at its
discretion and without notice.
. Notwithstanding the provision above, the Administrator can amend and modify
the Plan to comply with or conform to local law, regulation or custom. Such
amendments and modifications can have limited application to a specific
Subsidiary, division, or jurisdiction and need not apply to all
Participants. Each such amendment or modification will be in writing and
attached to this Plan.
SEVERABILITY
. If any provision of this Plan is held illegal or invalid for any reason,
the illegality or invalidity shall not effect the remaining parts of the
Plan, and the Plan will be construed and enforced as if the illegal or
invalid provision were not part of the Plan.
8
<PAGE>
NO WAIVER
. Failure of the Company to enforce at any time any provision of this Plan
shall in no way be construed to be a waiver of such provision or any other
provision of the Plan.
GOVERNING LAW
. The Plan and all individual Incentive Target Updates hereunder will be
governed by the laws of the State of California. In applying the laws of
the State of California, its rules on choice of law will be disregarded.
All Provisions
. This official Plan document represents the exclusive and complete statement
of the terms of the Plan, and supersedes any and all prior or
contemporaneous understandings, representations, documents, and
communications between the Company or any Subsidiary and any Participant,
whether oral or written, relating to its subject matters. In the event of
any conflict between the provisions of this official Plan document, as
amended from time to time and any other document or presentation describing
or otherwise relating to the Plan, this official document shall control.
9
<PAGE>
Adoption
To record the adoption of the Leadership Share Plan, the Company has caused its
duly authorized officer to execute this document.
LEVI STRAUSS & CO.
By
Date:
10
<PAGE>
APPENDIX ONE: GLOSSARY OF TERMS
===============================================================================
Administrator means the person, persons or entity appointed by the Committee.
- -------------
Applicable LVA Percentage Rate means the percentage rate applied to the
- ------------------------------
Company's cumulative LVA above Threshold Cumulative LVA used to determine the
LVA Award Pool.
Award Payments means the cash payable to a Participant under the Plan as
- --------------
described in the Plan.
Committee means the Personnel Committee of the Board of Directors of the
- ---------
Company.
Company means Levi Strauss & Co.
- -------
Cumulative Percent Vested means the degree to which a Participant's grant is
---------------------------------------------------
vested or eligible to be used in calculating a Vested Award as defined in the
- -----------------------------------------------------------------------------
Plan.
- -----
Eligible Employee means an individual who is on the payroll of the Company, or
- -----------------
Subsidiary, who is in U.S. salary grade 7 or above (or the non-U.S. equivalent,
as determined by the Committee) worldwide.
Grant Cycle means, with respect to a Leadership Share, the time period during
- -----------
which the Company's achievement of financial objectives is measured.
Involuntary Termination means termination of employment with the Company due to
- -----------------------
violation of policy, misconduct, or unsatisfactory job performance.
Layoff means an involuntary termination of employment as a result of an
- ------
individual or group layoff that affects the Participant.
Leadership Shares give Plan Participants the opportunity to receive Award
- -----------------
Payments under the Plan. Their initial value is zero, but the value may increase
or decrease over time based on the Company's achievement of financial objectives
during the Grant Cycle. Leadership Shares are not stock, stock options, stock
appreciation rights, or similar rights or instruments.
Leadership Share Value equals the LVA Award Pool for a Grant Cycle divided by
- ----------------------
the total number of shares authorized for that same Grant Cycle. The Leadership
Share Value is zero if the Company's cumulative LVA does not exceed the
Threshold Cumulative LVA level.
Leadership Value Added or LVA means the financial performance measure used to
- -----------------------------
determine Award Payments under the Plan.
A-1
<PAGE>
Long-term Disability means the Participant is disabled within the meaning of,
- --------------------
and eligible for benefits under, a long-term disability program or equivalent
program maintained by the Company or a Subsidiary employing the Participant.
LVA Award Pool equals the actual Company cumulative LVA above Threshold
- --------------
Cumulative LVA times the Applicable LVA Percentage Rate. The LVA Award Pool is
used to determine the Leadership Share Value.
Organization Level means the U.S. salary grade, band, or equivalent used to
- ------------------
determine the Participant's Leadership Share Grant for the applicable Grant
Cycle.
Participant means an Eligible Employee of the Company or a Subsidiary, who has
- -----------
been granted Leadership Shares under this Plan.
Payment Date means the date on which an Award Payment will be made, which will
- ------------
be as soon as administratively possible following the end of a fiscal year.
Performance Period means the duration of a Grant Cycle for which LVA is
- ------------------
measured.
Performance/Award Schedule means the administrative schedule developed and
- --------------------------
approved at the beginning of each Grant Cycle that establishes the cumulative
Threshold and target LVA, Applicable LVA Percentage Rate, number of authorized
Leadership Shares, and Leadership Share Value based on the Company's possible
performance for the applicable Grant Cycle.
Plan means the Leadership Shares Plan of Levi Strauss & Co. as set forth in this
- ----
document and as amended from time to time.
Retirement or Retire means termination of employment by a Participant who has
- --------------------
met the age and service requirement as defined and determined under the pension
plan applicable to the Participant who has retired thereunder.
Subsidiary means any corporation of which more than 50% of the outstanding
- ----------
shares having ordinary voting power are owned or controlled by the Company, and
any other entity that the Board of Directors of the Company, in its sole
discretion, deems to be a Subsidiary.
Threshold Cumulative LVA means the minimum amount of LVA the Company needs to
- ------------------------
achieve to generate Leadership Share Value and Award Payments for a Grant Cycle
under the Plan.
Vesting Date is the last day of the third, fourth and fifth fiscal years of each
- ------------
Grant Cycle.
A-2
<PAGE>
EXHIBIT 10.30
PARTNERS IN PERFORMANCE
ANNUAL INCENTIVE PLAN
Levi Strauss Associates Inc. and Subsidiaries
CONFIDENTIAL
------------
<PAGE>
ABOUT THIS MATERIAL
- --------------------------------------------------------------------------------
This document describes how the Annual Incentive Plan works. It explains:
. Purpose of the Plan;
. Who administers the Plan;
. Who is eligible to receive incentives;
. How incentive targets are set;
. How funds for incentives are generated;
. How the amount of a Participant's incentive is determined;
. When incentives are paid; and
. What happens in the event of termination of employment.
For more specific information on how the Plan works, refer to the Partners in
Performance Compensation Guidelines. This material also refers to other
compensation and human resources programs. While it may be used as a stand
alone reference document, a broader understanding of all the Company
compensation programs and the Performance Management Process will provide
important perspective.
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
Page
----
Annual Incentive Plan 1
Appendix One: Glossary of Terms 9
<PAGE>
ANNUAL INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Annual Incentive Plan rewards individual and team contributions to the
Company's objectives during the year. The amount of incentive earned depends on
the financial performance of the Company and the performance of each individual
Participant.
PURPOSE OF PLAN
- ---------------
. Serve as a single plan covering salaried employees worldwide.
. Align employee and shareholder interests.
. Provide a financial incentive for meeting annual corporate and individual
objectives.
. Encourage and reward team performance.
. Provide managers the ability to recognize and reward key contributors and
reinforce the Performance Management Process.
. Tie the incentive opportunity to external competitive practices, and
internally to the Company's total compensation objectives.
EFFECTIVE DATE
- --------------
. The Plan starts on the first day of the 1995 fiscal year.
PLAN ADMINISTRATION
- -------------------
. The Plan is administered under the direction of the Personnel Committee of
the Board of Directors (the Committee). The Committee's determinations and
interpretations shall be binding on all Participants. Responsibilities
include approving:
-- Design and interpretation of the Plan;
-- Incentive participation rates;
-1-
<PAGE>
-- Financial performance measures;
-- Incentive pool funding sources and weights;
-- Company financial objectives;
-- Final incentive pool; and
-- Other terms and conditions that may be recommended by the Chief Executive
Officer or Chief Operating Officer.
. During any period of time in which the Company and its officers and directors
are subject to the requirements imposed by Section 16 of the Securities
Exchnage Act of 1934 (the "Act") and the Plan is considered a plan subject to
Rule 16b-3 under the Act, the Committee shall be composed of "disinterested
persons" as defined in Rule 16b-3. The Committee may delegate administrative
responsibilities to Company employees and may delegate to Company management
the authority to approve amendments to the Plan. It may not do so if it
would result in the Plan not being administered by "disinterested persons" at
a time when it is required to be so administered.
ELIGIBILITY
- -----------
. All salaried employees worldwide who meet the participation criteria are
Participants in the Plan. Specific participation criteria is determined on a
country-by-country basis.
ANNUAL INCENTIVE AGREEMENT
- --------------------------
. At the start of each year, an incentive agreement is created for each
participant that documents the terms, conditions, and rights as determined by
the Committee. Terms include such factors as the target incentive amount,
timing and form of payments, termination events, and at-will employment.
-2-
<PAGE>
PERFORMANCE PERIOD
- ------------------
. The Plan operates on a twelve month cycle which coincides with the Company's
fiscal year.
TARGET AMOUNTS FOR PARTICIPANTS
- -------------------------------
. Incentive Target Amounts are set near the beginning of each fiscal year for
each Participant. The annual Target Amount for each Participant is
determined by multiplying the Participant's annual base salary in effect for
the Plan's fiscal year by a participation rate. The Participation Rate is
based on the Participant's salary grade and is expressed as a percent of
annual base salary. The participation rates are:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
INCENTIVE PARTICIPATION RATE
(% OF BASE SALARY)
- -------------------------------------------------------------------------------------------
<S> <C>
Chairman/CEO 60%
President/COO 60%
LSNA/LSI Presidents 55%
GLT 45%
Grades 13/14 40%
Grade 12 35%
Grade 11/35 30%
Grade 10/33/34 25%
Grade 9/32 20%
Grade 30 20%
Chain NAM* 20%
Grades 7/8 15%
NAM* 15%
Grades 4/5/6 7%
TM, AM, AE** 7%
Grades 1/2/3 5%
Grades 20 - 26 5%
- -------------------------------------------------------------------------------------------
</TABLE>
* National Account Manager
**Territory Manager, Account Manager, Account Executive
Note: Sales titles and grades are reflective of the pre-CSSC organization.
. Target Amounts are calculated in local currency.
-3-
<PAGE>
. Incentive Participation Rates will be reviewed by Human Resources on a
periodic basis and may be adjusted to keep pay opportunities competitive.
. The Target Amount is comprised of two parts: a team component and an
individual component.
-- The team component is 80% of the Participant's annual incentive Target
Amount.
-- The individual component is 20% of the Participant's annual incentive
Target Amount.
SALES EMPLOYEES
- ---------------
. The method for calculating incentive Target Amounts for Territory Managers,
Account Managers, and Account Executives is different than the method used
for other employees. The calculation for sales employees is the
Participation Rate times the sales income plan, or the Participation Rate
times the maximum of certain salary grade levels, whichever is less. Target
incentives are limited to the maximum of salary grade 5 for Territory
Managers, the maximum of salary grade 6 for Account Managers, and the maximum
of a salary grade 7 for Account Executives.
For purposes of determining the Funded Amount, actual income from the sales
compensation plan (base and sales incentive) or the maximum of the
appropriate grade level, whichever is less, is used.
INCENTIVE POOL FUNDING SOURCES
- ------------------------------
. The source of funds for Business Unit Incentive Pools is based on the actual
financial performance of one or more of the following levels:
-- Corporate
-- Group (LSNA or LSI)
-- Division
-- Affiliate
-4-
<PAGE>
. Senior management reviews the funding sources and their relative weights
before the start of each fiscal year. Any changes (for example, those
resulting from internal reorganizations) are approved by the Committee.
. Following are three Business Unit examples with possible weights for each
funding source:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
EXAMPLES OF INCENTIVE POOL FUNDING WEIGHTS
- ------------------------------------------------------------------------------------------
POOL FUNDING CORPORATE DIVISION AFFILIATE
SOURCE STAFF
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate 100% 25% 10%
- ------------------------------------------------------------------------------------------
Group 25%
- ------------------------------------------------------------------------------------------
Division 50% 30%
- ------------------------------------------------------------------------------------------
Affiliate 60%
- ------------------------------------------------------------------------------------------
Total 100% 100% 100%
- ------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL PERFORMANCE MEASUREMENT
- ---------------------------------
. The Committee establishes the financial measures that are used to plan the
objectives and assess the performance of each funding source.
. Performance is measured based on Management Earnings (ME) and Return on
Investment (ROI).
. The ME and ROI financial performance objectives are set by the Committee
before the fiscal year begins.
. For purposes of determining the final incentive pool, the actual performance
of each funding source is expressed as a percent of financial target
achieved. This percentage is known as the Performance Factor.
INCENTIVE POOLS
- ---------------
. After the end of the fiscal year a Performance Factor is determined for each
funding source. The Performance Factor is a percentage based on the
financial performance of each funding source against its financial target.
The performance factor is between 0% and 200%.
-5-
<PAGE>
. Financial performance that exceeds the minimum objectives at each funding
source generates a Performance Factor starting at 1%. The Performance Factor
increases to 100% when 100% of the financial performance objective is
achieved.
. Performance that exceeds 100% of objectives generates a Performance Factor
from 100% up to 200% if the maximum objectives are achieved or exceeded.
. If performance at all funding sources is below minimum objectives, the
Performance Factor is 0% and therefore a final incentive pool is not
generated.
. For Business Units with more than one funding source, a weighted average of
the Performance Factors at each funding source is calculated. The weighted
average is based on the funding weights established at the beginning of the
year.
. After the end of the fiscal year, a Funded Amount is determined for each
Participant. The Funded Amount is determined by multiplying the weighted
average performance factor by the Participant's Target Amount.
. A final incentive pool for each Business Unit is determined after the end of
the fiscal year. A Business Unit's final incentive pool is the sum of the
Funded Amounts for each Participant within the Business Unit.
REDISTRIBUTION OF FINAL INCENTIVE POOLS
- ---------------------------------------
. After the final incentive pools have been determined, members of the Global
Leadership Team (GLT), North America Management Council (NAMC), or LSI
Management Association (LSI MA) may redistribute funds from one pool to
another. Participants are notified prior to the start of the performance
period that redistribution is possible.
. Any redistribution of funds results in a proportional change to both the team
and individual components of each affected Participant's Funded Amount.
INCENTIVE POOL APPROVAL
- -----------------------
. The CEO and COO recommend for Committee approval the final incentive pool
after the end of the fiscal year.
-6-
<PAGE>
PARTICIPANT INCENTIVE ALLOCATIONS
- ---------------------------------
. Incentive allocations to Participants in the Plan are determined by the head
of the Participant's work group, based on team performance and individual
contributions.
. If a Participant meets performance expectations (as determined in the
Performance Management Process), he or she will receive the team component
and be eligible to receive an individual incentive allocation.
. If a Participant does not meet performance expectations (as determined in the
Performance Management Process), no incentive is paid. Any money budgeted
for those incentives is added back to the individual component of the
Business Unit's Final Incentive Pool making it available for other
Participants in the Business Unit.
TEAM COMPONENT ALLOCATION
-- The team component allocation is up to 80% of the Participant's incentive
target amount, depending on the Business Unit's Final Incentive Pool.
-- If the Business Unit's Final Incentive Pool is less than 100% of the
target Incentive Pool, the Participant's team component is adjusted
proportionately lower than 80% of the Participant's Target Amount.
-- If the Business Unit's Final Incentive Pool is more than 100% of the
Incentive Pool, the individual's team component is no more than 80% of
the Participant's incentive Target Amount.
INDIVIDUAL INCENTIVE ALLOCATION
-- Incentive funds generated by the individual component are allocated to a
Participant, by the Participant's manager, based on individual
performance and performance compared to other Participants in the
Business Unit using the following criteria:
- Annual objectives (job responsibilities/business objectives,
strategic objectives, Aspirations, and continuous improvement)
-7-
<PAGE>
- Contributions to special projects
- Personal leadership and initiative
-- Individual incentive allocations are reviewed and approved by at least
two management levels, the Participant's manager and one level above.
-- The limit to individual incentives is the limit of the Business Unit's
Final Incentive Pool.
. The total funds allocated to a Participant is the Final Incentive Amount.
INCENTIVES PAYMENTS
- -------------------
. Incentives payments are made as soon as practical after the February Board
meeting following the close of the fiscal year. The Committee approves the
fiscal year-end results which fund the Plan and the final incentive pool.
TERMINATION OF EMPLOYMENT
- -------------------------
. In the case of termination due to death, retirement, reduction in force, or
long-term disability the incentive target amount is prorated for the length
of time worked during the fiscal year. Any earned incentive is paid in cash
as soon as practical after the February Board meeting following the close of
the fiscal year.
. In the case of termination due to voluntary resignation or involuntary
discharge all rights to incentive payments from the Annual Incentive Plan are
forfeited.
BENEFICIARY DESIGNATION
- -----------------------
. As part of the incentive agreement, each Participant shall name a person or
persons as the Beneficiary who is to receive any distribution payable under
the Plan in the event of the Participant's death. In the event that no
Beneficiary has been properly designated, or if no properly designated
Beneficiary survives the Participant, the Participant's estate, or other
person entitled under applicable law, shall be the Participant's Beneficiary.
-8-
<PAGE>
PENSION CREDIT
- --------------
. Plan payments are considered for pension plan credit for Participants who
participate in a Company pension plan. Eligibility and Plan rules are
defined in the applicable pension plan document.
EMPLOYMENT RIGHTS
- -----------------
. Neither this document nor the existence of the Plan is intended to or does
imply any promise of continued employment by LS&CO. or any subsidiary of
LS&CO. Employment may be terminated with or without cause, and with or
without notice, at any time, at the option of the employer or the employee.
No one other than the Chief Executive Officer, President or a Senior Vice
President of LS&CO. may approve an agreement with an employee that guarantees
his or her employment. Such an agreement must be in writing and be signed by
such an officer.
. A Participant who has committed an act of gross misconduct while an employee
may lose all of his or her interest, including any right, under the Plan and
may not be entitled to receive any payment under the Plan.
UNFUNDED STATUS
- ---------------
. The Plan is unfunded. A Participant's right to receive payments under the
Plan is an unsecured claim against the general assets of the Company.
Although the Company may establish a bookkeeping reserve to meet its
obligations, any rights acquired by any Participant are no greater than the
right of any unsecured general creditor of the Company. References to
"Funded Amounts", "Incentive Pools", and the like do not refer to or
represent actual, segregated assets of the Company.
AMENDMENT, MODIFICATION, OR TERMINATION OF PLAN
- -----------------------------------------------
. The Committee or its designee(s) may modify, amend, or terminate the Plan and
establish rules and procedures for its administration, at its discretion and
without notice.
-9-
<PAGE>
ADOPTION
- --------
To record the adoption of the Annual Incentive Plan, the Company has caused its
duly authorized officer to execute this document.
Levi Strauss Associates, Inc.
By ____________________________________________
Date ____________________________________________
-10-
<PAGE>
APPENDIX ONE: GLOSSARY OF TERMS
- -------------------------------------------------------------------------------
. Allocation is the process of distributing funds from the final AIP pool to
----------
Participants.
. Business Unit is an organizational unit (Corporate/Global, LSNA, LSI etc.) to
-------------
which Participants belong and is the basis for AIP funding.
. Company is Levi Strauss Associates Inc. (LSAI) and its subsidiaries.
-------
. Final Incentive Amount is the approved payout, including both team and
----------------------
individual components, to a Participant.
. Financial Performance Measures are the business objectives set for each
------------------------------
Funding Source for the purpose of determining the final Incentive Pool. The
Committee identifies which measures are to be used and establishes the
specific objectives to be used each year.
. Funded Amount is an amount generated to pay incentives based on the
-------------
Participant's Target Amount and a forecast of business performance. The
Funded Amount is calculated by multiplying a Participant's Target Amount by
the Performance Factor.
. Funding Source: the organizational unit(s) used to set and measure financial
---------------
objectives for purposes of determining the size of the final AIP allocation
pools (e.g. Corporate, LSNA/LSI, Division, Affiliate).
. Incentive Pool : the sum of the Funded Amounts for each Participant within
----------------
the Work Group, determined after the close of the fiscal year,.
. Involuntary Discharge is an involuntary termination of employment due to
---------------------
violation of policy, misconduct, unsatisfactory job performance or any other
reason deemed by the Company to warrant a discharge.
. Long-Term Disability is an authorized leave of absence for an extended period
--------------------
of time following a short-term disability of five consecutive months due to
personal illness, injury or disability.
. Participant is an employee who meets the participation criteria of the Plan.
-----------
Participation criteria is determined on a country-by-country basis.
-11-
<PAGE>
. Participation Rate is the percentage used to determine a Participant's
------------------
incentive Target Amount. A Participation Rate is set for each salary grade
level.
. Performance Factor is the percentage used to describe the degree to which
------------------
actual financial performance has met, exceeded, or fallen short of
objectives. The Performance Factor is used to determine the final AIP pool.
. Performance Management Process is the program in which performance objectives
------------------------------
are set and measured for individual employees.
. Reduction in Force or layoff is an involuntary termination of employment
------------------
which in the opinion of the Committee, results from the lack of appropriate
work for the Participant and is not for the reasons of unacceptable
performance or misconduct.
. Retirement is a voluntary termination of employment by an employee who meets
----------
the age and service requirement as defined and determined under the pension
plan applicable to the Participant.
. Target Amount is set near the beginning of the fiscal year. It is calculated
-------------
by multiplying the annual base salary by the Participation Rate.
. Team Component : The portion of the AIP funded amount which is automatically
----------------
allocated if the employee receives a YES decision.
. Term Employee is an employee hired on a full-time or part-time basis for a
-------------
specific period of time only. Both the starting and ending dates of
employment are defined at the time of hire.
-12-
<PAGE>
EXHIBIT 10.31
PARTNERS IN PERFORMANCE
LONG-TERM INCENTIVE PLAN
Levi Strauss Associates Inc. and Subsidiaries
CONFIDENTIAL
------------
<PAGE>
ABOUT THIS MATERIAL
- --------------------------------------------------------------------------------
This document describes how the Long-Term Incentive Plan works. It explains:
. Purpose of the Plan;
. Who administers the Plan;
. Who is eligible to receive incentives;
. How incentive target amounts are set;
. What type of incentive is granted under the Plan;
. How individual incentive grants are determined;
. What a Performance Unit is and how it works;
. When incentives are earned and paid; and
. What happens in the event of termination of employment.
For more specific information on how the Plan works, refer to the Partners in
Performance Compensation Guidelines. This material also refers to other
compensation and human resources programs. While it may be used as a stand alone
document, a broader understanding of all Company compensation programs and the
Performance Management Process will provide important perspective.
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
Page
Long-Term Incentive Plan 1
Appendix One: Performance Units 10
Appendix Two: Glossary of Terms 13
<PAGE>
LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Long-Term Incentive Plan rewards employees for making contributions, over
time, to the Company's success. Incentive grants are based on achieving
long-term Company financial performance objectives and the performance of each
individual Participant.
PURPOSE OF PLAN
- ---------------
. Serve as a single plan covering salaried employees worldwide.
. Align employee and shareholder interests.
. Provide a financial incentive for meeting long-term corporate objectives
and increasing shareholder value.
. Encourage and reward team performance.
. Provide managers the ability to recognize and reward key contributors to
long-term results and reinforce the Performance Management Process.
. Foster a long-term employee orientation to business activities that
reflect the Company's Business Vision, Mission and Aspirations.
. Tie incentive opportunity to external competitive pay practices and
internally to the Company's total compensation objectives.
EFFECTIVE DATE
- --------------
. The Plan starts on the first day of the 1995 fiscal year.
PLAN ADMINISTRATION
- -------------------
-1-
<PAGE>
. The Plan is administered under the direction of the Personnel Committee of
the Board of Directors (the Committee). The Committee's determinations and
interpretations shall be binding on all Participants.
Responsibilities include approving:
-- Design and interpretation of the Plan;
-- Incentive participation rates;
-- Financial performance measures and objectives;
-- Final performance unit values;
-- Final incentive payments; and
-- Other terms and conditions that may be recommended by the Chief
Executive Officer and Chief Operating Officer.
. During any period of time in which the Company and its officers and
directors are subject to the requirements imposed by Section 16 of the
Securities Exchnage Act of 1934 (the "Act") and the Plan is considered a
plan subject to Rule 16b-3 under the Act, the Committee shall be composed
of "disinterested persons" as defined in Rule 16b-3. The Committee may
delegate administrative responsibilities to Company employees and may
delegate to Company management the authority to approve amendments to the
Plan. It may not do so if it would result in the Plan not being
administered by "disinterested persons" at a time when it is required to
be so administered.
ELIGIBILITY
- -----------
. All salaried employees worldwide who meet the participation criteria are
Participants in the Plan. Specific participation criteria is determined on
a country-by-country basis.
LONG-TERM INCENTIVE AGREEMENT
- -----------------------------
. At each incentive grant, an incentive agreement is created for each
Participant that documents the terms, conditions, and rights as determined
by the Committee. Terms include
-2-
<PAGE>
the size of the grant, vesting schedules, timing and form of payments, at-
will employment, and rights at termination.
TARGET AMOUNTS FOR PARTICIPANTS
- -------------------------------
. Incentive Target Amounts are set near the beginning of each fiscal year
for each Participant using the new base salary and participation rate. The
long-term Target Amount for each Participant is determined by multiplying
the Participant's annual base salary by a Participation Rate. At year-end
targets are adjusted to reflect any salary or participation rate changes
that have occurred during the year. The Participation Rate is based on the
Participant's salary grade and is expressed as a percent of base salary.
The participation rates are:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PARTICIPATION RATE
(% OF BASE SALARY)
<S> <C>
Chairman/CEO 130%
President/COO 110%
GLT 75%
Grades 13/14 65%
Grade 12 45%
Grades 11/35 35%
Grades 10/33/34 30%
Grades 9/32 25%
Grade 30 15%
Chain NAM* 15%
Grades 7/8 15%
NAM* 15%
TM, AM, AE** 5%
Grades 1 - 6 5%
Grades 20 - 26 5%
</TABLE>
* National Account Manager
-3-
<PAGE>
**Territory Manager, Account Manager, Account Executive
Note: The sales titles and grades are reflective of the pre-CSSC
organization.
. LTIP targets are not prorated to reflect the number of months a
Participant was actively employed.
. Participation Rates will be reviewed on a periodic basis by Human
Resources and may be adjusted to keep pay opportunities competitive.
. The long-term Target Amount is comprised of two parts: a team
component and an individual component.
-- The team component is 20% of the Participant's long-term
incentive Target Amount.
-- The individual component is 80% of the Participant's long-term
incentive Target Amount.
. Target Amounts are calculated in local currency.
SALES EMPLOYEES
---------------
. The method for calculating incentive Target Amounts for Territory
Managers, Account Managers, and Account Executives is different than
the method used for other employees. The calculation for sales
employees is the Participation Rate times the sales income plan, or
the Participation Rate times the maximum of certain salary grade
levels, whichever is less. Target incentives are limited to the
maximum of salary grade 5 for Territory Managers, the maximum of
salary grade 6 for Account Managers, and the maximum of a salary
grade 7 for Account Executives.
For purposes of determining the Final Incentive Pool, actual fiscal
year earnings (base and sales incentive) or the maximum of the
appropriate salary grade level, whichever is less, is used.
INCENTIVE POOL
--------------
-4-
<PAGE>
. An Incentive Pool for each Business Unit is determined near the end
of each fiscal year. A Business Unit Incentive Pool is the sum of
the Target Amounts for each Participant within the Business Unit.
If personnel status changes in the Business Unit occur during the
year, the Target Amounts on the last day of the fiscal year are
used to determine the Incentive Pool.
. The Company long-term Incentive Pool is the total of all the
Business Unit Incentive Pools.
INCENTIVE POOL APPROVAL
-----------------------
. The CEO and COO recommend for Committee approval the Incentive Pool
after the end of the fiscal year.
PARTICIPANT INCENTIVE ALLOCATIONS
---------------------------------
. Incentive allocations from the Incentive Pool are made annually
after the end of the fiscal year.
. Incentive allocations to Participants in the Plan are determined by
the head of the individual's work group, based on team performance
and individual contributions.
. If a Participant meets expectations (as determined in the
Performance Management Process), he or she will receive the team
component and be eligible to receive an individual incentive
allocation.
. If a Participant's performance does not meet expectations (as
determined in the Performance Management Process), no incentive is
granted. Any money budgeted for those grants is added back to the
individual component of the Business Unit's Incentive Pool making it
available for other Participants in the Business Unit.
TEAM COMPONENT ALLOCATION
-------------------------
-- The team component allocation is 20% of the Participant's
long-term incentive Target Amount.
-5-
<PAGE>
INDIVIDUAL INCENTIVE ALLOCATION
-- Incentive funds generated by the individual component are
allocated to a Participant by the Participant's manager based
on performance compared to other Participants in the Business
Unit using the following criteria.
- The participant's trend of performance over time
- Current contribution to future success
- Relative contribution within the team to future team
success
- Absolute level of contribution (performance against
objectives)
- Initiative
- Continuous learning
- Long-term strategic thinking
-- Individual incentive allocations must be reviewed and approved
by at least two levels of management, the Participant's
manager and one level above.
TYPES OF GRANTS
. After the individual incentive allocations are made, the Final
Incentive Amounts are converted into United States dollars.
. The dollar value is then used as a basis to grant Performance Units
(Units).
. The dollar value of a Unit for grant purposes is $100.
. A detailed description of Performance Units is in Appendix I.
-6-
<PAGE>
UNFUNDED STATUS
---------------
. The Plan is unfunded. A Participant's right to receive payments
under the Plan is an unsecured claim against the general assets of
the Company. Although the Company may establish a bookkeeping
reserve to meet its obligations, any rights acquired by any
Participant are no greater than the right of any unsecured general
creditor of the Company. References to "Incentive Pools" do not
refer to or represent actual, segregated assets of the Company.
ACCELERATION OF PAYMENTS
------------------------
. The Committee may accelerate the vesting schedule and settle all or
any individual Participant's long-term performance units.
OTHER BENEFITS
--------------
. Performance unit grants and payments in respect to those
performance units will not be considered as covered compensation
when determining any other Company-sponsored benefits (e.g.,
pension benefits, stock plans).
TERMINATION OF EMPLOYMENT:
-------------------------
In the case of termination of LTIP participation due to death, retirement,
reduction in force, and long-term disability the following apply:
. A Participant becomes 100% vested in any portion of any grant that
has already begun to vest. Performance Units which have not begun to
vest are forfeited.
. Vested Performance Units are paid out as soon as practical after
termination.
. No new grants are made.
In the case of termination of LTIP participation due to voluntary resignation or
involuntary discharge the following apply:
-7-
<PAGE>
. Performance Units which are not vested are forfeited.
. If an employee resigns or is discharged between the vesting date
and payout date, vested Performance Units are payable at the time
of regular payout.
-8-
<PAGE>
BENEFICIARY DESIGNATION
-----------------------
. As part of the incentive agreement, each Participant shall name a
person or persons as the Beneficiary who is to receive any
distribution payable under the Plan in the event of the
Participant's death. The most recently designated beneficiary will
apply to all distributions unless otherwise specified by the
Participant. In the event that no Beneficiary has been properly
designated, or if no properly designated Beneficiary survives the
Participant, the Participant's estate, or other person entitled
under applicable law, shall be the Participant's Beneficiary.
NONASSIGNABILITY
----------------
. No Units or other rights granted under or provided by this Plan are
assignable or otherwise transferable by holders or Participants,
except by will or by the laws of descent and distribution.
EMPLOYMENT RIGHTS
-----------------
. No provision of the Plan gives anyone the right to remain employed
with the Company or to continue to receive future incentive grants.
The Company reserves the right to terminate any employee's service
at any time, with or without cause.
. A Participant who has committed an act of gross misconduct while an
employee of the Company, shall lose all of his or her interest,
including any right, under the Plan and shall not be entitled to
receive any payment under the Plan.
AMENDMENT, MODIFICATION, OR TERMINATION OF PLAN
-----------------------------------------------
. The Committee or its designee(s) may modify, amend, or terminate
any or all provisions of the Plan, and establish rules and
procedures for its administration, at its discretion and without
notice. Any modification made may not cancel out previously granted
units.
-9-
<PAGE>
ADOPTION
--------
To record the adoption of the Long-Term Incentive Plan, the Company has caused
its duly authorized officer to execute this document.
Levi Strauss Associates, Inc.
By ____________________________________________
Date ____________________________________________
-10-
<PAGE>
APPENDIX ONE: PERFORMANCE UNITS
- -------------------------------------------------------------------------------
OVERVIEW
--------
A Participant receives a grant of Performance Units (Units) based on his or her
final long-term incentive amount. The Participant has the right to receive
portions of the monetary value of these units beginning in the fourth year after
the grant. The value of each Unit is a fixed United States dollar amount. The
unit value is based on the Company's achievement of preset, long-term financial
performance objectives.
GRANT DATE
----------
. The Grant Date is the date on which the grant cycle begins. The date Units
are actually granted to Participants may be earlier, later, or the same
date as the Grant Date.
GRANT CYCLE
-----------
. The grant cycle has two parts. The first three years of the cycle is the
Company performance period. The next two and one-half years is the vesting
and payout period.
. Each grant cycle is known by the year in which the cycle begins. For
example, a grant made in 1995 is known as the 1995 Grant.
COMPANY PERFORMANCE PERIOD
--------------------------
. Company performance is measured over a three-year period for each grant. A
new cycle begins each year with each new grant.
. After the Company performance period ends, the Committee declares a final
unit value.
-11-
<PAGE>
INITIAL GRANT VALUE
-------------------
. The initial grant value is determined by converting the final incentive
amount into United States dollars. The dollar amount is divided by the
initial unit value ($100). The result which is rounded to the nearest whole
number is the number of performance units granted.
PERFORMANCE UNIT DOLLAR VALUE
-----------------------------
. Performance Units are valued in United States dollars.
. The initial value of each Unit is $100. This value is used to determine the
number of Units to grant to participants for each grant cycle.
. During a grant cycle units have a forecasted value which may change over
time. A final unit value is determined at the end of the performance cycle
based on the Company's financial performance against internal financial
measures (ROI) and external measures (relative total shareholder return).
. Final unit values begin as low as zero for below-minimum financial
performance. Unit values for above-minimum performance start at $1 and
increase with higher levels of financial performance. The maximum unit
value is $400. All unit values are subject to Committee approval.
FINANCIAL PERFORMANCE MEASURES AND OBJECTIVES
---------------------------------------------
. The Committee establishes the financial measures that are used to set the
Company's financial objectives and assess performance against these
objectives.
. These financial performance objectives are set for each grant cycle before
the grant date.
. The final unit value is based on the Company's financial performance
against objectives measured at the end of the three-year performance cycle.
. Financial measures and objectives are reviewed on a periodic basis and may
be modified with the Committee's approval. (The measures and objectives are
described in the Financial Performance Measurement Specifications.)
-12-
<PAGE>
FINAL GRANT VALUE
-----------------
. The final grant value is determined by multiplying the number of Units
granted in the grant cycle by the final unit value.
. This entire grant is converted into the Participant's local currency just
prior to payment of the first third.
VESTING
-------
. Vesting for the final grant value occurs in three equal installments on the
June 1 following the third, fourth, and fifth anniversary of the grant
date.
PAYMENTS
--------
. Incentive payments are made as soon as practical after the June 1 vesting.
For example, the first portion of the payments from the 1995 grant will be
made in June 1998, the second portion in June 1999, and the third portion
in June 2000. The second and third portions are credited with interest. The
interest is based on the local prime rate of the area where the grant was
originally made.
-13-
<PAGE>
APPENDIX TWO: GLOSSARY OF TERMS
- -------------------------------------------------------------------------------
. Allocation is the process of distributing Final Incentive Amounts from the
----------
Incentive Pool to Participants.
. Business Unit: an organizational unit (Corporate/Global, LSNA, LSI etc.)
-------------
to which Participants belong and is the basis for AIP funding.
. Company is Levi Strauss Associates Inc. (LSAI) and its subsidiaries.
-------
. Final Incentive Amount is the approved total, including both team and
----------------------
individual components, which is converted into a Performance Unit grant for
a Participant.
. Financial Performance Measures are the business objectives set for the
------------------------------
Company purpose of determining unit values. The Committee identifies which
measures are to be used and establishes the specific objectives to be used
for each performance cycle.
. Grant is the conversion of Final Incentive Amounts into Performance Units.
-----
. Incentive Pool is the sum of the target amounts of the Participants within
--------------
a Work Group, determined after the close of the fiscal year.
. Involuntary Discharge is an involuntary termination of employment with the
---------------------
Company due to violation of policy, misconduct, unsatisfactory job
performance or any other reason deemed by the Company to warrant a
discharge.
. Long-Term Disability is an authorized leave of absence for an extended
--------------------
period of time following a short-term disability of five consecutive months
due to personal illness, injury or disability.
. Participant is an employee who meets the participation criteria of the
-----------
Plan. Participation criteria is determined on a country-by-country basis.
. Participation Rate is the percentage used to determine a Participant's
------------------
target amount. A Participation Rate is set for each salary grade level.
-14-
<PAGE>
. Performance Management Process is the program in which performance
------------------------------
objectives are set and measured for individual employees.
. Performance Unit (Unit) is a non-monetary grant with an initial value of
-----------------------
$100, whose value may go up or down over time based on the Company's
achievement of preset, long-term financial performance objectives.
. Reduction in Force or layoff is an involuntary termination of employment
------------------
which in the opinion of the Committee, results from the lack of appropriate
work for the Participant and is not for the reasons of unacceptable
performance or misconduct.
. Retirement is a voluntary termination of employment by an employee who
----------
meets the age and service requirement as defined and determined under the
pension plan applicable to the Participant.
. Target Amount is set near the beginning of the fiscal year. It is
-------------
calculated by multiplying the annual base salary by the Participation Rate.
. Team Component: The portion of the LTIP target which is automatically
--------------
allocated if the employee receives a YES decision.
. Vesting: Owning the right to the value of Long-term Performance Units that
-------
were granted. Vesting occurs in thirds on June 1st following the 3rd, 4th
and 5th anniversaries of the grant date. Upon each June 1st vesting date,
the participant owns the right to the value of that one third portion of
the performance units.
-15-
<PAGE>
PARTNERS IN PERFORMANCE
LONG-TERM INCENTIVE PLAN
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Partners
in Performance Long-Term Incentive Plan (the "LTIP") as the successor to Levi
Strauss Associates Inc.;
WHEREAS, the Company desires to amend the LTIP to clarify the
disposition of units in the event of a Participant's disability or leave of
absence;
WHEREAS, the LTIP provides that the Personnel Committee of the Board of
Directors of the Company may amend the LTIP at any time and for any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
LTIP as set forth below:
1. The section of the LTIP entitled "Termination of Employment" is
amended in its entirety to read as set forth below:
TERMINATION OF EMPLOYMENT
-------------------------
In the case of termination of the employment of an individual
who is a Participant in the LTIP by reason of death,
retirement, reduction in force and long-term disability,
. The individual shall cease to be a Participant in the
LTIP;
-1-
<PAGE>
. No further grants shall be made to the individual;
. The individual shall become 100 % vested in any
Performance Units which have begun to vest;
. Vested Performance Units shall be paid out as soon as
practical after termination of employment; and
. Performance Units which have not begun to vest shall
be forfeited.
In the case of termination of the employment of an individual
who is a Participant in the LTIP due to voluntary resignation
or involuntary discharge other than layoff,
. The individual shall cease to be a Participant;
. Performance Units which are not vested shall be
forfeited, except as restored pursuant to "Leaves of
Absence and Layoff," below; and
. The date for payment of vested Performance Units
shall not be accelerated or otherwise affected by the
termination.
2. A new section is added after the section entitled "Termination of
Employment" to read as set forth below:
LEAVES OF ABSENCE AND LAYOFF
----------------------------
. For purposes of the LTIP, employment shall be deemed
to continue while the Participant is on a Company
approved leave of absence for up to 12 months (unless
a longer period is approved in writing by the
Committee or its delegate). However, in no event
shall employment be deemed to continue after the date
as of which (i) the Company terminates the
Participant's leave of absence or (ii) the
Participant is determined to have a long-term
disability.
. If the employment of a Participant is involuntarily
terminated by reason of a layoff and the Participant
is rehired by the Company or a Subsidiary within six
months of such layoff, then (i) the Performance Units
of such Participant which were forfeited pursuant to
the "Termination of Employment" section of the LTIP
shall be restored and (ii) the employment of the
Participant shall be deemed to have continued during
-2-
<PAGE>
the period between the Participant's layoff and the
Participant's reemployment by the Company or its
Subsidiary.
3. The definition of "Long-Term Disability" contained in Appendix Two
of the LTIP is amended in its entirety to read as set forth below:
. LONG-TERM DISABILITY occurs when
--------------------
- The Participant is disabled within the
meaning of, and eligible for benefits under,
a long-term disability program maintained by
the Company or a Subsidiary; or
- The Participant, in the opinion of the
Committee or its delegate, is unable to
engage in any substantial gainful activity
by reason of any medically determinable
physical or mental impairment which can be
expected to result in death, or can be
expected to last for a continuous period of
not less than 12 months.
4. The definition of "Reduction in Force" contained in Appendix Two of
the LTIP is amended in its entirety to read as set forth below:
. REDUCTION IN FORCE or LAYOFF, is an involuntary
------------------ ------
termination of employment which in the opinion of
the Committee or its delegate results from the lack
of appropriate work for the Participant and is not
for the reasons of unacceptable performance or
misconduct.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
- ----------------- -----------------------------------
Date Donna J. Goya
-3-
<PAGE>
PARTNERS IN PERFORMANCE
LONG-TERM INCENTIVE PLAN
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Partners in
Performance Long-Term Incentive Plan (the "LTIP");
WHEREAS, the Company desires to amend the LTIP to provide for
additional grants pursuant to the direction of the Personnel Committee of the
Board of Directors of the Company (the "Committee");
WHEREAS, the LTIP provides that the Committee may amend the LTIP at any
time and for any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya,
Senior Vice President for Global Human Resources, the authority to amend the
Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of the beginning of the fiscal year of the
Company ending in 1997, the Company amends the LTIP by the addition of a new
Appendix Three, to read as set forth below:
APPENDIX THREE: SPECIAL GRANTS
------------------------------
Introduction
This Appendix Three provides for the award of special grants under the
Plan in certain circumstances in addition to the grants otherwise
provided for under the Plan.
-4-
<PAGE>
AWARD OF SPECIAL GRANTS
-----------------------
This Appendix Three does not specifically grant special awards.
However, special grants may be made by the Global Leadership Team (or
successor entity) under this Appendix Three to the extent authorized by
the Committee. Accordingly, the Global Leadership Team shall determine
the size of such grant, the identity of the recipient of such grant and
all other terms and conditions of such grant, subject to the terms of
the relevant Committee authorization.
APPLICABLE RULES
----------------
Any special grant shall be subject to the general terms of the Plan and
shall be interpreted consistent with such terms, except to the extent
otherwise provided in the authorization of a special grant by the
Committee.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
- ----------------- -----------------------------------
Date Donna J. Goya
-5-
<PAGE>
EXHIBIT 10.32
LEVI STRAUSS ASSOCIATES INC.
LONG-TERM PERFORMANCE PLAN
(AS AMENDED AND RESTATED THROUGH AUGUST 1, 1988)
ARTICLE 1. ESTABLISHMENT AND PURPOSE
- -------------------------------------
The Company adopted the Plan effective as of June 20, 1986 and the Plan was
last amended and restated an August __, 1988. The purpose of the Plan is to
provide selected key Employees with long-term incentive compensation and a
material inducement to advance the Company's growth as well as providing the
Company with a valuable tool for the recruitment and retention of key Employees
of outstanding ability. To this end, the Plan provides for the issuance of
Rights which may entitle the holder to receive certain cash amounts.
ARTICLE 2. ADMINISTRATION
- --------------------------
The Plan shall be administered by the Committee, which has been authorized
to act on behalf of each Participating Company. The Committee shall determine
the meaning and application of the provisions of the Plan. The act of a majority
of the Committee members present at meetings at which a quorum exists, or acts
reduced to or approved in writing by a majority of all Committee members, shall
be valid acts of the Committee. Subject to the terms of the Plan, the Committee
shall have the exclusive authority and absolute discretion to act on the
following matters:
a. The selection of the Employees who are to become Participants;
b. The determination of the number of Rights to be granted to each
Participant;
c. Any waiver of the Plan's forfeiture conditions;
d. The adoption, amendment or rescission of rules, procedures and forms
relating to the Plan;
e. The determination of Performance Unit Value; and
f. Any other actions the Committee deems necessary or advisable for the
administration of the Plan.
All decisions, interpretations and other actions of the Committee shall be
final and binding on all Participants and all persons deriving their rights from
a Participant. No member of the Committee shall be liable for any action he or
she has taken, or has failed to take, in good faith with respect to the Plan or
any Right.
ARTICLE 3. ELIGIBILITY
- -----------------------
The Participants shall be selected by the Committee from those key
Employees who, in the opinion of the Committee, are in a position to contribute
materially to the Participating
<PAGE>
Company's continued growth, development and long-term financial success.
Participation may be based on the recommendations of the Company's Chief
Executive Officer, subject to the Committee's approval.
ARTICLE 4. TERMS AND CONDITIONS OF RIGHTS
- ------------------------------------------
4.1 General. Each Award of Rights granted Under the Plan shall be
-------
evidenced by a letter from the Committee to the Participant. The award shall be
subject to all of the terms of the Plan and such other conditions as the
Committee may deem appropriate in each case.
4.2 Vesting. One third of the Rights included in a Participant's award
-------
shall vest on each of the third, fourth and fifth anniversaries of the Date of
Grant of such award, but only if the Participant's service as an Employee has
been continuous from when the letter described in Section 4.1 is sent to
employee to the date of vesting. The Committee, at its sole discretion, may
accelerate the vesting of any or all outstanding Rights.
4.3 Payment. The amount payable with respect to each vested Right shall
-------
be equal to the Performance Unit Value. Payment shall be made to the
Participant in cash as soon as reasonably practicable after the Rights vest at
the end of the third, fourth and fifth years respectfully. Interest computed
from the end of the third year of an award will be paid on amounts vesting at
the end of the fourth and fifth year unless the Participant elected to defer
receipt under Article 5 of this Plan. Interest shall be computed at a monthly
interest rate equal to one-twelfth (1/12) of the annual rate charged for
commercial loans to most credit-worthy customers, as most recently announced by
Bank of America or such other financial institution as determined by the
Committee, effective as of the last day of the calendar month in which such
interest is computed.
4.4 Death, Disability or Retirement. In the event that a Participant
-------------------------------
ceases to be an Employee by reason of death, Disability or Retirement, a payment
shall be made to the Participant (or, in the event of the Participant's death,
to his or her beneficiary) for nonvested Rights provided that the participant
has reached the third, anniversary of the Data of Grant.
Payment shall be made to the Participant (or his or her Beneficiary) in a
single lump sum in cash as soon as reasonably practicable after the Participant
ceased to be an Employee, unless the Participant has elected a valid deferral
under Article 5 of this Plan.
4.5 Other Termination of Employment. Except to the extent that a payment
-------------------------------
is made under Section 4.4, all nonvested Rights held by a Participant when he or
she ceases to be an Employee shall be forfeited. In addition, an Employee of a
Participating Company shall cease to be an Employee for purposes of Section 4.5
as of the date his or her employer ceases to be a Participating Company.
4.6 Leaves of Absence. For purposes of the Plan, employment shall be
-----------------
deemed to continue while the Participant is on a Company approved leave of
absence of no more than 6 months.
4.7 Withholding Taxes. Such amounts as may be required by law shall be
-----------------
withheld from any payment under the Plan.
2
<PAGE>
4.8 Nontransferability of Rights. All Rights shall be nontransferable,
----------------------------
except that a Right may be transferred to a Beneficiary upon a Participant's
death, as provided in section 4.4. Any attempted alienation, assignment,
pledge, hypothecation, attachment, execution or similar process, whether
voluntary or involuntary, with respect to any Right shall be void and, at the
Committee's option, shall cause such Right to lapse.
4.9 No stockholder Rights. No Participant shall have any Rights as a
---------------------
stockholder of the Company by virtue of an award of Rights, including (without
limitation) the right to vote or to receive dividends or liquidation
distributions.
ARTICLE 5. ELECTION TO DEFER COMPENSATION
- ------------------------------------------
5.1 Total Long-Term Performance Plan Amounts Eligible for Deferral.
--------------------------------------------------------------
Except as provided in Subsection 5.5(f), any domestic Participant who is a
common-law employee of the Company may elect to defer a portion or all of the
amounts payable under the Long-Term Performance Plan pursuant to this Article 5.
The minimum amount that may be deferred is the greater of $5,000 or five percent
(5%) of each Right. A director who is not a common-law employee of the Company
may elect to defer a portion or all of the amounts payable under the Long-Term
Performance Plan only pursuant to the terms of the Levi Strauss Associates Inc.
Deferred Compensation Plan for Outside Directors.
5.2 Time for Filing Election. A deferral election shall be made in
------------------------
writing to the Committee. The election mast be made at least one year prior to
the initial vesting period for a given grant of units. All elections are
irrevocable when the final data for deferral elections is past.
5.3 Effect on Other Plans. Payment made under this Plan shall not be
---------------------
included in "covered compensation" or "Compensation" for crediting benefits or
contributions to any qualified retirement, profit sharing, stock purchase or
employee savings plan.
5.4 Interest Credit. Interest shall be computed monthly as of the last
---------------
day of each calendar month on the undistributed balance of each Participant's
Deferred Account at the end of such calendar month. Interest shall be computed
at a monthly interest rate equal to one-twelfth (1/12) of the annual rate
charged for commercial loans to most credit-worthy customers, as most recently
announced by Bank of America or such other financial institution as determined
by the Committee, effective as of the last day or the calendar month in which
such interest is computed.
Such interest shall be credited to the account of each Participant
on the books of the employing Participating Company as of December 31 of such
calendar year.
5.5 Payment Of Deferred Compensation.
--------------------------------
Except as provided in subsection 5.5(f), all Deferred Accounts under the
Plan shall be payable as follows:
a. Termination for Any Reason Other Than Death or Involuntary Discharge.
--------------------------------------------------------------------
In the event that the Participant's employment shall be terminated by
reason of disability,
3
<PAGE>
retirement, voluntary termination, bona fide job elimination or for
any other reason other than his death or other involuntary discharge,
the amount of his Deferred Account shall be paid to him over a ten
(10) year period in one hundred twenty (120) ratable monthly
installments commencing on the first day of the calendar month
following the later of the Participant's attainment of age seventy and
one-half (70-1/2) or the date of the Participation's termination of
employment. A Participant may, however, at the time he notifies the
Committee of his election to have a portion of his total compensation
for a given calendar year payable as a Deferred Account under the
Plan.
(i) Specify a date for a lump sum payment or begin monthly payments
for a period longer than five (5) year, but not to exceed ten
(10) years, over which his Deferred Account for such year shall
be paid; and/or
(ii) Specify that such monthly installments commence on other than
the date of retirement but not later than his attainment of age
seventy and one-half (70-1/2).
b. Termination of Employment by Death. In the event that the
----------------------------------
Participant's employment is terminated by death, or in the event of a
Participant's death after termination of employment and payments have
not commenced, the unpaid balance of his Deferred Account shall be
paid to his Beneficiary over a ten (10) year period in one hundred and
twenty (120) ratable monthly installments commencing on the first day
of the calendar month following the later of (i) the month in which
the Participant died, or (ii) the month in which the Participant would
have attained age seventy and one-half (70-1/2); except that at the
time a Participant notifies the Committee of his election to have a
portion of the amounts payable with respect to a Right be payable as a
Deferred Account under the Plan, such Participant may elect that such
unpaid balance be paid in a lump sum at a designated time within the
five (5) year period following his death or in ratable monthly
installments over a five (5) year period or a specified longer period
not to exceed ten (10) years.
c. Termination of Employment by Involuntary Discharge. In the event that
--------------------------------------------------
a Participant's employment is terminated by involuntary termination
other than death or disability, the amount of his Deferred Account
shall be paid in a lump sum within thirty (30) days after his
termination of employment.
d. Acceleration of Payments. A Participant or, in the case of the death
------------------------
of a Participant prior to the commencement of payment of Deferred
Account for any year, the Participant's Beneficiary, may file a
petition to accelerate payment of a Deferred Account for which no
effective election as to time and method of payment has been filed.
The Committee shall appoint an Outside Director to consider and act
upon such petitions. The Outside Director shall have sole discretion
to approve or disapprove such petitions. In the petition the
Participant shall with respect to the Deferred Account specify a date
for lump sum payment or
4
<PAGE>
a period to commence not later than the Participant's attainment of
age seventy and one-half (70-1/2) or actual retirement, whichever is
later, and not to end later than one hundred and twenty (120) months
after the Participant would attain age seventy and one-half (70-1/2).
e. In-Service Payments. The participant, in lieu of the provisions for
-------------------
payment of the Deferred Account set forth in Subsections 5.5 (a), (b)
and (d) above, may elect payment to be made as follows: Twenty percent
(20%) of the Deferred Account to be paid as soon as practical after
the vesting date and as soon as possible after the amounts have been
determined by the awarding company; thereafter in ratable annual
installments in July of each of the following four years.
f. Notwithstanding the aforesaid, the President and Chief Executive
Officer of the Company may determine in his or her sole discretion
that one or more of the payment options in Subsections 5.5 (a), (b)
and (d) above shall not be available with respect to any amounts
payable under the Long-Term Performance Plan by so notifying the
affected Participant or Participants at least 30 days prior to the
time for filing the deferral election for which such options shall not
be available.
g. Hardship. Upon a showing of financial hardship, the Committee, in its
--------
sole discretion, may direct the Company or Participating Company to
pay to a Participant (or, in the event of death, to a Participant's
Beneficiary) in one lump sum a portion or all of the unpaid balance of
such Participant's Deferred Account to the extent necessary to
alleviate the hardship. A "hardship" is an emergency beyond the
control of the Participant (or his Beneficiary).
h. Minimum Balance. Notwithstanding the aforesaid, in the event that a
---------------
Participant's employment is terminated for any reason other than
retirement and his undistributed balance (including accrued interest)
under the Plan is $50,000 or less, including any balance to which in-
service payment has been elected, on the last day of the full payroll
period immediately prior to his termination, the amount of his
Deferred Account, including any balance to which in-service payment
has been elected, shall he paid in a lump sum within thirty (30) days
after his termination of employment.
ARTICLE 6. BENEFICIARY DESIGNATIONS
- ------------------------------------
Upon commencement of participation, each Participant shall, by filing the
prescribed form with the Committee, name a person or persons as the Beneficiary
who will receive any distribution payable under the Plan in the event of the
Participant's death. If the Participant has not named a Beneficiary or if none
of the named Beneficiaries is living when any payment is to be made, then (a)
the spouse of the deceased Participant shall be the Beneficiary, or (b) if the
Participant has no spouse living at the time of such payment, the then living
children of the deceased Participant shall be the Beneficiaries in equal shares,
or (c) if the Participant has neither spouse nor children living at the time of
such payment, the estate of the Participant shall be the Beneficiary. The
Participant may change the designation of a Beneficiary from time to time in
5
<PAGE>
accordance with procedures established by the Committee. Any designation of a
Beneficiary (or an amendment or revocation thereof) shall be effective only if
it is made in writing on the prescribed form and is received by the Committee
prior to the Participant's death.
ARTICLE 7. RIGHTS UNSECURED; LOSS OF INTERESTS
- -----------------------------------------------
7.1 A Participant's Interest under the Plan and a Participant's right to
receive payments from his Deferred Account (if any) under the Long-Term
Performance Plan shall be an unsecured claim against the general assets of the
awarding Participating Company, and no special or separate fund shall be
established or other segregation of assets made to assure such payments;
provided, however, that the Participating Company may establish a bookkeeping
reserve to meet its obligations hereunder. Nothing contained in the Plan and no
action taken pursuant to the provisions of the Plan shall create, or be
construed to create, a trust of any kind, or a fiduciary relationship between
the Participating Company or the Committee and any Participant or other person.
To the extent that any person acquires a right to receive payments from a
Participating Company under the Plan, such right shall be no greater than the
right of any unsecured general creditor of the Participating Company.
7.2 A participant who has committed an act of Material Misconduct while
an employee of a Participating Company, shall lose all of his or her interest,
including any Right, under the Plan and shall not be entitled to receive any
payment with respect to any Right nor any payment from his Deferred Account (if
any) under the Plan.
ARTICLE 8. NO EMPLOYMENT RIGHTS
- --------------------------------
No provision of the Plan, nor any Right granted under the Plan, shall be
construed to give any person any right to remain an Employee. The Participating
Companies reserve the right to terminate any person's service at any time, with
or without cause.
ARTICLE 9. AMENDMENTS OR TERMINATION
- -------------------------------------
The Company may amend, suspend or terminate the Plan at any time and for
any reason. No Rights shall be issued after the termination of the Plan.
Neither an amendment of the Plan or the termination thereof shall affect any
Right which has previously become vested. The Committee may cancel a Right at
any time before such Right vests under Section 4.2.
ARTICLE 10. CHOICE OF LAW
- --------------------------
The Plan and all Rights shall be construed in accordance with the governed
by the laws of the State of California.
ARTICLE 11. DEFINITIONS
- ------------------------
11.1 "Beneficiary" means the person or persons determined under
-----------
Article 6.
11.2 "Committee" means the Personnel Committee appointed by the Company's
---------
Board of Directors.
6
<PAGE>
11.3 "Company" means Levi Strauss Associates Inc., a Delaware corporation.
-------
11.4 "Date of Grant" means the date as of which the Committee makes an
-------------
award of Rights, as set forth in the letter described in Section 4.1. The Date
of Grant may be earlier, later or the same date that the Committee makes an
award of Rights.
11.5 "Deferred Account" means a bookkeeping entry under the Long-Term
----------------
Performance Plan.
11.6 "Disability" means that the Participant is unable to engage in any
----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted,
or can be expected to last, for a continuous period of not less than 12 months,
if company is liable for purposes of disability.
11.7 "Employee" means a common-law employee or a director of a
--------
Participating company.
11.8 "Material Misconduct" means the commission (by action or inaction) of
-------------------
a criminal act or Gross Misconduct as that term is defined from time to time in
the Levi Strauss & Co. Guidelines to Personnel Policy, all as determined by the
committee.
11.9 "Outside Director" means a director of the Company who is not a
----------------
common-law employee of the Company.
11.10 "Participant" means an Employee who holds one or more Rights.
-----------
11.11 "Participating Company" means (a) the Company, Levi Strauss & Co, and
---------------------
Levi Strauss International and (k) other subsidiary of the Company which has
been designated as a Participating Company by the Committee. A Participating
Company shall cease to become a Participating Company upon the sale of its stock
or the sale of all or substantially all of its assets or at such other time as
designated by the Committee.
11.12 "Performance Unit Value" means the value of each Right as determined
----------------------
by the Committee.
11.13 "Plan" means this Levi Strauss Associates Inc. Long-Term Performance
----
Plan, as it may be amended from time to time.
11.14 "Retirement" means that the Participant has retired under a qualified
----------
defined benefit pension plan of a Participating company.
11.15 "Right" means the right to receive cash in an amount equal to any
-----
increase in the Performance Unit Value, subject to the terms of the Plan.
7
<PAGE>
ARTICLE 12. EXECUTION
- ----------------------
To record the restatement of the Plan, the following duly authorized
officer of the Company pursuant to delegated authority has executed this
document.
LEVI STRAUSS ASSOCIATES INC.
____________________________________
8
<PAGE>
LEVI STRAUSS ASSOCIATES, INC.
LONG-TERM PERFORMANCE PLAN
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Long-Term Performance Plan (the "LTPP");
WHEREAS, the Company desires to amend the LTPP to provide for an orderly
and systematic division of interests under the LTPP pursuant to an appropriate
domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefits plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends Section
4.8 of the LTPP by the addition of the following new paragraph after the
existing paragraph:
The foregoing provisions notwithstanding, any Right or entitlement to
payment with respect to any Right under the Plan may be transferred to any
"alternate payee," as such person is defined in section 414(p)(8) of the Code,
as provided in any domestic relations order with respect to the Plan which would
constitute a qualified domestic relations order within the meaning of section
414(p)(1)(A) of the Code if the Plan were subject to section 414(p) of the Code.
Determinations under this paragraph, including but not limited to determination
of whether an order would constitute a qualified domestic relations order, shall
be made by the Committee in its sole discretion. The rights of any alternate
payee hereunder are subject to the provisions of the Plan as administered with
respect to alternate payees, and the committee may require an alternate payee to
acknowledge that his or her rights are subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
______________________________ ______________________________
Date Donna J. Goya
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
LEVI STRAUSS ASSOCIATES INC.
LONG-TERM PERFORMANCE PLAN
WHEREAS, Levi Strauss Associates Inc. ("LSAI") maintains the Levi Strauss
Associates Inc. Deferred Compensation Plan for Executives ("DCPE"), the Levi
Strauss Associates Inc. Deferred Compensation Plan for Outside Directors
("DCPOD") and the Levi Strauss Associates Inc. Long-Term Performance Plan
("LTPP") for the benefit of persons eligible thereunder;
WHEREAS, the DCPOD provides certain benefits to outside directors of LSAI;
WHEREAS, the DCPE and LTPP are, in certain respects, administered by the
Personnel Committee of the Board of Directors of LSAI, which Committee is
comprised of outside directors of LSAI;
WHEREAS, the stock of LSAI has been acquired by LSAI Holding Corp.
("Holdings"), and LSAI has become a subsidiary of Holdings (the "Transaction");
WHEREAS, subsequent to the Transaction, the Board of Directors of Holdings
includes outside directors, but the Board of Directors of LSAI includes no
outside directors;
WHEREAS, by resolution adopted by the Board of Directors of Holdings and
LSAI on April 23, 1996, Holdings has assumed the DCPOD and the undersigned has
been authorized to amend the DCPE, DCPOD and LTPP as necessary to accommodate
the changes in board of director composition discussed above;
NOW THEREFORE, effective as of April 23, 1996:
1. The DCPE is hereby amended as set forth below:
a. Section 6(d) shall be amended by the addition of a new clause
(iii) to read as set forth below:
(iii) A request filed by an Eligible Employee or an Eligible
Employee's surviving spouse or Beneficiary under Section 6(d)(i) or
(ii) shall be filed with the Personnel Committee (the "Committee") of
the Board of Directors of LSAI Holding Corp. ("Holdings"), and the
disposition of such a request shall be determined by the Committee, or
its delegate, in its sole discretion.
10
<PAGE>
(b) The final sentence of Article 9 shall be amended to read as
follows:
The Administrator's interpretations and constructions of the Plan
and actions thereunder, except as otherwise determined by the
Board of Directors of Holdings, the Committee or the
Administrative Committee (for the purposes referenced in Section
6(f)), shall be binding and conclusive on all persons for all
purposes.
(c) Article 10 shall be amended in its entirety to read as follows:
The Plan may be amended, suspended or terminated, in whole
or in part, by the Board of Directors of Holdings or the
Committee, or the delegate of either, but no such action shall
retroactively impair or otherwise adversely affect the rights of
any person to Deferred Compensation under the Plan which has
accrued prior to the date of such action, as determined by the
Administrator.
2. The DCPOD is hereby amended as set forth below:
a. The name of the DCPOD, wherever it appears other than in Section
1, shall be changed to the "LSAI Holding Corp. Deferred Compensation Plan for
Outside Directors."
b. The parenthetical phrase which appears immediately below the
title of the DCPOD on page 1 shall be deleted.
c. Section 1 shall be amended in its entirety to read as follows:
The Levi Strauss Associates Inc. Deferred Compensation Plan for
Outside Directors, which has been renamed the LSAI Holding Corp.
Deferred Compensation Plan for Outside Directors (hereinafter the
"Plan"), became effective upon approval by the Executive
Committee of the Board of Directors of Levi Strauss & Co. on
January 17, 1977, was amended and restated on July 19, 1988 and
was amended from time to time thereafter by the Board of
Directors of Levi Strauss Associates Inc. ("LSAI") or a delegate
thereof. In connection with a transaction in which LSAI became a
subsidiary of LSAI Holding Corp. (the "Company"), the Company
assumed the Plan effective April 23, 1996.
d. Section 2 shall be amended in its entirety to read as follows:
The persons eligible to participate in this Plan shall be those
members of the Board of Directors of the Company (the "Board of
Directors") who are not otherwise employed by the Company or any
of its direct or indirect
11
<PAGE>
subsidiaries as an executive or in any other capacity. These
persons are generally referred to by the Company as "outside
directors."
3. The LTPP is hereby amended as set forth below:
a. The first sentence of Article 9 shall be amended in its entirety
to read as follows:
The Board of Directors of Holdings or the Committee may amend,
suspend or terminate the Plan at any time and for any reason.
b. Section 11.2 is amended to read as follows:
11.2 "Committee" means the Personnel Committee of Holdings'
---------
Board of Directors.
c. A new Section 11.7A is added to read as follows:
11.7A "Holdings" means LSAI Holding Corp.
--------
d. Section 11.9 is hereby amended to read as follows:
11.9 "Outside Director" means a director of Holdings who is
----------------
not a common-law employee of Holdings or any direct or indirect
subsidiary of Holdings.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto as of July
___, 1996.
_______________________________________
Robert D. Haas
Chairman of the Board and Chief Executive Officer
12
<PAGE>
LEVI STRAUSS ASSOCIATES, INC.
LONG-TERM PERFORMANCE PLAN
AMENDMENTS
WHEREAS, Levi Strauss & Co. (the "Company") maintains the Levi Strauss
Associates Inc. Long-Term Performance Plan (the "LTPP") as the successor to Levi
Strauss Associates Inc.;
WHEREAS, the Company desires to amend the LTPP to clarify the disposition
of Rights in the event of a Participant's disability or leave of absence and to
limit deferrals of amounts payable to provide for required tax payments;
WHEREAS, Article 9 of the LTPP provides that the Company may amend the LTPP
at any time and for any reason;
WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt certain amendments to the Plan and to delegate
to certain other officers of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on May 2, 1996, Robert D. Haas delegated to Donna J. Goya, Senior
Vice President for Global Human Resources, the authority to amend the Plan,
subject to specified limits, and such delegation has not been amended, rescinded
or superseded as of the date hereof; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
LTPP as set forth below:
1. Section 4.5 is amended in its entirety to read as follows:
4.5 Other Termination of Employment. Except to the extent that
-------------------------------
a payment is made under Section 4.4, all nonvested Rights held by a
Participant when he or she ceases to be an Employee shall be
forfeited. Except as provided in Section 4.6.b., Rights of a
Participant which are forfeited upon termination of employment are not
restored upon rehire of the Participant by a Participating Company.
In addition, an Employee of a Participating Company shall cease to be
an Employee for purposes of this Section 4.5 as of the date his or her
employer ceases to be a Participating Company.
13
<PAGE>
2. Section 4.6 is amended in its entirety to read as follows:
4.6 Leaves of Absence and Layoff.
----------------------------
a. For purposes of the Plan, employment shall be deemed to
continue while the Participant is on a Company approved leave of
absence for up to 12 months (unless a longer period is approved in
writing by the Committee or its delegate). However, in no event shall
employment be deemed to continue after the date as of which (i) the
Company terminates the Participant's leave of absence or (ii) the
Participant is determined to have a Disability.
b. If the employment of a Participant is involuntarily
terminated by reason of a layoff and the Participant is rehired by a
Participating Company within six months of such layoff, then (i) the
Rights of such Participant which were forfeited pursuant to Section
4.5 shall be restored and (ii) the employment of the Participant shall
be deemed to have continued during the period between the
Participant's layoff and the Participant's reemployment by a
Participating Company.
3. Section 5.1 shall be amended by the addition of the following sentence
immediately after the second sentence thereof;
Effective for payments with respect to Rights awarded in 1994 and
thereafter, the maximum amount that may be deferred is ninety-five
percent (95%) of each Right.
4. Section 11.6 shall be amended in its entirety to read as follows:
11.6 "Disability" means that:
----------
a. The Participant is disabled within the meaning of, and
eligible for benefits under, a long-term disability program maintained
by the Company; or
b. The Participant, in the opinion of the Committee or its
delegate, is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death, or can be expected to last
for a continuous period of not less than 12 months.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
__________________________ _________________________________
14
<PAGE>
Date Donna J. Goya
LEVI STRAUSS & CO.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
AND
LONG-TERM PERFORMANCE PLAN
AMENDMENTS
WHEREAS, Levi Strauss & Co, (the "Company") maintains the Deferred
Compensation Plan for Executives ("DCPE") and the Long-Term Performance Plan
("LTPP") for the benefit of eligible employees,
WHEREAS, pursuant to Article 10 of the DCPE, the DCPE may be amended by the
company;
WHEREAS, pursuant to Article 9 of the LTPP, the LTPP may be amended by the
Company;
WHEREAS, in recognition of the potential impact of unexpected changes in
the business of the Company and the applicable income tax laws, the Company
desires to amend the DCPE and the LTPP to provide participants a limited window
during which participants may amend their elections with respect to
distributions under the plans;
WHEREAS, the Board of Directors of the Company has authorized Robert D.
Haas, Chairman of the Board and Chief Executive Officer, to adopt certain
amendments to the DCPE and the LTPP and to delegate to other officers of the
Company the authority to adopt certain amendments to the DCPE and LTPP;
WHEREAS, Robert D. Haas has delegated to Donna J, Goya, Senior Vice
President, the authority to amend the DCPE and the LTPP, subject to specified
limits; and
WHEREAS, the amendments herein are within such limits to the delegated
authority of Dona J. Goya;
NOW, THEREFORE, effective January 1, 1998, the DCPE and the LTPP are
amended as set forth below:
1. The DCPE is amended by the addition of the attached "January 1998
Appendix" to the DCPE; and
2. The LTPP is amended by the addition of the attached "January 1998
Appendix" to the LTPP.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date indicated below.
15
<PAGE>
January __, 1998
______________________________________
Donna J. Goya, Senior Vice President
<PAGE>
LEVI STRAUSS & CO.
LONG-TERM PERFORMANCE PLAN
JANUARY 1998 APPENDIX
During the period from January 1, 1998 through February 13, 1998, any
individual with a Deferred Account under the Plan may revoke and/or change any
previous election made under Section 5.9 of the Plan regarding the payment of
the Participant's Deferred Account and file a new election (such actions are
collectively referred to in this Appendix as a "revised election"). However,
any revised election must satisfy the following conditions:
1. The effective date for a revised election shall be twelve months after
the date on which it is received by the Committee;
2. No revised election shall require payments to be made as of any date
prior to the effective date of the revised election nor prevent any
payment otherwise scheduled to be made as of any date prior to the
effective date of the revised election;
3. A revised election must be in form prescribed by the Committee; and
4. A revised election must be received by the Committee before February
14, 1998.
Any distribution election made under the provisions of the Plan other than
a revised election made under the Appendix shall be effective except to the
extent that such election is superseded by a revised election under this
Appendix.
<PAGE>
LEVI STRAUSS & CO.
LONG-TERM PERFORMANCE PLAN
JANUARY 1998 APPENDIX
During the period from January 1, 1998 through February 13, 1998, any
individual with a Deferred Account under the Plan may revoke and/or change any
previous election made under Section 5.9 of the Plan regarding the payment of
the Participant's Deferred Account and file a new election (such actions are
collectively referred to in this Appendix as a "revised election"). However,
any revised election must satisfy the following conditions:
1. The effective date for a revised election shall be twelve months after
the date on which it is received by the Committee;
2. No revised election shall require payments to be made as of any date
prior to the effective date of the revised election nor prevent any
payment otherwise scheduled to be made as of any date prior to the
effective date of the revised election;
3. A revised election must be in form prescribed by the Committee; and
4. A revised election must be received by the Committee before February
14, 1998.
Any distribution election made under the provisions of the Plan other than
a revised election made under the Appendix shall be effective except to the
extent that such election is superseded by a revised election under this
Appendix.
<PAGE>
MEMORANDUM UNDER ARTICLE 5
LEVI STRAUSS ASSOCIATES INC. LONG-TERM PERFORMANCE PLAN
With respect to Rights granted in 1986 only, the last
time for a filing deferral election shall be August 31,
1988.
<PAGE>
MEMORANDUM UNDER ARTICLE 5
LEVI STRAUSS ASSOCIATES INC. LONG-TERM PERFORMANCE PLAN
With respect to Rights granted in 1986 only, the last
time for filing a deferral election shall be August 31,
1988.
<PAGE>
EXHIBIT 10.33
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made as of the 30" day of September, 1999,
by and between Levi Strauss & Co., a Delaware corporation ("Company"), and
Philip A. Marineau ("Executive").
WITNESSETH THAT:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, in accordance with the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the Company and the Executive hereby agree as follows:
In consideration of the mutual covenants set forth herein, the Company and the
Executive hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive agrees to serve the Company in accordance with the terms and
conditions of this Agreement.
2. PERIOD OF EMPLOYMENT. The term "Period of Employment" shall mean the
period which commences on the date hereof (the "Effective Date") and, unless
earlier terminated pursuant to Section 6, ends on September 30, 2002; provided,
however, that the Period of Employment shall automatically be extended on a day
by day basis effective on and after September 30, 2002 until such date as either
the Company or the Executive shall have terminated such automatic extension
provision by giving written notice to the other pursuant to Section 6(e).
3. DUTIES AND RESPONSIBILITIES DURING THE PERIOD OF EMPLOYMENT. During
the Period of Employment, the Executive shall be employed as the President and
Chief Executive Officer of the Company and shall report to the Company's Board
of Directors (the "Board"). It is also understood that the Executive will be
elected a member of the Board. During the Period of Employment, and excluding
any periods of vacation, sick leave or other Company-approved leave of absence
to which the Executive is entitled, the Executive shall devote his full time,
energy and skill to the business and affairs of the Company. Executive may (i)
serve on corporate, civic or charitable boards or committees (subject to
approval of the Board, which approval shall not be unreasonably withheld), (ii)
deliver lectures, fulfill speaking engagements or teach at educational
institutions, or (iii) manage personal investments, so long as such activities
under clauses (i), (ii) and (iii) do not interfere, in any respect, with the
Executive's responsibilities hereunder.
<PAGE>
4. COMPENSATION AND OTHER PAYMENTS.
(A) SALARY. The Company shall pay the Executive a base salary of
at least $1,000,000 per year (the "Base Salary") during the Period of Employment
in accordance with the Company's executive salary policy.
(B) ANNUAL BONUS. Subject to the terms of the Annual Incentive
Plan (the "AIP"), the Executive will be eligible to receive a target annual
bonus of 90% of his Base Salary (the "Target Amount") with a maximum annual
bonus of 180% of his Base Salary.
(C) TRANSITION BONUS. The Company will pay Executive a cash
payment of three million dollars ($3,000,000) on or before January 2000. If the
Executive's employment shall be terminated by the Company for Cause (as defined
under Section 6(b)) or by the Executive other than for Good Reason (as defined
in Section 6(c)) within 12 months of the Effective Date, Executive shall repay
to the Company an amount equal to $3,000,000 multiplied by a fraction, the
numerator of which is 12 minus the number of full months of employment with the
Company and the denominator of which is 12.
(D) ANNUAL LONG-TERM INCENTIVE GRANT. Each February, the Company
will award a Leadership Shares grant under the Leadership Shares Plan of the
Company based on the performance of the Executive. In February 2000, the Company
will grant to the Executive 170,000 Leadership Shares (using a base year
Leadership Value Added ("LVA") equal to 1999 actual LVA).
(E) SPECIAL LONG-TERM INCENTIVE GRANT. In February 2000, the
Company will grant to the Executive 810,000 Leadership Shares (using a base year
LVA equal to the 1999 actual LVA), which shall be subject to all of the terms
and conditions of the Leadership Shares Plan, except as otherwise provided
herein.
(F) REIMBURSEMENT OF PROFESSIONAL FEES. Subject to reasonable and
appropriate substantiation presented by the Executive, the Company shall pay on
the Executive's behalf all statements for reasonable expenses incurred in
connection with the negotiation and execution of this Agreement.
(G) RELOCATION EXPENSES. The Company shall pay the Executive's
reasonable expenses related to the relocation of his primary residence to the
San Francisco metropolitan area in accordance with the Company's relocation
policy, but with the following additions and modifications:
(i) The Company shall reimburse the Executive for temporary
living accommodations for the Executive and his family in the San Francisco
metropolitan area for a period not to exceed one year from the Effective
Date;
<PAGE>
(ii) At the election of the Executive, the Company shall
purchase the Executive's current primary residence under the Company's
relocation policy subject to a minimum buy-out of $3.6 million; and
(iii) The Company shall reimburse the Executive for all taxes
payable by the Executive because of relocation-related payments by the
Company, including tax reimbursement payments, but excluding taxes
attributable to capital gains from the sale of his primary residence.
5. OTHER EXECUTIVE BENEFITS.
(a) SUPPLEMENTAL PENSION BENEFIT. The Company shall provide the
Executive with the following supplemental pension benefit.
(i) Subject to paragraph (iii) below, the Executive will
be entitled to receive a supplemental pension benefit, in the form and
at the time described below, equal to the excess of the Pension Amount
(defined below) over the offsets described in (ii) below. For such
purposes, the Pension Amount and each such offset as of any date shall
be the actuarial equivalent of such Pension Amount or offset
determined as if it were payable in the form of a straight life
annuity commencing as of the Executive's normal retirement date under
the Company's Revised Home Office Pension Plan ("HOPP"), and using the
actuarial assumptions set forth in the HOPP, as in effect on the
Effective Date. For these purposes, the Pension Amount shall equal the
normal retirement benefit to which the Executive would be entitled
under the terms of HOPP as in effect on the Effective Date if (A) his
Benefit Service (as defined in the HOPP on the Effective Date) were
equal to his actual years of Benefit Service plus 18 years and (B) his
Final Average Compensation (as defined in the HOPP on the Effective
Date) were equal to the greater of his actual Final Average
Compensation or the sum of his initial Base Salary and Target Amount
described in Section 4(a) and (b), respectively without regard to any
dollar limitation on compensation contained in the HOPP.
(ii) The offsets shall be (A) the benefits provided to
Executive under any qualified or non-qualified defined benefit plans
of the Company (including, if applicable, any cash balance pension
plan), (B) the benefits owed to Executive under any qualified or non-
qualified defined benefit plans maintained by any prior employer of
the Executive, and (C) the projected unreduced Social Security benefit
of the Executive assuming constant earnings from the date of
termination to his normal retirement age.
(iii) Except as otherwise provided below, the supplemental
pension benefit will vest 1/36th for each month of the Executive's
Service (as defined in the HOPP on the Effective Date) with the
Company after the Effective Date. Notwithstanding the foregoing, the
Executive will forfeit all rights to the
<PAGE>
supplemental pension benefit if, prior to September 30, 2002, the
Company terminates the Executive's employment for Cause or if the
Executive terminates employment with the Company other than for Good
Reason. In the event the Company terminates the Executive's employment
or the Executive shall resign for Good Reason within 12 months after a
Change in Control (defined below), the supplemental pension benefit
will fully vest and will be determined as set forth in paragraph
(a)(i) above (A) using the years of Benefit Service and age Executive
would have attained as of the last day of the Period of Employment
(determined without regard to termination of employment) and (B)
taking into account for purposes of determining Final Average
Compensation, the salary and bonus-based termination benefits payable
under this Agreement though the last day of the Period of Employment.
(iv) The Executive may elect to receive the supplemental
pension benefit at any time and in any form available under the HOPP
or any non-qualified defined benefit plan of the Company as in effect
on the Effective Date, or as may be available under any qualified or
non-qualified defined benefit plan of the Company hereafter. For
commencement of benefits prior to age 65, the supplemental pension
benefit will be subject to reduction pursuant to the early retirement
benefit provisions of the HOPP and non-qualified defined benefit plan
as in effect on the Effective Date and shall be Determined as if the
Executive is early retirement eligible (regardless of his attained age
or years of Benefit Service at the time of termination of employment).
(v) If the Executive dies after the Effective Date but
before the supplemental pension benefit becomes payable, his wife will
receive a supplemental survivor annuity for her life in an amount
equal to 50% of the supplemental benefit that would have been payable
to the Executive hereunder as if (i) he had terminated his employment
immediately before his death, (ii) he was eligible for early
retirement (regardless of his attained age or years of Benefit Service
at the time of death), (iii) he was fully vested in the supplemental
pension benefit as of such date, and (iv) he elected to receive the
benefit in the form of a Qualified Joint and Survivor Annuity (as
defined in the HOPP).
(B) REGULAR REIMBURSED BUSINESS EXPENSES. The Company shall
promptly reimburse the Executive for all expenses and disbursements reasonably
incurred by the Executive in the performance of his duties hereunder during the
Period of Employment and to the extent consistent with the applicable Company
policies. In addition, the Company shall reimburse the Executive for reasonable
expenses incurred to obtain any amounts owed to the Executive under Section
5(a)(ii)(B) above.
(C) BENEFIT PLANS. The Executive and his eligible family members
shall be entitled to participate immediately, on terms no less favorable to the
Executive and his eligible family members than the terms generally offered to
senior executives of the Company, in any employee benefit plan or arrangement or
other fringe benefits of the Company, automobile
<PAGE>
allowance, club memberships and dues, and similar programs (collectively
referred to as the "Benefits"). In the event that any health programs or
insurance policies applicable to the Benefits provided hereunder contain a
preexisting conditions clause, or in the event that the Executive does not
qualify for disability insurance under the appropriate plan, the Company shall
either obtain a waiver from such provision with respect to the Executive and/or
his eligible family members or self-insure the Executive and/or his eligible
family members with respect to such conditions.
6. TERMINATION.
(A) DEATH OR DISABILITY. This Agreement and the Period of
Employment shall terminate automatically upon the Executive's death. The Company
may also terminate this Agreement in the event of a Disability. In such event,
the Executive's employment with the Company shall terminate effective 30 days
after receipt by the Executive of notice given any time after a period of 120
consecutive days of Disability or a period of 180 days of Disability within any
12 consecutive months, and, in either case, while such Disability is continuing
("Disability Effective Date"). "Disability" means the Executive's inability to
substantially perform his duties hereunder, with or without reasonable
accommodation, as evidenced by a certificate signed by a physician mutually
acceptable to the Company and the Executive.
(B) BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment for Cause. For purposes of this Agreement, " Cause" shall
mean that (i) the Executive has plead "guilty" or "no contest" to or has been
convicted of an act which is defined as a felony under federal or state law,
(ii) engaged in conduct that constitutes willful neglect or willful misconduct
with respect to employment duties under this Agreement, resulting, in either
case, in material economic harm to the Company or substantial damage to the
Company's reputation, or (iii) willful disobedience by the Executive of lawful
directions received from or policies established by the Chairman of the Board of
Directors of the Company or the Board of Directors, which continues for more
than 30 days after the Company notifies the Executive of its intention to
terminate his employment on account of such disobedience. Notwithstanding the
foregoing, the Board may not terminate the Executive's employment for Cause
unless the Executive is given at least 30 days written notice of the Board
meeting called to make such determination, and the Executive is given the
opportunity to address such meeting, with the assistance of counsel if so
desired.
(C) BY EXECUTIVE FOR GOOD REASON. During the Period of Employment,
the Executive may terminate his employment within 90 days of any event that
constitutes Good Reason, provided that he has given not less than 30 days
advance notice to the Company. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties materially
inconsistent with the Executive's position as President and Chief Executive
Officer of the Company and that result in a significant diminution of
responsibility;
<PAGE>
(ii) any material failure by the Company to comply with the
provisions of this Agreement;
(iii) any removal of the Executive from his position as the
President and Chief Executive Officer of the Company, unless in any such
instance the Company shall have reason to terminate the Executive's
employment hereunder for Cause; and
(iv) the Company's requiring the Executive to be based in any
office or location other than in the San Francisco metropolitan area, and
other than on travel reasonably required to carry out the Executive's
obligations under this Agreement.
(D) OTHER THAN FOR CAUSE OR GOOD REASON. The Company or the Executive
may terminate this Agreement for any reason other than for Cause or Good Reason,
respectively, upon not less than 30 days written notice to the Company or
Executive, as the case may be.
(E) NOTICE OF TERMINATION. Any termination by the Company for Cause
or other than for Cause, or by the Executive for Good Reason or for other than
Good Reason, shall be communicated by notice of termination to the other party
not less than 30 days prior to the termination effective date. For purposes of
this Agreement, "Date of Termination" means the date specified in the Notice of
Termination; provided, however, that if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.
7. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(A) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If the
Company shall terminate the Executive's employment (other than for Cause,
Disability or death) or if, during the Period of Employment, the Executive shall
terminate his employment within 90 days of an event that constitutes Good
Reason, the Company shall pay to the Executive the aggregate of the following
amounts with respect to items (i) and (ii) and will cause the Executive to
receive the benefits described in (iii) and (iv):
(i) three times the sum of (1) the Executive's Base Salary as
of the Date of Termination plus (2) the Executive's most recent target
bonus, or if greater, most recent annual bonus payment, payable in a lump
sum within 30 days following the Date of Termination;
(ii) any obligations accrued or earned by (and, except as
provided under (iii) below, to the extent vested) the Executive under the
terms of any plan, contract or arrangement of the Company on the Date of
Termination (hereinafter referred to as "Accrued Obligations");
(iii) Leadership Shares in the Special Long-Term Incentive Grant
under Section 4(e) in an amount equal to the greater of (i) the number of
such Leadership Shares vested under the terms of the Leadership Shares Plan
of the Company on the Date of
<PAGE>
Termination, or (ii) the number of such shares determined by multiplying
13,500 by the number of months of Service (as defined in the HOPP on the
Effective Date) of the Executive on the Date of Termination, which
Leadership Shares shall remain outstanding through the end of their
original term; and
(iv) if the Executive has not yet attained age 55 as of the Date
of Termination, the Company shall continue medical benefits to the
Executive and/or the Executive's family at least equal to those which would
have been provided to them in accordance with Section 5(c) of this
Agreement if the Executive's employment had not been terminated, and
thereafter the Executive shall be treated as a retired senior executive of
the Company for purposes of medical benefits provided by the Company to
such retirees.
(B) CHANGE IN CONTROL. If the Company shall terminate the Executive's
employment for any reason other than for Cause or the Executive shall resign for
Good Reason within 12 months after a Change in Control, the Company shall
provide the Executive with the aggregate of the following amounts and benefits:
(i) each of the benefits provided under Section 7(a) above;
(ii) full and immediate vesting in the supplemental pension
benefit under Section 5(a);
(iii) full and immediate vesting in each Annual Long-Term
Incentive Grant under Section 4(d) and in each Special Long-Term
Incentive Grant under Section 4(e) to the' extent yet vested-as of the
Date of Termination, which Grants shall remain outstanding~though the
end of their respective original terms; and
(iv) if the Executive has not yet attained age 55 as of the Date
of Termination, the Company shall continue medical benefits to the
Executive and/or the Executive's family at least equal to those which
would have been provided to them in accordance with Section 5(c) of
this Agreement if the Executive's employment had not been terminated,
and thereafter the Executive shall be treated as a retired senior
executive of the Company for purposes of medical benefits provided by
the Company to such retirees.
For purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred when any person (as that term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, but excluding the Company, or any
of its "controlled group members" (as defined under Section 1563 of the Internal
Revenue Code of 1986, as amended), or any employee benefit plan of the Company
or any controlled group member, or any person organized, appointed or
established by the Company or any controlled group member for or pursuant to the
terms of any such plan, or any person who is affiliated through ownership or
familial relations with any holder of the Company's outstanding securities as of
the Effective Date), has acquired, directly or indirectly, beneficial ownership
of securities representing 51 percent or more of the
<PAGE>
total votes THAT COULD BE CAST BY THE holders of all of the Company's
outstanding securities entitled to vote in elections of Directors.
(C) CAUSE; OTHER THAN GOOD REASON. If the Executive's employment
shall be terminated by the Company for Cause or by the Executive other than for
Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than Accrued Obligations (which do not include any target bonus
that is not payable as of the Date of Termination and/or any Leadership Shares
that have not vested as of the Date of Termination).
(D) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability, this Agreement shall terminate without further
obligations to the Executive, other than Accrued Obligations.
(E) DEATH. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement other
than Accrued Obligations and supplemental pension amounts, as provided under
Section 5(a).
8. INDEMNIFICATION. The Company shall maintain, for the benefit of tile
Executive, director and officer liability insurance in form at least as
comprehensive as, and in an amount that is at least equal to, that maintained by
the Company on August 1, 1999.
9. CONFIDENTIAL INFORMATION, NON-COMPETITION, NON-SOLICITATION. The
following provisions shall apply to the extent permissible under applicable law:
(A) The Executive shall hold in a fiduciary capacity for the benefit
of the Company all secret -or confidential information, knowledge or data
relating to the Company, including any of its subsidiaries and affiliates.
The Company shall be entitled to injunctive relief to prevent any breach or
threatened breach of this Section.
(B) For at least one year after the Period of Employment, the
Executive shall not, without the prior written consent of the Company,
utilize any confidential information of the Company to own, manage,
operate, join, control, be employed by (in an executive or managerial
capacity), consult with or participate in any business that competes,
directly or indirectly, with the Company, which may result in harm
(economic or to reputation) to the Company; provided, however, that the
ownership by the Executive after his Date of Termination of not more than
two percent of the voting stock of any publicly held corporation shall not
be a violation of this Section 9(b).
(C) For at least one year after the Period of Employment, the
Executive shall not (i) interfere with or harm, or attempt to interfere
with or harm, the relationship of the Company with any person who at any
time was an employee, customer or supplier of the Company or otherwise had
a business relationship with the Company; (ii) solicit for employment or
hire any person who is or was during the prior year an employee of the
Company, or (iii) solicit similar business from any customer of the
Company.
<PAGE>
10. TAXES.
(A) In the event that the aggregate of payments or benefits provided
to the Executive under Section 7(b) above constitute a Parachute Payment, as
defined in Section 280G(b)(2) of the Internal Revenue Code, the Company shall
pay to the Executive an additional amount which is equal to the applicable
excise tax on the Executive, plus any taxes on reimbursement payments made to
the Executive under this Section 10.
(B) Notwithstanding paragraph (a) above, if the After-Tax Amount (as
defined below) of the payment of benefits under Section 7(b) and the gross-up
payment do not exceed 110 percent of the After-Tax Floor Amount (as defined
below), then no gross-up payment shall be made to the Executive and the amount
of benefits under Section 7(b) shall be reduced (but not below the Floor Amount)
to the largest amount which would both (i) not cause any excise tax to the
executive, and (ii) not cause any nondeductibility by the Company. "After-Tax
Amount" is the amount that remains after payment of all federal, state and local
or other taxes. "Floor Amount" means the greatest pre-tax amount of benefits
that could be paid to the Executive without causing the Executive to be subject
to any excise taxes. "After-Tax Floor Amount" means the after-tax amount of the
Floor Amount.
11. SUCCESSORS. This Agreement is personal to the Executive and shall
not be assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's heirs and legal representatives. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without reference to principles of
conflicts of laws.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party, by overnight
courier, or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Philip A. Marineau
435 E. 52.d St.
Apt. 11 B
New York, NY 10022
with a copy to:
Robert J. Stucker, Esq.
<PAGE>
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle Street
26th Floor
Chicago, IL 60601
If to the Company:
Albert F. Moreno
Senior Vice President and General Counsel
Levi Strauss & Co.
1155 Battery Street
San Francisco, CA 94111
or to such other address as any of the parties shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(C) None of the provisions of this Agreement shall be deemed to be a
penalty.
(D) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(E) Either party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.
(F) This Agreement (which includes the agreements referenced herein)
supersedes any prior employment agreement or understandings, written or verbal
between the Company and the Executive and contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof.
(G) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS HEREOF, the parties have executed this Agreement all as of the
day and year first above written.
PHILIP A. MARINEAU LEVI STRAUSS & CO.
<PAGE>
_________________________ By:____________________________
Robert D. Haas
Chairman and Chief Executive Officer
Date:____________________ Date:__________________________
<PAGE>
EXHIBIT 10.34
LEVI STRAUSS & CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
WITH GORDON SHANK
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I - RECITAL; AGREEMENT 1
ARTICLE II - DEFINITIONS 1
2.1 "Actuarial Equivalent" 1
2.2 "Administrator" 1
2.3 "Agreement" 1
2.4 "Board" 1
2.5 "Canadian Plan" 1
2.6 "Committee" 1
2.7 "Disability" 1
2.8 "LSA" 1
2.9 "Qualified Plan" 2
2.10 "Retirement Date" 2
2.11 "Shank" 2
2.12 "Supplemental Benefits" 2
2.13 "Supplement Death Benefits" 2
2.14 "Supplement Retirement Benefit" 2
ARTICLE III - SUPPLEMENTAL BENEFITS 2
3.1 Eligibility and Vesting 2
3.2 Retirement Benefit 2
3.3 Death Prior to Termination of Employment 3
ARTICLE IV - RULES OF PAYMENT 3
4.1 Withholding; Taxes 3
4.2 Payment of Guardian 3
ARTICLE V - BENEFICIARY DESIGNATION 3
5.1 Beneficiary Designation 3
5.2 Amendments 3
5.3 No Beneficiary Designation 3
i
<PAGE>
ARTICLE VI - ADMINISTRATION 4
6.1 Committee Duties 4
6.2 Administrator 4
6.3 Agents 4
6.4 Binding Effect on Decisions 4
6.5 Indemnity of Committee 4
ARTICLE VII - CLAIMS PROCEDURE 4
7.1 Claim 4
7.2 Denial of Claim 5
7.3 Review of Claim 5
7.4 Final Decision 5
ARTICLE VIII - FORFEITURE 5
ARTICLE IX - MISCELLANEOUS 5
9.1 Termination, Suspension or Amendment of Agreement 5
9.2 Funding 5
9.3 Unsecured General Creditor 6
9.4 Nonassignability 6
9.5 Not a Contract of Employment 6
9.6 Protective Provisions 6
9.7 Captions 6
9.8 Governing Law 6
9.9 Validity 7
9.10 Notice 7
9.11 Successors 7
i
<PAGE>
Dated as of January 1, 1998
LEVI STRAUSS & CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
WITH GORDON SHANK
ARTICLE I
---------
RECITAL; AGREEMENT
WHEREAS, Gordon Shank, the Chief Marketing Officer of LS&CO., has
provided and will continue to provide valuable service to LS&CO. and its related
companies; in consideration of the foregoing, Shank and LS&CO. agree as follows:
ARTICLE II
----------
DEFINITIONS
For purposes of this Agreement, capitalized terms not defined herein
shall have the same meaning as in the Qualified Plan. In addition, the following
terms shall have the meanings indicated, unless the context clearly indicates
otherwise:
2.1 "Actuarial Equivalent" means a benefit of equivalent value when
--------------------
computed on the basis of the same mortality and interest rate factors specified
in Section 25 of the Qualified Plan.
2.2 "Administrator" means an individual or individuals designated by
-------------
the Committee.
2.3 "Agreement" means the Agreement set forth herein, as it may be
---------
amended from time to time, which provides for Supplemental Benefits to and with
respect to Shank.
2.4 "Board" means the Board of Directors of LS&CO.
-----
2.5 "Canadian Plan" means the Pension Plan for Salaried Employees of
--------------
Levi Strauss & Co. (CANADA) INC., as in effect from time to time.
2.6 "Committee" means the Administrative Committee of Retirement Plans.
---------
2.7 "Disability" means a physical or mental condition which, in the
----------
opinion of the Committee, permanently prevents Shank from satisfactorily
performing his usual duties for LS&CO. The Committee's decision as to Disability
will be based upon medical reports and/or other evidence satisfactory to the
Committee.
1
<PAGE>
2.8 "LS&CO." means Levi Strauss & Co., and its successors and assigns.
-----
2.9 "Qualified Plan" means the Revised Home Office Pension Plan of Levi
--------------
Strauss Associates Inc., as Amended and Restated from time-to-time.
2.10 "Retirement Date" means the date on or after Shank attains age 55,
---------------
that his employment with LS&CO. and all Affiliated Companies terminates.
2.11 "Shank" means Gordon Shank, the Chief Marketing Officer of LS&CO.
-----
2.12 "Supplemental Benefits" means Supplemental Death Benefits and
---------------------
Supplemental Retirement Benefits.
2.13 "Supplemental Death Benefit" means the benefit payable to Shank's
--------------------------
Surviving Spouse under Section 3.3 of the Agreement.
2.14 "Supplemental Retirement Benefit" means the benefit payable to
-------------------------------
Shank under Section 3.2 of the Agreement.
ARTICLE III
-----------
SUPPLEMENTAL BENEFITS
3.1 Eligibility and Vesting. Shank shall be eligible to receive
benefits under the Agreement, if at all, pursuant to the terms hereof. Subject
to Article VIII, Shank shall be entitled to receive a Supplemental Retirement
Benefit pursuant to Section 3.2 if he is employed by LS&CO. or an Affiliated
Company until his Retirement Date, or if such employment earlier terminates
because of his Disability.
3.2 Retirement Benefit. Shank's Supplemental Retirement Benefit shall
be payable at the same time and in the same manner as his benefit under the
Qualified Plan in an amount equal to the excess of
(i) the retirement benefit (payable at the time and in the
manner described above) to which he would have been entitled if all
periods of his employment with LS&CO. and any Affiliated Company were
considered in the calculation of Benefit Service and all of his
compensation from LS&CO. and any Affiliated Company were considered in
the calculation of Final Average Compensation for purposes of his
benefit under the Qualified Plan, and if such benefit were, calculated
without application of Sections 401(a)(17) and 415 of the Internal
Revenue Code of 1986 as amended, but subject to all other provisions,
conditions, restrictions and limitations contained in the definitions
of "Benefit Service" and "Final Average Compensation" under the
Qualified Plan; over
2
<PAGE>
(ii) the sum of the actual benefit payable to him under the
Qualified Plan (as such time and in such manner) and the Actuarial
Equivalent of the actual benefit payable to him (calculated as if it
were paid at such time and in such manner) under the Canadian Plan.
3.3 Death Prior to Termination of Employment. If Shank dies while
----------------------------------------
employed by LS&CO., or during a period of Disability but before benefits have
commenced hereunder, and Shank has a Surviving Spouse, LS&CO. shall pay a
survivor benefit to Shank's Surviving Spouse as of the first day of the month
following the later to occur of the date of Shank's death or the date that would
have been his 55' birthday, in an amount equal to the Actuarial Equivalent of
Shank's benefit determined under Section 3.2 as of the date of his death.
ARTICLE IV
----------
RULES OF PAYMENT
4.1 Withholding; Taxes. LS&CO. shall withhold from payments made
-------------------
hereunder any taxes required to be withheld by the federal or any state or local
government.
4.2 Payment to Guardian. If the benefit hereunder is payable to a minor
--------------------
or a person declared incompetent or to a person incapable of handling the
disposition of his property, the Administrator may direct payment of such
benefit to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Administrator may require
proof of incompetency, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the benefit. Such distribution shall
completely discharge LS&CO. from liability with respect to such benefit.
ARTICLE V
---------
BENEFICIARY DESIGNATION
5.1 Beneficiary Designation. Shank shall designate one or more persons
------------------------
or entities as his beneficiary (including a secondary beneficiary) to whom
benefits under this Agreement will be paid in the event of Shank's death after
he becomes entitled to payment hereunder. Each beneficiary designation shall be
in a written form prescribed by the Administrator, and will be effective only
when filed with the Administrator during Shank's lifetime.
5.2 Amendments. Any beneficiary designation may be changed without the
-----------
consent of any designated beneficiary by the filing of a new beneficiary
designation with the Administrator. The filing of a new beneficiary designation
form will cancel all beneficiary designations previously filed.
3
<PAGE>
5.3 No Beneficiary Designation. In the absence of an effective
--------------------------
beneficiary designation, then the designated beneficiary shall be deemed to be
the person or persons surviving Shank in the first of the following classes in
which there is a survivor:
(a) Shank's Surviving Spouse;
(b) Shank's children, except that if any of the children predecease
Shank but leave issue surviving,.then such issue shall take by right of
representation the share their parent would have taken if living;
(c) Shank's estate.
ARTICLE VI
----------
ADMINISTRATION
6.1 Committee Duties. This Agreement shall be supervised by the
-----------------
Committee. The Committee shall have the full power and authority in its
discretion to make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Agreement and decide or resolve any
and all questions, including interpretation of this Agreement, as may arise in
connection with the Agreement. A majority vote of the Committee members shall
control any decision.
6.2 Administrator. The Administrator shall direct the day-to-day
--------------
administration of the Agreement and shall act as agent of the Committee in the
operation of the Agreement.
6.3 Agents. The Committee may, from time to time, employ other agents
-------
and delegate to them such administrative duties as it sees fit, and may from
time to time consult with counsel who may be counsel to LS&CO.
6.4 Binding Effect on Decisions. The decision or action of the
----------------------------
Committee in respect of any question arising out of or in connection with the
administration, interpretation and application of the Agreement and the rules
and regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest hereunder.
6.5 Indemnity of Committee. LS&CO. shall indemnify and hold harmless
-----------------------
the members of the Committee and the Administrator against any and all claims,
loss, damage, expense or liability arising from any action or failure to act
with respect to the Agreement, except in the case of gross negligence or willful
misconduct.
ARTICLE VII
-----------
CLAIMS PROCEDURE
7.1 Claim. Any person claiming a benefit, requesting an interpretation
------
or
4
<PAGE>
ruling under the Agreement, or requesting information under the Agreement
shall present the request in writing to the Administrator, which shall respond
in writing within 30 days.
7.2 Denial of Claim. If the claim or request is denied, the written
----------------
notice of denial shall state:
(a) The reason for denial, with specific reference to the
Agreement provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the claim review procedure.
7.3 Review of Claim. Any person whose claim or request is denied or who
----------------
has not received a response within 30 days may request review by notice given in
writing to the Committee. The claim or request shall be reviewed by the
Committee who may, but shall not be required to, grant the claimant a hearing.
On review, the claimant may have representation, examine pertinent documents,
and submit issues and comments in writing.
7.4 Final Decision. The decision on review shall normally be made
---------------
within 60 days. If an extension of time is required for a hearing or other
special circumstances, the claimant shall be notified and the time limit shall
be 120 days. The decision shall be in writing and shall state the reason and the
relevant Agreement provisions. All decisions on review shall be final and bind
all parties concerned.
ARTICLE VIII
------------
FORFEITURE
The Supplemental Benefit payable to or with respect to Shank hereunder
shall be forfeited if Shank's employment with LS&CO. or an Affiliated Company is
terminated due to misconduct as that term is defined in Section 2.42 of the
Qualified Plan.
ARTICLE IX
----------
MISCELLANEOUS
9.1 Termination Suspension or Amendment of Agreement. This Agreement
-------------------------------------------------
may only be terminated or suspended by a written agreement between Shank and
LS&CO.
9.2 Funding. The Agreement at all times shall be entirely unfunded and
--------
no provision shall at any time be made with respect to segregating any assets of
LS&CO. for payment of any benefits hereunder. In addition, this Agreement is
intended to be an unfunded arrangement for purposes of the Employee Retirement
Income Security Act of
5
<PAGE>
1974, as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended,
and is maintained primarily to provide deferred compensation benefits for a
member of a select group of management or highly compensated employees for
purposes of ERISA. Neither Shank, nor his Surviving Spouse or beneficiary or any
other person shall have any interest in any particular assets of LS&CO. by
reason of the right to receive a benefit under the Agreement.
9.3 Unsecured General Contractor. In the event of LS&CO.'s insolvency,
-----------------------------
Shank and his Surviving Spouse, beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interests or claims in any property or
assets of LS&CO., and shall not be beneficiaries of, or have any rights, claims
or interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by LS&CO. In that event, any and all of
LS&CO.'s assets and policies shall be, and remain, the general, unpledged,
unrestricted assets of LS&CO. LS&CO.'s obligation under the Agreement shall be
that of an unfunded and unsecured promise of LS&CO. to pay money in the future.
9.4 Nonassignability. Neither Shank, nor his Surviving Spouse,
-----------------
beneficiary or any other person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt of the amounts, if any
payable hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be unassignable and nontransferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgment, alimony or separate
maintenance owed by Shank, his Spouse or beneficiary or any other person, nor be
transferable by operation of law in the event of Shank's, his Surviving Spouse's
or beneficiary's or any other person's bankruptcy or insolvency.
9.5 Not a Contract of Employment. The terms and conditions of this
-----------------------------
Agreement shall not be deemed to constitute a contract of employment between
LS&CO. and Shank, and Shank (or his Surviving Spouse or beneficiary) shall have
no rights against LS&CO. except as may otherwise be specifically provided
herein. Moreover, nothing in this Agreement shall be deemed to give Shank the
right to be retained in the service of LS&CO. or to interfere with the right of
LS&CO. to discipline or discharge him at any time.
9.6 Protective Provisions. Shank will cooperate with LS&CO. by
----------------------
furnishing any and all information requested by LS&CO., in order to facilitate
the payment of benefits hereunder, and by taking such physical examinations as
LS&CO. may deem necessary and taking such other action as may be requested by
LS&CO.
9.7 Captions. The captions of the articles, sections and paragraphs of
---------
this Agreement are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
9.8 Governing Law. The provisions of this Agreement shall be construed
--------------
and interpreted according to the laws of the State of California.
6
<PAGE>
9.9 Validity. In case any provision of this Agreement shall be held
---------
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Agreement shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.
9.10 Notice. Any notice or filing required or permitted to be given to
-------
the Committee under this Agreement shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail to any member of the
Committee, the Administrator or the Secretary of LS&CO. Such notice shall be
deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or certification.
9.11 Successors. The provisions of this Agreement shall bind and inure
-----------
to the benefit of LS&CO. and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of LS&CO., and successors of any
such corporation or other business entity.
IN WITNESS WHEREOF, this instrument has been executed by Shank and a
duly authorized officer of LS&CO. effective as of January 1, 1998.
LEVI STRAUSS & CO.
By:
----------------------------------------------
Peter A. Jacobi, President
GORDON SHANK
----------------------------------------------
7
<PAGE>
First Amendment to Levi Strauss & Co.
Supplemental Executive Retirement Agreement
With Gordon Shank
WHEREAS, Gordon Shank ("Shank") and Levi Strauss & Co. ("LS&CO.") have
entered into an Agreement, effective as of January 1, 1998 (the "Agreement"),
for the purpose of providing supplemental retirement benefits to Shank if
certain conditions are satisfied; and
WHEREAS, it was the intention of Shank and LS&CO. that benefits under
the Agreement be offset by all other retirement benefits provided to Shank under
arrangements of LS&CO. or any affiliated company, and the Agreement failed to
provide for an offset of benefits under one such arrangement;
NOW, THEREFORE, in consideration of the foregoing, which consideration
Shank and LS&CO. deem to be sufficient, Shank and LS&CO. agree to amend the
Agreement, effective January 1, 1998, as follows:
1. A new Section 2.13 is added to the Plan (and succeeding Sections of
Article II are renumbered accordingly) and shall read as follows:
2.13 "'SUPPLEMENTAL CANADIAN PLAN' means the Levi Strauss &
Co. (Canada Inc. Supplementary Executive Retirement Plan."
2. Section 3(ii) is amended to read as follows:
"(ii) the sum of the actual benefit payable to him
under the Qualified Plan (at such time and in such manner) and
the Actuarial Equivalent of the actual benefit payable to him
(calculated as if it were paid at such time and in such
manner) under the Canadian Plan and the Supplemental Canadian
Plan."
3. In all other respects, the provisions of the Agreement shall remain
in full force and effect.
Signed this day of , 1998.
------- ----------------
GORDON SHANK LEVI STRAUSS & CO.
By:
------------------------- --------------------------------
Peter A. Jacobi, President
8
<PAGE>
EXHIBIT 10.35
INDEMNIFICATION AGREEMENT
-------------------------
INDEMNIFICATION AGREEMENT (the "Agreement") between Levi Strauss Associates
Inc., a Delaware corporation (the "Company"), and [NAME], a director of the
Company (the "Indemnitee"), dated as of November 30, 1995.
WHEREAS, the Indemnitee has agreed to serve on a special committee of the
Company's Board of Directors (the "Special Committee") to be formed on November
30, 1995 for the purpose of evaluating an acquisition proposal from certain
shareholders of the company.
WHEREAS, the By-Laws of the Company provide for certain indemnification of
the officers and directors of the Company;
NOW THEREFORE, in consideration of the Indemnitee's agreement to serve on
the Special Committee and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company has agreed to the
covenants set forth herein for the purpose of further securing to the Indemnitee
the indemnification provided by the By-Laws of the Company:
Section 1. In the event that the Indemnitee was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that the Indemnitee is or
was serving at the request of the Company on the Special Committee, whether the
basis of such proceeding is alleged action in an official capacity as a member
of the Special Committee or in any other capacity while serving as a member of
the Special Committee, the Indemnitee shall be indemnified and held harmless by
the Company to the fullest extent authorized by the General Corporation Law of
the State of Delaware (the "DGCL"), as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
Delaware law permitted the Company to provide prior to such amendment), against
all expense, liability and loss (including attorneys' fees, judgments, fines,
Employee Retirement and Income Security Act excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by the
Indemnitee in connection therewith and such indemnification shall continue as to
the Indemnitee after the Indemnitee has ceased to be a member of the Special
Committee and shall inure to the benefit of the Indemnitee's heirs, executors,
administrators, conservators and guardians; provided, however, that, except as
-------- -------
provided in Section 2 hereof with respect to proceedings to enforce rights to
indemnification, the Company shall indemnify the Indemnitee in connection with a
proceeding (or part thereof) initiated by the Indemnitee only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Company. The
right to indemnification conferred hereunder shall be a contract right and shall
include the right to be paid by the Company the expenses incurred in defending
any such proceeding in advance of its final
<PAGE>
disposition (hereinafter in "advancement of expenses"); provided, however, that,
-------- -------
if the DGCL requires an advancement of expenses incurred by the Indemnitee in
his or her capacity as a member of the Special Committee to be made in advance
of the final disposition of a proceeding, such advancement of expenses shall be
made only upon delivery to the Company of an undertaking (hereinafter an
"undertaking"), by or on behalf of the Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by a final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication"),
that the Indemnitee is not entitled to be indemnified for such expenses under
this Agreement or otherwise.
Section 2. If a claim under Section 1 of this Agreement is not paid in
full by the Company within sixty days after a written claim has been received by
the Company, the Indemnitee may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim. If successful in whole or in
part in any such suit or in a suit brought by the Company seeking to recover an
advancement of expenses, the Indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (I) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the Indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit by the Company to recover an
advancement of expenses pursuant to the terms of an undertaking, the Company
shall be entitled to recover such expenses upon a final adjudication that the
Indemnitee has not met the applicable standard of conduct set forth in the DGCL.
Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the Indemnitee is
proper in the circumstances because the Indemnitee has met the applicable
standard if conduct set forth in the DGCL, nor an actual determination by the
Company (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall be a defense to the suit or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
Section 3. The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition conferred
in this Agreement shall not be exclusive of any other right which the Indemnitee
may have or hereafter acquire under any statute, provision of the Company's
Restated Certificate of Incorporation or By-Laws, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. In the event that the Company maintains insurance to protect
itself and any director or officer of the Company against any expense, liability
or loss, such as insurance shall cover the Indemnitee to at least the same
extent as any other director or officer of the Company.
Section 5. The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition conferred
in this Agreement is a contractual right and shall not be altered or abrogated
in any manner adverse to the Indemnitee by virtue of amendments to the Company's
Restated Certificate of Incorporation or By-Laws, or applicable law.
<PAGE>
IN WITNESS WHEREOF, the Company and the Indemnitee have executed this
Indemnification Agreement I duplicate on the day and year first above written.
LEVI STRAUSS ASSOCIATES INC.
By: __________________________
Name: Robert D. Haas
Title: Chairman and
Chief Executive Officer
______________________________
[NAME]
(Indemnitee)
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
Ratio of Earnings to Fixed Charges
For Fiscal Years Ended 1995 - 1999 and
For Three Months Ended 2/27/00 and 2/28/99
(000's)
Fiscal Year Ended Three Months Ended
11/28/1999 11/29/1998 11/30/1997 11/24/1996 11/26/1995 2/27/2000 2/28/1999
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest:
Interest expense (includes amortization
of debt discount and costs) $182,978 $178,035 $212,358 $145,234 $ 15,659 $ 56,782 $ 43,157
Capitalized debt costs 15,729 27,447 25,221 33,941 0 33,694 35,486
Interest factor in rental expense 28,700 26,733 32,600 29,733 31,000 5,994 6,377
---------------------------------------------------------------------------------
Total fixed charges 227,407 232,215 270,179 208,908 46,659 96,470 85,020
---------------------------------------------------------------------------------
Earnings:
Income (loss) before income taxes 8,499 162,700 184,281 619,906 1,034,837 100,243 (376,571)
Add: Fixed charges 227,407 232,215 270,179 208,908 46,659 96,470 85,020
Subtract: Capitalized debt costs (15,729) (27,447) (25,221) (33,941) 0 (33,694) (35,486)
----------------------------------------------------------------------------------
Total Earnings 220,177 367,468 429,239 794,873 1,081,496 163,019 (327,037)
----------------------------------------------------------------------------------
Ratio of Earnings to Fixed Charges 1.0 1.6 1.6 3.8 23.2 1.7 -
</TABLE>
In computing the ratio of earnings to fixed charges: (1) earnings have been
based on income from continuing operations before income taxes and fixed charges
(exclusive of capitalized debt costs) and (2) fixed charges consist of interest
and debt discount and cost expenses (including amounts capitalized) and the
estimated interest portion of rents.
For the three months ended February 28, 1999, earnings were insufficient to
cover total fixed changes.
<PAGE>
EXHIBIT 21
LEVI STRAUSS & CO.
SUBSIDIARIES AS OF MARCH 28, 2000
Battery Street Enterprises, Inc.
LS Reconveyance Corporation
Levi Strauss (Geneva) S.A.
Levi Strauss (Hong Kong) Limited
Levi Strauss (India) Private Limited
Levi Strauss Brasil Representacoes Ltda
Levi Strauss Dominicana S.A.
Levi Strauss Eximco (Asia) Pte Ltd
Levi Strauss Eximco Chile Limitada
Levi Strauss Eximco de Columbia Limitada
Levi Strauss Financial Center Corporation
Levi Strauss Funding Corp.
Levi Strauss Foreign Sales Corporation
Levi Strauss Global Fulfillment Services, Inc.
Levi Strauss International
Caliman Company Limited
Levi Strauss & Co. (Canada) Inc.
Levi Strauss & Co. Europe S.A.
Casualwear Direct B.V.
Levi Strauss & Co. Financial Services
Levi Strauss (Asia), Ltd.
Levi Strauss (Australia) Pty. Ltd.
Levi Strauss (Far East) Ltd.
Levi Strauss do Brasil Industria e Comercio Ltda
PT Levi Strauss Indonesia
Levi Strauss (Malaysia) Sdn. Bhd.
Levi Strauss (New Zealand) Ltd.
Levi Strauss (Phil.) Inc. II
Levi Strauss (Philippines) Inc.
Levi Strauss (Suisse) S.A.
Levi Strauss (U.K.) Limited
Farvista Limited
Levi Strauss Pension Trustee Ltd.
Middlebrook Ltd.
Retailindex Limited
Levi Strauss Asia Pacific Division Pte Ltd
Levi Strauss Belgium, S.A.
Levi Strauss Chile Limitada
Levi Strauss Continental S.A.
Paris - O.L.S.S.A.R.L.
Levi Strauss de Espana S.A.
<PAGE>
Levi Strauss de Mexico, S.A. de C.V.
Levi Strauss France, S.A.
Levi Strauss Germany GmbH
Levi Strauss Global Operations, Inc.
Levi Strauss Nederland B.V.
Dockers Europe BV
Casual Wear Co. A/S
Dockers Portugal Clothing, Lda
Levi Strauss Hellas S.A.
Levi Strauss Polska Sp.zo.o.
Levi Strauss Praha, Spol.Sro. (Levi Strauss Prague, Ltd)
Levi Strauss South Africa (Pty.) Ltd.
Levi Strauss Hungary Trading Ltd.
Levi Strauss Instanbul Konfeksiyon Sanayi ve Ticaret A.S.
Levi Strauss Italia, Srl
Flagstore Srl
Levi Strauss Korea Ltd.
Levi Strauss Latin America, Inc.
Levi Strauss Latin America, Inc. & CIA
Levi Strauss Norway, A/S
Buksehjornet A/S (Joint Stock Company)
Levi Strauss, U.S.A., LLC
Levi Strauss-Argentina, LLC
Saddleman South America, Inc.
Suomen Levi Strauss OY
Levi Strauss Japan K.K.
Levi's Only Stores, Inc.
LDJV, Inc.
Majestic Insurance International Ltd.
Miratrix, S.A.
NF Industries, Inc.
Levi Strauss Funding, LLC
<PAGE>
EXHIBIT 23.1
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement.
Arthur Andersen LLP
San Francisco, California
May 3, 2000
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-28-1999
<PERIOD-END> NOV-28-1999
<CASH> 192,816
<SECURITIES> 0
<RECEIVABLES> 789,290
<ALLOWANCES> 30,017
<INVENTORY> 671,487
<CURRENT-ASSETS> 2,166,743
<PP&E> 1,233,463
<DEPRECIATION> 548,437
<TOTAL-ASSETS> 3,665,517
<CURRENT-LIABILITIES> 1,367,116
<BONDS> 2,430,617
0
0
<COMMON> 373
<OTHER-SE> (1,288,935)
<TOTAL-LIABILITY-AND-EQUITY> 3,665,517
<SALES> 5,139,458
<TOTAL-REVENUES> 5,139,458
<CGS> 3,180,845
<TOTAL-COSTS> 1,778,259
<OTHER-EXPENSES> (16,519)
<LOSS-PROVISION> 5,396
<INTEREST-EXPENSE> 182,978
<INCOME-PRETAX> 8,499
<INCOME-TAX> 3,144
<INCOME-CONTINUING> 5,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,355
<EPS-BASIC> 0.14
<EPS-DILUTED> 0.14
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-27-2000
<PERIOD-END> FEB-27-2000
<CASH> 105,959
<SECURITIES> 0
<RECEIVABLES> 662,795
<ALLOWANCES> 29,264
<INVENTORY> 629,494
<CURRENT-ASSETS> 1,875,170
<PP&E> 1,135,238
<DEPRECIATION> 521,866
<TOTAL-ASSETS> 3,303,383
<CURRENT-LIABILITIES> 1,209,160
<BONDS> 2,173,337
0
0
<COMMON> 373
<OTHER-SE> (1,219,945)
<TOTAL-LIABILITY-AND-EQUITY> 3,303,383
<SALES> 1,082,437
<TOTAL-REVENUES> 1,082,437
<CGS> 632,442
<TOTAL-COSTS> 320,897
<OTHER-EXPENSES> (29,141)
<LOSS-PROVISION> 1,214
<INTEREST-EXPENSE> 56,782
<INCOME-PRETAX> 100,243
<INCOME-TAX> 35,084
<INCOME-CONTINUING> 65,159
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,159
<EPS-BASIC> 1.75
<EPS-DILUTED> (6.36)
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