EXHIBIT 10.32 (B)
SECURITY AGREEMENT
AGREEMENT dated as of March 11, 1997 among IOMEGA CORPORATION (with its
successors, the Borrower), CITICORP USA, INC., as Security Agent (with its
successors in such capacity, the Security Agent), and XXXXX FARGO BANK,
N.A., as agent of the Secured Parties referred to below for purposes of
administering the Collateral Account referred to below (with its successors
in such capacity, the Concentration Bank).
W I T N E S S E T H :
WHEREAS, the Borrower, certain banks (the Banks), Citibank, N.A., as
Administrative Agent (the Administrative Agent) and Xxxxxx Guaranty Trust
Company of New York, as Documentation Agent (together with the Administrative
Agent, the Bank Agents), are parties to a Credit Agreement of even date
herewith (as the same may be amended from time to time, the Credit Agreement);
WHEREAS, in order to induce said Banks and Bank Agents to enter into the
Credit Agreement, the Borrower has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement and the Notes issued pursuant thereto;
and
WHEREAS, the Banks and the Bank Agents have appointed Citicorp USA, Inc.,
their Security Agent hereunder;
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. Definitions.
Terms defined in the Credit Agreement and not otherwise defined herein have,
as used herein, the respective meanings provided for therein. The following
additional terms, as used herein, have the following respective meanings:
Collateral has the meaning set forth in Section 3.
Collateral Account has the meaning set forth in Section 5.
Instruments means all instruments, chattel paper or letters of credit (each
as defined in the UCC) evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of,
any of the Receivables, including (but not limited to) promissory notes,
drafts, bills of exchange and trade acceptances evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Receivables, now owned or hereafter
acquired by the Borrower.
Liquid Investments has the meaning set forth in Section 5(D).
Lockbox Banks means each bank which has signed a Lockbox Letter substantially
in the form of Annex C hereto or has entered into the other arrangements
described in Section 5(B).
Perfection Certificate means a certificate substantially in the form of Annex
A, completed and supplemented with the schedules and attachments contemplated
thereby to the satisfaction of the Security Agent, and duly executed by the
chief financial officer and the chief legal officer of the Borrower.
Proceeds means all cash and other proceeds of, and all other profits or
receipts, in whatever form, arising from the collection, sale, exchange,
assignment or other disposition of, or realization upon, Collateral,
including, without limitation, all claims of the Borrower against third
parties for loss of, damage to or destruction of, or for proceeds payable
under any Collateral, whether now existing or hereafter arising.
Receivables means, whether now owned or hereafter acquired by the Borrower,
(i) all accounts (as defined in Article 9-106 of the UCC) and shall also mean
and include all accounts receivable, contract rights, chattel paper,
instruments, general intangibles and other rights of the Borrower to receive
a payment of money or other consideration, in each case which result from
transactions with account debtors located in the United States or Canada or
are evidenced by invoices or other documents issued in the name of or held
by the Borrower in the United States or Canada, and (ii) any and all rights of
the Borrower (x) with respect to any collateral securing any Receivable
described in clause (i) above, (y) under any security agreement (as defined
in the UCC) securing any Receivable described in clause (i) above or (z)
assertable against any Person other than the related account debtor, under
a guaranty, warranty or otherwise, in connection with any Receivable described
in clause (i) above or any collateral securing any Receivable described in
clause (i) above.
Secured Obligations means (a) all principal of and interest on any Loan
under, or any Note issued pursuant to, the Credit Agreement, (b) all other
amounts payable by the Borrower hereunder or under the Credit Agreement and
(c) any renewals or extensions of any of the foregoing. The Secured
Obligations shall include, without limitation, any interest, costs, fees and
expenses which accrue on or with respect to any of the foregoing, whether
before or after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Borrower;
provided that, for the purposes of payments and allocations pursuant to
Section 9 after the commencement of any case, action or other proceeding
relating to the bankruptcy, insolvency or reorganization of the Borrower,
each Secured Obligation shall be deemed to include interest accrued thereon
after the commencement of such proceeding only to the extent that such
interest is allowed in such proceeding (pursuant to Section 506(b) of the
United States Bankruptcy Code or otherwise).
Secured Parties means the Security Agent, the Concentration Bank, the Bank
Agents and the Banks.
Security Interests means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
UCC means the Uniform Commercial Code as in effect on the date hereof in the
State of New York; provided that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or non-perfection of any of the
Security Interests in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, UCC means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection
or non-perfection.
SECTION 2. Representations, Warranties and Covenants.
The Borrower represents, warrants and covenants as follows:
(A) The Borrower has good and marketable title to all of the Collateral, free
and clear of any Liens. The Borrower has taken all actions necessary under
the UCC to perfect its interest in any Receivables purchased or otherwise
acquired by it, as against its assignors and creditors of its assignors.
(B) The Borrower has not performed any acts which might prevent the Security
Agent from enforcing any of the terms of this Agreement or which would limit
the Security Agent in any such enforcement. No registration, recordation or
filing with any governmental body, agency or official is required in
connection with the execution or delivery of this Agreement. Other than
financing statements or other similar or equivalent documents or instruments
with respect to the Security Interests, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering
all or any part of the Collateral is on file or of record in any jurisdiction
in which such filing or recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person (other than the
Borrower) asserting any claim thereto or security interest therein, except
that the Security Agent, the Concentration Bank or any designee of the
Security Agent may have possession of Collateral as contemplated hereby.
(C) Not less than five Domestic Business Days prior to the date of the first
Borrowing under the Credit Agreement, the Borrower will deliver the
Perfection Certificate to the Security Agent. The information set forth
therein will be correct and complete as of the dates referred to therein.
Not later than 60 days following the date of the first Borrowing, the
Borrower will furnish to the Security Agent file search reports from each
UCC filing office set forth in Schedule 7 to the Perfection Certificate
confirming the filing information set forth in such Schedule.
(D) The Security Interests constitute valid security interests under the UCC
securing the Secured Obligations. When UCC financing statements in the form
specified in Schedule 6(A) to the Perfection Certificate have been filed in
the offices specified in the Perfection Certificate, the Security Interests
will constitute perfected security interests in the Collateral to the extent
that a security interest therein may be perfected by filing pursuant to the
UCC, prior to all other Liens and rights of others therein.
SECTION 3. The Security Interests.
(A) In order to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to secure the
performance of all of the obligations of the Borrower hereunder and under
the Credit Agreement, the Borrower hereby grants to the Security Agent, for
the ratable benefit of the Secured Parties, a continuing security interest
in and to all of the following property of the Borrower, whether now owned
or existing or hereafter acquired or arising and regardless of where
located (all being collectively referred to as the Collateral):
(1) Receivables;
(2) Instruments;
(3) The Collateral Account, all cash deposited therein from time to time,
the Liquid Investments made pursuant to Section 5(D) and other monies and
property of any kind of the Borrower in the possession or under the control
of the Security Agent;
(4) All books and records (including, without limitation, customer lists,
credit files, computer programs, printouts and other computer materials and
records) of the Borrower pertaining to any of the Collateral described in
Clauses 1 through 3 hereof; and
(5) All Proceeds of all or any of the Collateral described in Clauses 1
through 4 hereof.
(B) The Security Interests are granted as security only and shall not subject
the Security Agent or any other Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of the Borrower with respect to
any of the Collateral or any transaction in connection therewith.
SECTION 4. Further Assurances; Covenants.
(A) (I) The Borrower will not change (i) the location of its chief executive
office or chief place of business or (ii) the locations where it keeps or
holds any Collateral or any records relating to any Collateral from the
applicable location described in the Perfection Certificate unless it shall
have (a) given the Security Agent at least 30 days' prior notice thereof and
(b) delivered an opinion of counsel with respect thereto in accordance with
Section 4(J). The Borrower shall not in any event change the location of
any Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(II) The Borrower will not change its name, identity or corporate structure
in any manner unless it shall have (i) given the Security Agent at least 30
days' prior notice thereof and (ii) delivered an opinion of counsel with
respect thereto in accordance with Section 4(J).
(B) The Borrower will, from time to time, at its expense, execute, deliver,
file and record any statement, assignment, instrument, document, agreement
or other paper and take any other action (including, without limitation, any
filings of financing or continuation statements under the UCC) that from time
to time may be necessary or desirable, or that the Security Agent may
request, under the laws of the United States of America or Canada or any
State, provincial or local jurisdiction located therein, in order to create,
preserve, perfect, confirm or validate the Security Interests or to enable
the Secured Parties to obtain the full benefits of this Agreement, or to
enable the Security Agent to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the Collateral. To the extent
permitted by applicable law, the Borrower hereby authorizes the Security
Agent to execute and file financing statements or continuation statements
without the Borrower's signature appearing thereon. The Borrower agrees
that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
The Borrower shall pay the costs of, or incidental to, any recording or
filing of any financing or continuation statements concerning the Collateral.
(C) If any Collateral is at any time in the possession or control of any of
the Borrower's agents, the Borrower shall notify such agents of the Security
Interests created hereby and to hold all such Collateral for the Security
Agent's account subject to the Security Agent's instructions.
(D) The Borrower shall keep full and accurate books and records consistent
with GAAP relating to the Collateral, and stamp or otherwise xxxx such books
and records in such manner as the Security Agent or the Required Banks may
reasonably require in order to reflect the Security Interests.
(E) The Borrower will immediately deliver and pledge each Instrument to the
Security Agent, appropriately endorsed to the Security Agent; provided that
so long as no Event of Default shall have occurred and be continuing, the
Borrower may retain for collection in the ordinary course any Instruments
(other than checks and drafts constituting payments in respect of Receivables,
as to which the provisions of Section 5(B) shall apply) received by it in the
ordinary course of business and the Security Agent shall, promptly upon
request of the Borrower, make appropriate arrangements for making any other
Instrument pledged by the Borrower available to it for purposes of
presentation, collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate to the Security Agent, against trust receipt
or like document).
(F) The Borrower shall use its best efforts to cause to be collected from its
account debtors, as and when due, any and all amounts owing under or on
account of each Receivable and Instrument (including, without limitation,
Receivables which are delinquent, such Receivables to be collected in
accordance with lawful collection procedures) and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding
balance of the related Receivable. Subject to the rights of the Security
Agent and the other Secured Parties hereunder if an Event of Default shall
have occurred and be continuing, the Borrower may allow in the ordinary
course of business as adjustments to amounts owing under its Receivables or
Instruments (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Borrower finds
appropriate in accordance with sound business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise, all in accordance
with the Borrower's ordinary course of business consistent with its historical
collection practices. The costs and expenses (including, without limitation,
attorney's fees) of collection, whether incurred by the Borrower or the
Security Agent, shall be borne by the Borrower.
(G) Upon the occurrence and during the continuance of any Event of Default,
upon request of the Required Banks through the Security Agent, the Borrower
will promptly notify (and the Borrower hereby authorizes the Security Agent
so to notify) each account debtor in respect of any Receivable or Instrument
that such Collateral has been assigned to the Security Agent hereunder, and
that any payments due or to become due in respect of such Collateral are to
be made directly to the Security Agent or its designee.
(H) Without the prior written consent of the Security Agent, the Borrower
will not (a) sell, exchange, assign or otherwise dispose of any Collateral
or (b) create, incur or suffer to exist any Lien with respect to any
Collateral (other than the Security Interests) or with respect to any
inventories now owned or hereafter acquired by the Borrower (other than
Liens described in clause (g) of Section 5.09 of the Credit Agreement, so
long as such Liens have not given rise to an Event of Default).
(I) The Borrower will, promptly upon request, provide to the Security Agent
all information and evidence it may reasonably request concerning the
Collateral, and in particular concerning the Receivables, to enable the
Security Agent to enforce the provisions of this Agreement. The Borrower
will permit the representatives of the Security Agent to call at its places
of business from time to time and at any reasonable time during business
hours (such visits to be conducted so as not to disrupt the business and
affairs of the Borrower), and, without hindrance or delay but with prior
notice, to inspect the Collateral and, no more than once each Fiscal Year
unless an Event of Default has occurred and is continuing, to inspect,
audit, check and make extracts from and copies of the books, records,
journals, orders, receipts and correspondence which relate to the Collateral
at the Borrower's cost and expense without undue interference with the
Borrower's operations. The Borrower will provide each Secured Party with
such information as to the Collateral as such Secured Party may reasonably
request.
(J) Not more than six months nor less than 30 days prior to (i) each date
on which the Borrower proposes to take any action contemplated by Section
4(A)(I) or (II) and (ii) each anniversary of the date of the first Borrowing
during the term of the Credit Agreement, the Borrower shall, at its cost and
expense, cause to be delivered to the Secured Parties an opinion of counsel
satisfactory to the Security Agent substantially in the form of Annex B
hereto or in such other form as is reasonably acceptable to the Secured
Parties and their counsel, to the effect that all financing statements and
amendments or supplements thereto, continuation statements and other
documents required to be recorded or filed in order to perfect and protect
the Security Interests, for a period, specified in such opinion, continuing
until a date not earlier than eighteen months from the date of such opinion,
against all creditors of and purchasers from the Borrower have been filed
in each filing office necessary for such purpose. Each such opinion shall
be accompanied by a certificate of the Borrower to the effect that all
filing fees and taxes, if any, payable in connection with such filings have
been paid in full.
SECTION 5. Collateral Account.
(A) There is hereby established with the Concentration Bank a cash collateral
account designated Collateral Account Xx. 0000000000 xx Xxxxxxxx XXX, Inc.,
as Security Agent under the Security Agreement dated as of March 11, 1997
among Iomega Corporation, Citicorp USA, Inc. and Xxxxx Fargo Bank, N.A. (the
Collateral Account) in the name and under the control of the Security Agent
into which there shall be deposited from time to time and as they become
available the cash proceeds of the Collateral required to be delivered to the
Concentration Bank or the Security Agent pursuant to subsection (B) of this
Section 5 or any other provision of this Agreement. Any income received by
the Concentration Bank or the Security Agent with respect to the balance
from time to time standing to the credit of the Collateral Account, including
any interest or capital gains on Liquid Investments, shall remain, or be
deposited, in the Collateral Account. All right, title and interest in and
to the cash amounts on deposit from time to time in the Collateral Account
together with any Liquid Investments from time to time made pursuant to
subsection (D) of this Section shall vest in the Security Agent, shall
constitute part of the Collateral hereunder and shall not constitute payment
of the Secured Obligations until applied thereto as hereinafter provided.
(B) The Borrower shall instruct all account debtors and other Persons
obligated in respect of all Receivables to make all payments in respect of
the Receivables either (i) directly to the Concentration Bank (by electronic
transfer to the Collateral Account or by remittance to a post office box
which shall be in the name and under the control of the Concentration Bank)
or (ii) to one or more other banks in any state (other than Louisiana) in
the United States (by remittance to a post office box which shall be in the
name and under the control of such bank) under a Lockbox Letter substantially
in the form of Annex C hereto duly executed by the Borrower and such bank or
under other arrangements, in form and substance satisfactory to the Security
Agent, pursuant to which the Borrower shall have irrevocably instructed such
other bank (and such other bank shall have agreed) to remit all proceeds of
such payments directly to the Concentration Bank for deposit into the
Collateral Account or as the Security Agent may otherwise instruct such bank
(it being understood that the Security Agent may not otherwise instruct such
bank unless an Event of Default has occurred and is continuing or the
Concentration Bank or the Collateral Account changes). All such payments
made to the Concentration Bank or the Security Agent shall be deposited in
the Collateral Account. In addition to the foregoing, the Borrower agrees
that if the proceeds of any Collateral hereunder (including the payments made
in respect of Receivables) shall be received by it, the Borrower shall as
promptly as possible deposit such proceeds into the Collateral Account. Until
so deposited, all such proceeds shall be held in trust by the Borrower for
and as the property of the Secured Parties and shall not be commingled with
any other funds or property of the Borrower.
(C) The balance from time to time standing to the credit of the Collateral
Account shall, except upon the occurrence and continuation of an Event of
Default, be distributed without set-off (except for any set-off for amounts
owed under this Agreement or the Credit Agreement) to the Borrower upon the
order of the Borrower. If immediately available cash on deposit in the
Collateral Account is not sufficient to make any distribution to the Borrower
referred to in the previous sentence of this Section 5(C), the Security Agent
shall liquidate as promptly as practicable Liquid Investments as required to
obtain sufficient cash to make such distribution and, notwithstanding any
other provision of this Section 5, such distribution shall not be made until
such liquidation has taken place. Upon the occurrence and continuation of an
Event of Default, the Security Agent shall, if so instructed by the Required
Banks, apply or cause to be applied (subject to collection) any or all of the
balance from time to time standing to the credit of the Collateral Account in
the manner specified in Section 9.
(D) Amounts on deposit in the Collateral Account shall be invested and re-
invested from time to time in such Liquid Investments as the Borrower shall
from time to time determine, which Liquid Investments shall be held in the
name and be under the control of the Security Agent; provided that, if an
Event of Default has occurred and is continuing, the Security Agent shall, if
so instructed by the Required Banks, liquidate any such Liquid Investments
and apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 9. For the purposes
hereof, Liquid Investments means any investment in (i) direct obligations
of the United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated in the
highest grade or, in the case of commercial paper issued by the Agent, in any
investment grade, by a nationally recognized credit rating agency or (iii)
time deposits with, including certificates of deposit issued by, the Security
Agent or any office located in the United State of any bank or trust company
which is organized or licensed under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $1,000,000,000; provided that (i) each Liquid Investment shall mature
within 30 days after it is acquired by the Security Agent and (ii) in order
to provide the Security Agent, for the benefit of the Secured Parties, with
a perfected security interest therein, each Liquid Investment shall be either:
(a) evidenced by negotiable certificates or instruments, or if non-negotiable
then issued in the name of the Security Agent, which (together with any
appropriate instruments of transfer) are delivered to, and held by, the
Security Agent or an agent thereof (which shall not be the Borrower or any of
its Affiliates) in the State of New York; or
(b) in book-entry form and issued by the United States and subject to pledge
under applicable state law and Treasury regulations and as to which (in the
opinion of counsel to the Security Agent) appropriate measures shall have been
taken for perfection of the Security Interests.
SECTION 6. General Authority.
The Borrower hereby irrevocably appoints the Security Agent its true and
lawful attorney, with full power of substitution, in the name of the Borrower,
the Security Agent, the Bank Agents, the Banks or otherwise, for the sole use
and benefit of the Secured Parties, but at the Borrower's expense, to the
extent permitted by law to exercise, at any time and from time to time while
an Event of Default has occurred and is continuing, all or any of the
following powers with respect to all or any of the Collateral:
(i) to demand, xxx for, collect, receive and give acquittance for any and
all monies due or to become due thereon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds or avails thereof, as fully and effectually as if the Security
Agent were the absolute owner thereof; and
(iv) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto;
provided that the Security Agent shall give the Borrower not less than ten
days' prior notice of the time and place of any sale or other intended
disposition of any of the Collateral except any Collateral which threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. The Security Agent and the Borrower agree that such notice
constitutes reasonable notification within the meaning of Section 9-504(3)
of the UCC.
SECTION 7. Remedies upon Event of Default.
(A) If any Event of Default has occurred and is continuing, the Security
Agent may exercise on behalf of the Secured Parties all rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, the Security Agent may, without being
required to give any notice, except as herein provided or as may be required
by mandatory provisions of law, (i) withdraw all cash and Liquid Investments
in the Collateral Account and apply such monies, Liquid Investments and other
cash, if any, then held by it as Collateral as specified in Section 9 and
(ii) if there shall be no such monies, Liquid Investments or cash or if
such monies, Liquid Investments or cash shall be insufficient to pay all
the Secured Obligations in full, sell the Collateral or any part thereof at
public or private sale, for cash, upon credit or for future delivery, and
at such price or prices as the Security Agent may deem satisfactory. The
Security Agent or any other Secured Party may be the purchaser of any or
all of the Collateral so sold and thereafter hold the same, absolutely and
free from any right or claim of any kind whatsoever. The Borrower will
execute and deliver such documents and take such other action as the
Security Agent deems necessary or advisable in order that any such sale may
be made in compliance with law. Upon any such sale the Security Agent shall
have the right to deliver, assign and transfer to the purchaser thereof the
Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely and free from any claim or right of
any kind whatsoever, including any equity or right of redemption of the
Borrower which may be waived, and the Borrower, to the extent permitted by
law, hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter adopted.
The notice (if any) of such sale required by Section 6 shall (1) in the
case of a public sale, state the time and place fixed for such sale, and
(2) in the case of a private sale, state the day after which such sale may
be consummated. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Security
Agent may fix in the notice of such sale. At any such sale, the Collateral
may be sold in one lot as an entirety or in separate parcels, as the
Security Agent may determine. The Security Agent shall not be obligated
to make any such sale pursuant to any such notice. The Security Agent may,
without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place
to which the same may be so adjourned. In the case of any sale of all or
any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Security Agent until the selling
price is paid by the purchaser thereof, but the Security Agent shall not
incur any liability in the case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in the case of any such failure,
such Collateral may again be sold upon like notice. The Security Agent,
instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
(B) For the purpose of enforcing any and all rights and remedies under this
Agreement the Security Agent may (i) require the Borrower to, and the Borrower
agrees that it will, at its expense and upon the request of the Security
Agent, forthwith assemble all or any part of the Collateral as directed by
the Security Agent and make it available at a place designated by the Security
Agent which is, in its opinion, reasonably convenient to the Security Agent
and the Borrower or otherwise, (ii) to the extent permitted by applicable law,
enter, with or without process of law and without breach of the peace, any
premise where any of the Collateral is or may be located, and without charge
or liability to it seize and remove such Collateral from such premises and
(iii) have access to and use the Borrower=s books and records relating to the
Collateral. The Security Agent may also render any or all of the Collateral
unusable at the Borrower=s premises and may dispose of such Collateral on such
premises without liability for rent or costs.
SECTION 8. Limitation on Duty of Security Agent in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the Security
Agent shall have no duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of it or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Security Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal
to that which it accords its own property and shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
agent or bailee selected by the Security Agent in good faith.
SECTION 9. Application of Proceeds.
Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in the Collateral Account or otherwise held by
the Security Agent shall be applied by the Security Agent in the following
order of priorities:
first, to payment of the expenses of such sale or other realization, including
reasonable compensation to agents of (including, but not limited to, the
Concentration Bank) and counsel for the Security Agent, and all expenses,
liabilities and advances incurred or made by the Security Agent in connection
therewith;
second, to payment of any other unreimbursed expenses for which the Security
Agent or any Bank Agent or Bank is to be reimbursed pursuant to Section 9.03
of the Credit Agreement or Section 11 hereof and unpaid fees owing to the
Security Agent hereunder or to the Bank Agents under the Credit Agreement;
third, to the ratable payment of unpaid principal of the Secured Obligations;
fourth, to the ratable payment of accrued but unpaid interest on the Secured
Obligations in accordance with the provisions of the Credit Agreement;
fifth, to the ratable payment of all other Secured Obligations, until all
Secured Obligations shall have been paid in full; and
finally, to payment to the Borrower or its successors or assigns, or as a
court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
The Security Agent may make distributions hereunder in cash or in kind or,
on a ratable basis, in any combination thereof.
SECTION 10. Concerning the Security Agent and the Concentration Bank.
(A) The Security Agent is authorized to take all such action as is provided
to be taken by it as Security Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including, without limitation, the timing and methods of realization upon
the Collateral) the Security Agent shall act or refrain from acting in
accordance with written instructions from the Required Banks or, in the
absence of such instructions, in accordance with its discretion.
(B) Citicorp USA, Inc. and its affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not the Security Agent
hereunder.
(C) The obligations of the Security Agent hereunder are only those expressly
set forth herein. Without limiting the generality of the foregoing, the
Security Agent shall not be required to take any action with respect to any
Default or Event of Default, except as expressly provided herein.
(D) The Security Agent may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
(E) Neither the Security Agent nor any director, officer, agent, or employee
of the Security Agent shall be liable for any action taken or not taken by it
in connection herewith (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Security Agent, nor any of its affiliates, nor any
of their respective directors, officers, agents or employees, shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement;
(ii) the performance or observance of any of the covenants or agreements of
the Borrower; or (iii) the validity, effectiveness or genuineness of this
Agreement or any instrument or writing furnished in connection herewith. The
Security Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or to be signed
by the proper party or parties The Security Agent shall not be responsible
for the existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security Interests in
any of the Collateral, whether impaired by operation of law or by reason of
any action or omission to act on its part hereunder. The Security Agent shall
have no duty to ascertain or inquire as to the performance or observance of
any of the terms of this Agreement by the Borrower.
(F) Each Bank shall, ratably in accordance with the amount of its Secured
Obligations, indemnify the Security Agent (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as
result from the Security Agent's gross negligence or willful misconduct) that
the Security Agent may suffer or incur in connection with this Agreement or
any action taken or omitted by the Security Agent hereunder or thereunder.
(G) The Security Agent may resign at any time by giving written notice of its
resignation to the other Secured Parties and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Security Agent (a Successor Agent). If no Successor Agent shall have been
so appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Security Agent's giving of notice of
resignation, then the retiring Security Agent may, on behalf of the other
Secured Parties, appoint a Successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $100,000,000.
Upon the acceptance of its appointment as Security Agent hereunder by a
Successor Agent, such Successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Security Agent, and
the retiring Security Agent shall be discharged from its duties and
obligations hereunder. After any retiring Security Agent's resignation
hereunder as Security Agent, the provisions of this Section shall inure to
its benefit as to any actions taken or omitted to be taken by it while it
was Security Agent.
(H) The Concentration Bank is acting hereunder as the agent of the Secured
Parties, and is entitled to the benefits of Sections 8 and 10 of this
Agreement in respect of its activities under this Agreement to the same
extent as if it were the Security Agent.
(I) The Concentration Bank may at any time, by giving written notice to
the Security Agent and the Borrower, and shall, if requested to do so by the
Security Agent, resign its position as the Secured Parties' agent and be
discharged of its responsibilities hereunder, such resignation to be effective
upon the appointment by the Security Agent, with the consent of the Borrower,
of a successor Concentration Bank. If no successor Concentration Bank shall
be appointed and shall have accepted such appointment within 30 days after
the Concentration Bank gives the aforesaid notice of resignation, the
Security Agent may appoint a successor Concentration Bank or apply to any
court of competent jurisdiction to appoint a successor Concentration Bank.
Any successor Concentration Bank shall be a commercial bank organized under
the laws of the United States of America or of any state thereof and having
a combined capital and surplus of at least $100,000,000. Upon the acceptance
of its appointment as Concentration Bank hereunder by a successor
Concentration Bank, such successor Concentration Bank shall thereupon succeed
to and become vested with all the rights and duties of the retiring
Concentration Bank, the Collateral Account shall be transferred to such
successor Concentration Bank, and the retiring Concentration Bank shall be
discharged from its duties and obligations hereunder. After any retiring
Concentration Bank's resignation hereunder the provisions of Sections 8 and
10 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Concentration Bank.
(J) In order to comply with any legal requirement in any jurisdiction, the
Security Agent may at any time appoint another bank or trust company or one
or more other persons, either to act as co-agent or co-agents, jointly with
the Security Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Security Agent,
include provisions for the protection of such co-agent or separate agent
similar to the provisions of this Section 10).
SECTION 11. Fees and Expenses.
If the Borrower fails to comply with the provisions of the Credit Agreement
or this Agreement, and as a result thereof, the value of any Collateral or
the validity, perfection, rank or value of any part of the Security Interests
is thereby diminished or potentially diminished or put at risk, the Security
Agent, if requested by the Required Banks, may, but shall not be required to,
effect such compliance on behalf of the Borrower, and the Borrower shall
reimburse the Security Agent for the costs thereof on demand. All insurance
expenses and all expenses of protecting, storing, warehousing, appraising,
insuring, handling, maintaining, and shipping the Collateral, any and all
excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral, or in respect of periodic
appraisals and inspections of the Collateral to the extent the same may be
requested by the Requested Banks during the continuance of an Event of
Default, or in respect of the sale or other disposition thereof, shall be
borne and paid by the Borrower; and if the Borrower fails to promptly pay
any portion thereof when due, the Security Agent or any Bank may, at its
option, but shall not be required to, pay the same and charge the Borrower's
account therefor, and the Borrower agrees to reimburse the Security Agent or
such Bank therefor on demand. All sums so paid or incurred by the Security
Agent or any other Secured Party for any of the foregoing and any and all
other sums for which the Borrower may become liable hereunder and all costs
and expenses (including reasonable attorneys' fees and expenses and court
costs) reasonably incurred by the Security Agent in enforcing or protecting
the Security Interests or any of their rights or remedies under this
Agreement, shall, together with interest thereon until paid at the rate
applicable to Base Rate Borrowings plus 2%, be additional Secured Obligations
hereunder.
SECTION 12. Termination of Security Interests; Release of Collateral.
Upon the repayment in full of all Secured Obligations and the termination of
the Commitments under the Credit Agreement, the Security Interests shall
terminate and all rights to the Collateral shall revert to the Borrower. At
any time and from time to time prior to such termination of the Security
Interests, the Security Agent may release any of the Collateral with the prior
written consent of the Required Banks; provided that prior to such
termination, the Security Agent may release all or substantially all of the
Collateral (as defined in the Credit Agreement) only with the consent of all
Banks. Upon any such termination of the Security Interests or release of
Collateral, the Security Agent will, at the expense of the Borrower, execute
and deliver to the Borrower such documents as the Borrower shall reasonably
request to evidence the termination of the Security Interests or the release
of such Collateral, as the case may be.
SECTION 13. Notices.
All notices hereunder shall be in writing (including telex, facsimile or
similar writing) and shall be given to the parties hereto at their respective
addresses, facsimile numbers or telex numbers set forth on the signature pages
hereof or at such other addresses, facsimile numbers or telex numbers as the
addressees may hereafter specify for such purpose by notice to the other
parties hereto. Each such notice, request or other communication shall be
effective (i) if given by telex, when transmitted to the telex number referred
to in this Section and the appropriate answerback is received, (ii) if given
by facsimile, when transmitted to the facsimile number referred to in this
Section and confirmation of receipt is received, (iii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address referred to in this Section.
SECTION 14. Waivers, Non-Exclusive Remedies.
No failure on the part of any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by such party of any right under any other Loan Document preclude
any other or further exercise thereof or the exercise of any other right.
The rights in this Agreement and the other Loan Documents are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 15. Successors and Assigns.
This Agreement is for the benefit of the Secured Parties and their successors
and assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Agreement shall be binding on the Borrower and its successors and assigns.
SECTION 16. Changes in Writing.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by the Borrower
and the Security Agent with the consent of the Required Banks (and, if the
rights or duties of the Concentration Bank are affected thereby, by the
Concentration Bank).
SECTION 17. New York Law.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, except as otherwise required by mandatory
provisions of law and except to the extent that remedies provided by the
laws of any jurisdiction other than New York are governed by the laws of
such jurisdiction.
SECTION 18. Severability.
If any provision hereof is invalid or unenforceable in any jurisdiction, then,
to the fullest extent permitted by law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Security Agent and the other Secured Parties in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 19. Notice of Security Interest.
By signing below, Xxxxx Fargo Bank, N.A. acknowledges receipt of notice,
pursuant to '9302(g)(ii) of Division 9 of the California Commercial Code,
that Citicorp USA, Inc., as Security Agent, has a security interest in the
Collateral Account.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
IOMEGA CORPORATION
By /S/ XXXXXX X. XXXXXXX
Name: XXXXXX X. XXXXXXX
Title: TREASURER
Address: 0000 XXXX XXXXXX XXX, XXX, XXXX 00000 Facsimile:
CITICORP USA, INC., as Security Agent
By /S/ XXXXXXX X. XXX
Name: XXXXXXX X. XXX
Title: ATTORNEY-IN-FACT
Address: 000 XXXX XXXXXX, XX, XX 00000 Facsimile:
XXXXX FARGO BANK, N.A., as Concentration Bank
By /S/ XXXXXX XXXXXX
Name: XXXXXX XXXXXX
Title: VICE PRESIDENT
Address: Facsimile:
ANNEX A
PERFECTION CERTIFICATE
The undersigned, the chief financial officer and chief legal officer of IOMEGA
CORPORATION, a Delaware corporation (the Borrower), hereby certify with
reference to the Security Agreement dated as of March 11, 1997 among the
Borrower, Citicorp USA, Inc., as Security Agent, and Xxxxx Fargo Bank, N.A.,
as Concentration Bank (terms defined therein being used herein as therein
defined), to the Secured Parties as follows:
1. Names. (a) The exact corporate name of the Borrower as it appears in its
certificate of incorporation is as follows:
(b) Set forth below is each other corporate name the Borrower has had since
its organization, together with the date of the relevant change:
(c) Except as set forth in Schedule 1, the Borrower has not changed its
identity or corporate structure in any way within the past five years.*
(d) The following is a list of all other names (including trade names or
similar appellations) used by the Borrower or any of its divisions or other
business units at any time during the past five years:
2. Current Locations. (a) The chief executive office of the Borrower is
located at the following address:
Mailing Address County State
(b) The following are all the locations where the Borrower maintains any
books or records relating to any Receivables:
Mailing
Name Address County State
(c) The following are all the places of business of the Borrower not
identified above that have any connection with or relationship to the
Receivables:
Mailing
Name Address County State
3. Prior Locations. Set forth below is the information required by
subparagraphs (a), (b) and (c) of paragraph 2 with respect to each location
or place of business maintained by the Borrower at any time during the past
five years:
4. Unusual Transactions. [Except as set forth in Schedule 4,] all
Receivables have been originated by the Borrower in the ordinary course
of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a true copy
of a file search report from the Uniform Commercial Code filing officer in
each jurisdiction identified in paragraph 2 or 3 above with respect to each
name set forth in paragraph 1 above. Attached hereto as Schedule 5(B) is a
true copy of each financing statement or other filing identified in such
file search reports.
6. UCC Filings. A duly signed financing statement on Form UCC-1 in
substantially the form of Schedule 6(A) hereto has been duly filed in the
Uniform Commercial Code filing office in each jurisdiction identified in
paragraph 2 hereof. Attached hereto as Schedule 6(B) is a true copy of each
such filing duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule setting
forth filing information with respect to the filings described in paragraph 6
above.
8. Filing Fees. All filing fees and taxes payable in connection with the
filings described in paragraph 6 above have been paid.
IN WITNESS WHEREOF, we have hereunto set our hands this day of March, 1997.
____________________________
Name:
Title:
____________________________
Name:
Title:
SCHEDULE 6(A)
Description of Collateral
All accounts (including receivables, contract rights, and chattel paper),
instruments and general intangibles pertaining to accounts and instruments,
now owned and hereafter acquired, wherever located, and all proceeds thereof.
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing**
ANNEX B
OPINION OF
COUNSEL FOR BORROWER
* * * *
1. The Security Agreement creates valid security interests, for the benefit
of the Secured Parties, in all the Borrower's right, title and interest in
all Collateral to the extent the UCC is applicable thereto (the Security
Interests).
2. UCC financing statements [and amendments thereto] (collectively, the
Financing Statements) have been filed in the filing offices listed in Schedule
7 to the Perfection Certificate (the Filing Jurisdictions), which are all of
the offices in which filings are required to perfect the Security Interests,
to the extent the Security Interests may be perfected by filing under the UCC,
and no further filing or recording of any document or instrument or other
action will be required so to perfect the Security Interests, except that (i)
continuation statements with respect to each Financing Statement must be filed
within the respective time periods set forth on Schedule 7 to the Perfection
Certificate; (ii) additional filings may be necessary if the Borrower changes
its name, identity or corporate structure or the jurisdiction in which its
places of business, its chief executive office or the Collateral are located;
and (iii) we express no opinion on the perfection of, or need for further
filing or recording to perfect, the Security Interests in the Collateral now
or hereafter located in any jurisdiction other than the Filing Jurisdictions.
3. Based solely on information provided to us by ______ through the dates of
the respective searches in each of the respective filing offices set forth in
Schedule A hereto, there are
(i) no UCC financing statements which name the Borrower as debtor or seller
and cover any of the Collateral, other than the Financing Statements, listed
in the available records in the UCC filing offices set forth in paragraphs 2
and 3 of the Perfection Certificate, which include all of the offices
prescribed under the UCC as the offices in which filings should have been
made to perfect security interests in the Collateral; and
(ii) no notices of the filing of any federal tax lien (filed pursuant to
Section 6323 of the Internal Revenue Code) or any lien of the Pension Benefit
Guaranty Corporation (filed pursuant to Section 4068 of ERISA) covering any
of the Collateral listed in the available records in the [office of the clerk
of the United States district court for the judicial district of Utah], which
is the only office having files which must be searched in order to fully
determine the existence of notices of the filing of federal tax liens (filed
pursuant to Section 6323 of the Internal Revenue Code) and liens of the
Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of ERISA)
on the Collateral.
4. The Security Interests validly secure the payment of all future Loans made
by the Banks to the Borrower, whether or not at the time such Loans are made
an Event of Default or other event not within the control of the Banks has
relieved or may relieve the Banks of their obligations to make such Loans, and
are perfected to the extent set forth in paragraph 7 above with respect to
such future Loans.
ANNEX C
[FORM OF LOCKBOX LETTER]
March 11, 1997
[Name and Address of Lockbox Bank]
Re: Iomega Corporation
Gentlemen:
We hereby notify you that effective March 11, 1997, we have transferred
exclusive ownership and control of our lock-box account[s] No[s].
_________________ (the Lockbox Account[s]) [maintained with you under the
terms of the [Lockbox Agreement] attached hereto as Exhibit A] to Citicorp
USA, Inc., as Security Agent (the Security Agent).
We hereby irrevocably instruct you to make all payments to be made by you out
of or in connection with the Lockbox Account[s] (i) to the Security Agent for
credit to account no. ___________ maintained by Xxxxx Fargo Bank, N.A., at
the latter's office at ________________, or (ii) as you may otherwise be
instructed by the Security Agent.
We also hereby notify you that the Security Agent shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with
the Lockbox Account[s], including, without limitation, the right to specify
when payments are to be made out of or in connection with the Lockbox
Account[s].
No funds deposited into the Lockbox Account[s] will be subject to deductions,
set-off, banker's lien or any other right in favor of any other person than
the Security Agent, except that you may set-off against the Lockbox Account[s]
the face amount of any check deposited in and credited to such Lockbox
Account[s] which is subsequently returned for any reason and fees owed with
respect to the Lockbox Account[s]. Your compensation for providing the
services contemplated herein shall be as mutually agreed between you and us
from time to time and we will continue to pay such compensation.
Please confirm your acknowledgment of and agreement to the foregoing
instructions by signing in the space provided below.
Very truly yours,
IOMEGA CORPORATION
By___________________________
Title:
Acknowledged and agreed
to as of this ____ day of
March __, 1997.
[LOCKBOX BANK]
By_________________________
Title:
* Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature
or jurisdiction of corporate organization. If any such change has occurred,
include in Schedule 1 the information required by paragraphs 1, 2 and 3 of
this certificate as to each acquiree or constituent party to a merger or
consolidation.
** Indicate lapse date, if other than fifth anniversary.
