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SECURITY AGREEMENT
Between
POWER-ONE, INC.
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
as Administrative Lender
February 1, 1996
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TABLE OF CONTENTS
Page
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X. XXXXX
1.01. . . . . . . . . . . . . . . . . . ASSIGNMENT AND GRANT OF SECURITY 2
1.02. . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF OBLIGATIONS 5
1.03. . . . . . . . . . . . . . . . . . . . . . . .DEBTOR REMAINS LIABLE 5
1.04. . . . . . . . . . . DELIVERY OF SECURITY AND INSTRUMENT COLLATERAL 6
II. REPRESENTATIONS AND WARRANTIES
2.01. . . . . . . . . . . . . . . . . . . .REPRESENTATIONS AND WARRANTIES 6
III. COVENANTS
3.01. . . . . . . . . . . . . . . . . . . . . . . . . FURTHER ASSURANCES 8
3.02. . . . . . . . . . . . . . . . . .EQUIPMENT, FIXTURES AND INVENTORY 9
3.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .INSURANCE 10
3.04. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES, CHATTEL
PAPER AND INSTRUMENTS 11
3.05. . . . . . . . . . . . . . . . . . . . . .TRANSFERS AND OTHER LIENS 11
3.06. . . . . . . . . . . . . . . .RIGHTS TO DIVIDENDS AND DISTRIBUTIONS 12
3.07. . . . . . . . . . RIGHT OF ADMINISTRATIVE LENDER TO NOTIFY ISSUERS 12
3.08. . . . . . . . . . ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT 13
IV. RIGHTS AND POWERS OF ADMINISTRATIVE LENDER
4.01. . . . . . . . . . . . . . . . . ADMINISTRATIVE LENDER MAY PERFORM 13
4.02. . . . . . . . . . . . . . . . . . ADMINISTRATIVE LENDER'S DUTIES 14
4.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .REMEDIES 14
4.04. . . . . . . . . . . . . . . . . . . . .FURTHER APPROVALS REQUIRED 16
4.05. . . . . . . . . . . . . . . . . . . . . . .INDEMNITY AND EXPENSES 17
V. MISCELLANEOUS
5.01. . . . . . . . . . . . . . . . . . . . . . . . . CUMULATIVE RIGHTS 17
5.02. . . . . . . . . . . . . . . . . . MODIFICATIONS; AMENDMENTS; ETC. 18
5.03. . . . . . . . . . . . . . . . . . . .CONTINUING SECURITY INTEREST 18
5.04. . . . . . . . . . . . . . . . . . . . . . . .GOVERNING LAW; TERMS 18
5.05. . . . . . . . . . . . . . . . . . . . . . . .WAIVER OF JURY TRIAL 18
5.06. . . . . . . . . . . . ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS 19
5.07. . . . . . . . . . . . . .NO INTERFERENCE, COMPENSATION OR EXPENSE 19
5.08. . . . . . . . . . . . . .WAIVERS OF RIGHTS INHIBITING ENFORCEMENT 19
5.09. . . . . . . . . . . . . . . . . . . . . . .NOTICES AND DELIVERIES 19
(a) MANNER OF DELIVERY . . . . . . . . . . . . . . . . . . 19
(b) ADDRESSES. . . . . . . . . . . . . . . . . . . . . 19
(c) EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . 20
5.10.. . . . . . . . . . . . . . . . . . . . . . .SUCCESSORS AND ASSIGNS 20
5.11.. . . . . . . . . . . . . . . . . . . . . . . . . . . LOAN DOCUMENT 20
5.12.. . . . . . . . . . . . . . . . . . . . . . . . . . . . DEFINITIONS 21
5.13.. . . . . . . . . . . . . . . . . . . . . . . . . . . .SEVERABILITY 21
5.14.. . . . . . . . . . . . . . . . . . . . . .OBLIGATIONS NOT AFFECTED 21
5.15.. . . . . . . . . . . . . . . . . . . . . . . . . . . .COUNTERPARTS 21
5.16.. . . . . . . . . . . . . . . . . . . . . . . . . .ENTIRE AGREEMENT 21
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SCHEDULES:
Schedule 1 - Equipment, Fixtures and Inventory Locations
Schedule 2 - Trade Names
Schedule 3 - Restricted Accounts
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "AGREEMENT"), dated as of February 1, 1996, made
by Power-One, Inc., a Delaware corporation ("DEBTOR"), as successor by merger
with Power-One LLC, a Delaware limited liability company ("POWER-LLC"), in favor
of NationsBank of Texas, N.A., a national banking association, as Administrative
Lender ("ADMINISTRATIVE LENDER") for itself and each other lender a party to the
Credit Agreement described below (singly, a "SECURED PARTY", and collectively,
the "SECURED PARTIES").
BACKGROUND:
(1) Administrative Lender, Secured Parties and Power-LLC entered into the
Credit Agreement dated as of September 27, 1995 (as the same has been and may
hereafter be supplemented, amended and modified from time to time, including but
not limited to, pursuant to that certain First Amendment to Credit Agreement of
even date herewith, executed by Debtor, Administrative Lender and Secured
Parties, being the "CREDIT AGREEMENT").
(2) Power-LLC merged into Debtor pursuant to that certain Agreement of
Merger effective as of February 1, 1996, whereby Debtor acquired all assets and
assumed all liabilities of Power-LLC, as further evidenced by that certain
Assumption Agreement of even date herewith, executed by Debtor in favor of the
Administrative Lender.
(3) It is the intention of the parties hereto that this Agreement create a
first priority security interest securing the payment of the obligations set
forth in SECTION 1.02 hereof.
(4) It is a condition precedent to the obligation of the Secured Parties
to make Advances under the Credit Agreement that Debtor shall have executed and
delivered this Agreement.
AGREEMENT.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce Secured Parties to make the Advances
and issue, or participate in the issuance of, Letters of Credit under the Credit
Agreement, Debtor hereby agrees with Administrative Lender for its benefit and
the ratable benefit of Secured Parties, as hereinafter set forth. By its
execution hereof, Debtor hereby ratifies, confirms, assumes, and accepts all
Loan Documents and Collateral Documents heretofore executed and delivered by
Power-LLC, together with all duties, obligations and liabilities of Power-LLC
thereunder.
X. XXXXX
1.01. ASSIGNMENT AND GRANT OF SECURITY. Debtor hereby assigns,
pledges, hypothecates and transfers to Administrative Lender, for its benefit
and the ratable benefit of Secured Parties, and hereby grants to Administrative
Lender, for its benefit and the ratable benefit of Secured Parties, a security
interest in, the entire right, title and interest of Debtor, in and to the
following assets of Debtor, whether now owned or hereafter acquired, including
but not limited to the following ("COLLATERAL"):
(a) all writings which evidence both a monetary obligation and a security
interest in or a lease of specific goods ("CHATTEL PAPER");
(b) all documents, warehouse receipts, bills of lading, including, without
limitation, documents of title (as defined in the UCC) or other receipts
covering, evidencing or representing collateral ("DOCUMENTS");
(c) all equipment (as defined in the UCC), and (whether or not included in
such definition) all vehicles, machinery, chattels, tools, parts, furniture,
furnishings, fixtures and supplies, of every nature, wherever located, all
additions, accessories and improvements thereto and substitutions therefor and
all accessories, parts and equipment which may be attached to or which are
necessary for the operation and use of such personal property or fixtures,
whether or not the same shall be deemed to be affixed to real property, together
with all accessions thereto, and all rights under or arising out of present or
future contracts relating to the foregoing ("EQUIPMENT");
(d) all property so related to particular real estate that an interest in
it arises under the real estate law of the jurisdiction in which such property
is located, including all equipment, fixtures and articles of personal property
now or hereafter attached to or used in or about any building or buildings now
erected or hereafter to be erected on any real property now or hereafter owned
or leased by Debtor (the "PROPERTY"), which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes for
which they were or are to be erected; all materials to be delivered to the
Property and used or to be used in connection with the construction of any
building to be constructed on the Property, including, but not limited to, all
masonry, siding, roof shingles, flooring, doors, windows, tile, shutters,
stoves, ovens, awnings, screens, cabinets, shades, blinds, carpets, draperies,
furniture, furnishings, plumbing, heating, air conditioning, lighting,
ventilating, refrigerating, cooking, laundry and incinerating equipment and all
fixtures and appurtenances thereto, and such other goods and chattels and
personal property as are ever used or furnished in operating such buildings or
the activities conducted therein, and all building materials and equipment now
or hereafter delivered to the Property and intended to be installed thereon
("FIXTURES");
(e) all general intangibles (as defined in the UCC), and (whether or not
included in such definition) all contract rights; all inventions, processes,
production methods, proprietary information and know-how; and all licenses or
other agreements granted to Debtor with respect to any of the foregoing; all
information, advertising lists, customer lists, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, telephone numbers and telephone
listings, catalogs, books, records,
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computer and automatic machinery software and programs, and the like pertaining
to operations by or the business of Debtor; all field accounting information and
all media in which or on which any of the information or knowledge or data or
records may be recorded or stored and all computer programs used for the
compilation or printout of such information, knowledge, records or data; all
licenses, consents, permits, variances, certifications and approvals of all
Tribunals now or hereafter held by Debtor pertaining to operations or business
now or hereafter conducted; all rights to receive return of deposits and trust
payments; all rights to payment under letters of credit and similar agreements;
all tax refunds (including, without limitation, all federal and state income tax
refunds and benefits of net operating loss carry forwards); and all causes of
action, rights, claims and warranties now or hereafter owned or acquired by
Debtor ("GENERAL INTANGIBLES");
(f) all instruments and letters of credit (each as defined in the Uniform
Commercial Code), and (whether or not included in such definitions) all
promissory notes, drafts, bills of exchange and trade acceptances
("INSTRUMENTS");
(g) all inventory in all of its forms, wherever located, now or hereafter
existing, including, but not limited to, (i) all raw materials and work in
process therefor, finished goods thereof, and materials used or consumed in the
manufacture or production thereof, (ii) goods in which Debtor has an interest in
mass or a joint or other interest or right of any kind (including, without
limitation, goods in which Debtor has an interest or right as consignee but only
to the extent of Debtor's interest therein), and (iii) goods which are returned
to or repossessed by Debtor, and all accessions thereto and products thereof and
documents therefor (any and all such inventory, accessions, products and
documents being the "INVENTORY");
(h) all accounts, contract rights, chattel paper, documents, instruments,
deposit accounts, general intangibles, tax refunds and other obligations of any
kind owing to Debtor, now or hereafter existing, whether or not arising out of
or in connection with the sale or lease of goods or the rendering of services,
and all rights now or hereafter existing in and to all security agreements,
leases, and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, documents, instruments, deposit accounts,
general intangibles or obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, deposit accounts, general intangibles and
obligations being the "RECEIVABLES");
(i) all of the following, to the extent that the following pertains to
manufacturing, production or maintenance operations of Debtor: trade secrets,
all know-how, inventions, processes, methods, information, data, plans,
blueprints, specifications, designs, drawings, engineering reports, test
reports, materials standards, processing standards and performance standards,
and all computer and automatic machinery software and programs directly related
thereto, and all licenses or other agreements to which Debtor is a party with
respect to any of the foregoing ("TRADE SECRETS");
(j) all agreements with each manufacturer, vendor, sales agent, sales
representative and each other Person pursuant to which Debtor receives,
maintains, sells, leases or otherwise disposes of Inventory, including all
agreements permitting the use of each such Person's name, logo, trademarks,
tradenames and advertising ("VENDOR AGREEMENTS");
(k) the Power-One Acquisition Documents;
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(l) all right, title and interest of Debtor in, to and under each contract
and other agreement relating to the lease, sale or other disposition of
Collateral;
(m) all rights, claims and benefits of Debtor against any Person arising
out of, relating to or in connection with Collateral purchased by Debtor,
including, without limitation, any such rights, claims or benefits against any
Person storing or transporting such Collateral;
(n) the balance of every deposit account of Debtor under control of
Administrative Lender and each other Secured Party and each of their respective
Affiliates and any other claim of Debtor against Administrative Lender and each
other Secured Party, now or hereafter existing, liquidated or unliquidated, and
all money, instruments, securities, documents, chattel paper, credits, claims,
demands, income, and any other property, rights and interests of Debtor which at
any time shall come into the possession or custody or under the control of
Administrative Lender or any Secured Party or any of its agents, affiliates or
correspondents, for any purpose, and the proceeds of any thereof (Administrative
Lender and each other Secured Party shall be deemed to have possession of any of
the Collateral in transit to or set apart for it or any of its agents,
affiliates or correspondents.
(o) 66% of the issued and outstanding capital stock of Power Electronics,
Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico
("PEI"), together with all Dividends, cash, proceeds, profits, instruments,
distributions and other property from time to time distributed in respect
thereof, and any subscription rights or warrants to acquire any interest in PEI;
(p) 66% of the issued and outstanding capital stock of Poder Uno de
Mexico, S.A. de C.V., a corporation organized under the laws of the United
Mexican States ("PUM"), together with all Dividends, cash, proceeds, profits,
instruments, distributions and other property from time to time distributed in
respect thereof and any subscription rights or warrants to acquire any interest
in PUM;
(q) all licenses, permits and other rights related thereto;
(r) all insurance policies and bonds and claims and payments thereunder;
(s) all property similar to the above hereafter acquired by Debtor; and
(t) all accessions to, substitutions for and replacements, proceeds and
products of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property of the types described in this
SECTION 1.01) and, to the extent not otherwise included, all (i) payments under
insurance (whether or not Administrative Lender 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 and (ii) cash.
Notwithstanding the foregoing provisions of this SECTION 1.01, the
Collateral shall not include, and Debtor shall not hereby be deemed to grant a
security interest in, any rights of such Debtor under any license, lease,
agreement or contract that expressly prohibits any such assignment or security
interest; PROVIDED, HOWEVER, that in the event that any such prohibition may be
waived or avoided upon such Debtor's obtaining a consent to such assignment or
security
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interest or through the satisfaction of any other condition precedent and such
consent is obtained or such condition precedent is satisfied, the foregoing
provisions of this sentence shall not be effective with respect to such license,
lease, agreement or contract.
1.02. DESCRIPTION OF OBLIGATIONS. This Agreement creates a first
priority security interest (subject, however, to any Permitted Liens) securing
the payment and performance of any and all obligations now or hereafter existing
of Debtor, each Obligor and any other Person (other than Administrative Lender
or any Secured Party) under the Credit Agreement and the other Loan Documents,
including any extensions, modifications, substitutions, amendments and renewals
thereof, whether for principal, interest, fees, premium, expenses, reimbursement
obligations, indemnification or otherwise (all such obligations of Debtor, each
Obligor and each other Person being the "OBLIGATIONS"). Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Obligations and would be owed by Debtor, each other
Obligor and any other Person (other than Administrative Lender or any Secured
Party) to Administrative Lender or any Secured Party under any Loan Document,
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding under any Debtor
Relief Law involving Debtor, any Obligor or any other Person (including all such
amounts which would become due or would be secured but for the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding of Debtor, any other Obligor or any other Person under any
Debtor Relief Law).
1.03. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Debtor shall remain liable under the 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 Administrative Lender of
any of the rights hereunder shall not release Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) neither Administrative Lender nor any Secured Party shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Administrative Lender or any
Secured Party be obligated to perform any of the obligations or duties of Debtor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
1.04. DELIVERY OF SECURITY AND INSTRUMENT COLLATERAL. All certificates
or instruments representing or evidencing the Collateral shall be delivered to
and held by or on behalf of Administrative Lender pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Administrative Lender. Administrative Lender shall
have the right, as provided in SECTION 3.06, after the occurrence of an Event of
Default, and with prior written notice to Debtor, to transfer to or to register
in the name of Administrative Lender or any of its nominees any or all of such
Collateral. In addition, Administrative Lender shall have the right at any time
after the occurrence of an Event of Default to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations. Except as provided in
SECTION 3.08(d), Debtor maintains the voting rights in the Securities Collateral
which was granted in the Securities Collateral pursuant to SECTION 1.01(p).
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II. REPRESENTATIONS AND WARRANTIES
2.01. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants
to Administrative Lender and each Secured Party, with respect to itself and the
Collateral, as follows:
(a) As of the date hereof, all of the Equipment, Fixtures and Inventory
pledged by Debtor hereunder are located at the places specified on SCHEDULE 1
hereto (as supplemented from time to time by Debtor by written notice to
Administrative Lender) or in transit to a place specified on SCHEDULE 1 hereto
(as supplemented from time to time by Debtor by written notice to Administrative
Lender) or in transit for sale to a third-party purchaser that upon such sale
will become the obligor under a Receivable. The chief place of business and
chief executive office of Debtor and the office where Debtor keeps all of its
records concerning the Receivables, are located in Camarillo, California. As of
the date hereof, SCHEDULE 1 is a complete and correct list of, as to any leased
property on which any Collateral is located, the lease or other agreement (and
all amendments thereto) pursuant to which Debtor has use of such property
(complete and correct copies of which have been provided to Administrative
Lender), the lessor pursuant to such agreement, the recording information for
such agreement, the description of such property sufficient for recording and
the name of the record owner of such property. All Chattel Paper, promissory
notes or other instruments evidencing the Receivables (excluding checks) have
been delivered and pledged to Administrative Lender duly endorsed and
accompanied by such duly executed instruments of transfer or assignment as are
necessary for such pledge, to be held as pledged collateral.
(b) Debtor is the legal and beneficial owner of the Collateral pledged by
it free and clear of any Lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement and
permitted pursuant to SECTION 7.2 of the Credit Agreement and any other Lien
permitted by the Credit Agreement. No effective financing statement or other
similar document used to perfect and preserve a security interest under the laws
of any jurisdiction covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of Administrative
Lender relating to this Agreement and with respect to any Lien permitted by the
Credit Agreement. As of the date hereof, Debtor has the trade names set forth
on SCHEDULE 2 (and no others). Debtor (including any corporate or partnership
predecessor) has not existed or operated under any name other than as stated on
SCHEDULE 2 since the date seven years preceding the date of this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant hereto,
together with the filing of financing statements containing the description of
the Collateral with the Secretary of the State of California and the United
States Trademark and Copyright Office, which will be made immediately following
the date of closing, creates a valid and perfected first priority security
interest in the Collateral (other than Collateral having an aggregate value not
in excess of $50,000) in which a security interest can be perfected by filing a
UCC financing statement (except for any Lien permitted by the Credit Agreement),
securing the payment of the Obligations; PROVIDED that additional actions may be
required with respect to the perfection of proceeds of the Collateral; FURTHER
PROVIDED that Secured Party retains physical possession of any Collateral, the
possession of which is required for perfection.
(d) No consent of any Person (other than with respect to licenses, leases,
agreements or contracts which expressly prohibit any assignment or security
interest) and no authorization,
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approval or other action by, and no notice to or filing with, any Tribunal
(other than the United States Trademark and Copyright Office) is required
(i) for the pledge by Debtor of the Collateral pledged by it hereunder, for the
grant by Debtor of the security interest granted hereby or for the execution,
delivery or performance of this Agreement by Debtor, (ii) for the perfection or
maintenance of the pledge, assignment and security interest created hereby
(including the first priority nature of such pledge, assignment and security
interest) or (iii) for the exercise by Administrative Lender of the rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement (except as may have been obtained by or at the
direction of Debtor).
(e) Debtor possesses all licenses and permits, including but not limited
to all applicable certificates of occupancy, licenses and permits and all health
and sanitation permits, required for the operations of its business except where
the failure to do so would not have a Material Adverse Effect.
(f) SCHEDULE 3 is a complete and correct list of all Acquisition
Documents.
(g) None of the Collateral described in SECTIONS 1.01(o) and 1.01(p)
("SECURITIES COLLATERAL") is subject to any unpaid capital call or dispute, any
buy-sell, voting trust, transfer restriction, preferential right to purchase or
similar agreement or any option, warrant, put or call or similar agreement. All
of the Securities Collateral are duly authorized, validly issued and non-
assessable and were not issued in violation of the Rights of any Person.
(h) All Inventory produced in the United States of America has been
produced in substantial compliance with the Fair Labor Standards Act.
(i) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
III. COVENANTS
3.01. FURTHER ASSURANCES. (a) Debtor agrees that, except for
restrictions related to Permitted Liens, where any agreement existing as of the
date hereof or hereafter to which Debtor is a party contains any restriction
that could reasonably be expected to prohibit Debtor from granting any security
interest under this Agreement, Debtor will use its best efforts to obtain the
necessary consent to or waiver of such restriction from any Person so as to
enable Debtor to effectively grant to Administrative Lender such security
interest under this Agreement.
(b) Debtor agrees that from time to time, at the expense of Debtor, Debtor
will promptly execute and deliver all further instruments and documents
(including supplements to all schedules), and take all further action, that may
be necessary or desirable, or that Administrative Lender may reasonably request,
in order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby, and the priority thereof, or to
enable Administrative Lender to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, upon reasonable written request by Administrative Lender, Debtor
will: (i) xxxx conspicuously each Chattel Paper included in Receivables, and,
at the reasonable request of Administrative Lender, each of its records
pertaining to the Collateral with the following legend:
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THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO
A SECURITY AGREEMENT DATED SEPTEMBER 27, 1995 (AS THE SAME HAS BEEN
AND MAY HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY POWER-ONE
LLC, WHICH SECURITY INTEREST AND LIEN HAVE ALSO BEEN GRANTED, RATIFIED
AND CONFIRMED BY POWER-ONE, INC., AS SUCCESSOR BY MERGER TO POWER-ONE
LLC, IN FAVOR OF NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER
FOR CERTAIN LENDERS, AND PURSUANT TO A CREDIT AGREEMENT DATED AS OF
SEPTEMBER 27, 1995 (AS THE SAME HAS BEEN AND MAY HEREAFTER BE AMENDED,
MODIFIED OR RESTATED)
or such other legend, in form and substance reasonably satisfactory to and as
specified by Administrative Lender, indicating that such Chattel Paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or other
instrument or be Chattel Paper, deliver and pledge to Administrative Lender
hereunder such note, instrument or Chattel Paper duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to Administrative Lender; and (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
Administrative Lender may reasonably request, in order to perfect and preserve
the pledge, assignment and security interest granted or purported to be granted
hereby.
(c) In addition to such other information as shall be specifically
provided for herein, Debtor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other lists, documents, reports, and product, service and sales documents
in connection with the Collateral as Secured Party may reasonably request, all
in reasonable detail. In connection with its enforcement of the security
interest, Administrative Lender may use such information or transfer it to any
assignee or sublicensee permitted hereunder for such assignee's or sublicensee's
use.
(d) Debtor hereby authorizes Administrative Lender to file one or more
financing or continuation statements, and after 10 days' prior written notice to
Debtor, amendments thereto, relating to all or any part of the Collateral
without the signature of Debtor where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(e) Debtor will not, and will not permit any Person to, materially revise,
modify, amend or restate the articles of incorporation of any corporation the
stock or other interest in which is Collateral or the partnership, joint venture
or other organizational document of any partnership or joint venture any
interest in which is Collateral or terminate, cancel or dissolve any such
Person, except as permitted under the Credit Agreement.
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3.02. EQUIPMENT, FIXTURES AND INVENTORY.
(a) Debtor shall not keep the Equipment, Fixtures and Inventory pledged by
it hereunder (other than Inventory sold in the ordinary course of business)
worth an aggregate amount exceeding $50,000 in any location unless (i) the
Debtor has delivered to Administrative Lender a financing statement for such
Equipment, Fixtures and Inventory kept by Debtor at such location or (ii) such
Equipment, Fixtures and Inventory are kept in Mexico in connection with the
operations of PUM.
(b) Debtor shall cause the Equipment and Fixtures pledged by it hereunder
that are necessary for Debtor's business to be maintained and preserved in the
same condition, repair and working order as when purchased, ordinary wear and
tear excepted in accordance with Debtor's past practices, and shall forthwith,
or in the case of any material loss or damage to any of the Equipment and
Fixtures as quickly as practicable after the occurrence thereof, make or cause
to be made all reasonable repairs, replacements, and other improvements in
connection therewith which are necessary or desirable to such end. Debtor shall
promptly furnish to Administrative Lender a statement respecting any loss or
damage which singly or in the aggregate equals or exceeds $50,000 for any fiscal
year to any of the Equipment and Fixtures pledged by it hereunder. Debtor shall
promptly furnish to Administrative Lender a statement respecting any loss or
damage which singly or in the aggregate equals or exceeds $50,000 for any fiscal
year to any of the Inventory pledged by it hereunder.
(c) Debtor shall pay promptly when due all material property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Collateral pledged by it hereunder, except such taxes as are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, except where the failure to file such
returns, pay such taxes or establish such reserves does not involve unpaid or
allegedly unpaid amounts, in aggregate, in excess of $50,000 for any fiscal
year. Debtor shall comply with, and shall use its best efforts to cause its
licensees to comply with, all requirements of the Fair Labor Standards Act.
3.03. INSURANCE. Debtor shall, at its own expense, maintain insurance
with respect to the Collateral in accordance with the terms set forth in
SECTION 5.5 of the Credit Agreement. Debtor further covenants and agrees to
keep the Collateral which is Inventory, Equipment, Fixtures and other tangible
personal property insured in such amounts, against such risks and with such
insurers as is consistent with customary industry practice, provided that none
of such insurance shall be in amounts less than the greater of (i) the
replacement value and (ii) the original cost of the covered property (less any
deduction standard in the industry for such type of property), subject in the
case of any property damage insurance to normal and customary rights granted in
the original course of business to (A) any landlord (with respect to the
property covered by any lease), (B) in the case of any equipment financing, to
any equipment lessor or lender (with respect to the equipment covered thereby),
or (C) mortgagees of any real property. All such policies of insurance shall be
written for the benefit of Administrative Lender and Debtor, as their interests
may appear, and shall provide for at least thirty Business Days' prior written
notice of cancellation to Administrative Lender. Debtor shall promptly furnish
to Administrative Lender evidence of such insurance in form and content
satisfactory to Administrative Lender. If Debtor fails to perform or observe
any applicable covenants as to insurance on any of such Collateral,
Administrative Lender may at its own option obtain
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insurance on only Administrative Lender's interest in such Collateral, any
premium thereby paid by Administrative Lender to become part of the Obligations,
bear interest prior to the existence of an Event of Default, at the then
applicable Base Rate Basis, and during the existence of an Event of Default, at
the Default Rate. In the event Administrative Lender maintains such substitute
insurance, the additional premium for such insurance shall be due on demand and
payable by Debtor to Administrative Lender in accordance with any notice
delivered to Debtor by Administrative Lender. Debtor hereby grants
Administrative Lender a security interest in any refunds of unearned premiums in
connection with any cancellation, adjustment or termination of any policy of
insurance required by Administrative Lender and in all proceeds of such
insurance and hereby appoints Administrative Lender its attorney-in-fact to
endorse any check or draft that may be payable to Debtor in order to collect
such refunds or proceeds. Any such sums collected by Administrative Lender
shall be credited, except to the extent applied to the purchase by
Administrative Lender of similar insurance, to any amounts then owing on the
Obligations in accordance with the Credit Agreement.
3.04. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES, CHATTEL
PAPER AND INSTRUMENTS.
(a) Debtor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Receivables, and
the originals of all Chattel Paper and Instruments, at the location therefor
specified in SECTION 2.01(a). Debtor will hold and preserve such records and
Chattel Paper and Instruments and will permit representatives of Administrative
Lender at any time during normal business hours and after reasonable notice to
inspect and make abstracts from and copies of such records and Chattel Paper and
Instruments.
(b) Except as otherwise provided in this SECTION 3.04(b), Debtor shall
continue to collect, at its own expense, all amounts due or to become due Debtor
under the Receivables, Chattel Paper and Instruments. In connection with such
collections, Debtor may take (and, upon the occurrence and during the
continuance of an Event of Default at Administrative Lender's direction, shall
take) such action as Debtor or, after the occurrence and during the continuance
of an Event of Default, Administrative Lender, may deem necessary or advisable
to enforce collection of the Receivables, Chattel Paper and Instruments;
PROVIDED, HOWEVER, that Administrative Lender shall have the right (upon an
Event of Default which is continuing) (upon written notice to Debtor of its
intention to do so) to notify the account debtors or obligors under any
Receivables, Chattel Paper and Instruments of the assignment of such
Receivables, Chattel Paper and Instruments to Administrative Lender and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to Debtor thereunder directly to Administrative Lender and, upon such
notification at the expense of Debtor, to enforce collection of any such
Receivables, Chattel Paper and Instruments, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
Debtor might have done or as Administrative Lender deems appropriate. After the
occurrence of an Event of Default, all amounts and proceeds (including
Instruments) received by Debtor in respect of the Receivables, Chattel Paper and
Instruments shall be received in trust for the benefit of Administrative Lender
hereunder, shall be segregated from other funds of Debtor and, after receipt of
notice from Administrative Lender, shall be forthwith paid over to
Administrative Lender in the same form as so received (with any necessary
indorsement) to be applied as provided in the Credit Agreement. Debtor shall
not adjust, settle or compromise the amount or payment of any Receivable,
Chattel Paper or Instrument, release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon other than those made
in the
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ordinary course of business.
3.05. TRANSFERS AND OTHER LIENS. Debtor shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except as permitted under the Credit
Agreement, (ii) create or permit to exist any Lien, security interest, option or
other charge or encumbrance upon or with respect to any of the Collateral
(excluding the Securities Collateral), except for the security interest under
this Agreement (and except as provided for in the Credit Agreement), or
(iii) with respect to the Securities Collateral, sell, assign or transfer any of
Debtor's rights in the Securities Collateral (except as provided for in the
Credit Agreement).
3.06. RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. With respect to any
certificates, bonds, or other instruments or securities constituting a part of
the Collateral, Administrative Lender shall have authority during the
continuance of an Event of Default, upon written notice to Debtor of its
intention to do so, either to have the same registered in Administrative
Lender's name or in the name of a nominee, and, with or without such
registration, upon such notification to demand of the issuer thereof, and to
receive and receipt for, any and all Dividends (including any stock or similar
dividend or distribution) payable in respect thereof, whether they be ordinary
or extraordinary. If Debtor shall become entitled to receive or shall receive
any interest in or certificate (including, without limitation, any interest in
or certificate representing a Dividend or a distribution in connection with any
reclassification, increase, or reduction of capital, or issued in connection
with any reorganization), or any option or rights arising from or relating to
any of the Collateral, whether as an addition to, in substitution of, as a
conversion of, or in exchange for any of the Collateral, or otherwise, Debtor
agrees after receipt by Debtor of the notice referred to above, to accept the
same as Administrative Lender's agent and to hold the same in trust on behalf of
and for the benefit of Administrative Lender, and to deliver the same
immediately to Administrative Lender in the exact form received, with
appropriate undated stock or similar powers, duly executed in blank, to be held
by Administrative Lender, subject to the terms hereof, as Collateral. Unless an
Event of Default is in existence, Debtor shall be entitled to receive all cash
Dividends paid in respect of any of the Collateral (subject to the restrictions
of any other Loan Document). Administrative Lender shall be entitled to all
Dividends, and to any sums paid upon or in respect of any Collateral, upon the
liquidation, dissolution, or reorganization of the issuer thereof which shall be
paid to Administrative Lender to be held by it as additional collateral security
for the Obligations and application to the Obligations at the discretion of
Administrative Lender. All Dividends paid or distributed in respect of the
Collateral which are received by Debtor in violation of this Agreement shall,
until paid or delivered to Administrative Lender, be held by Debtor in trust as
additional Collateral for the Obligations.
3.07. RIGHT OF ADMINISTRATIVE LENDER TO NOTIFY ISSUERS. At any time
during the continuance of an Event of Default and at such other times as
Administrative Lender is entitled to receive Dividends and other property in
respect of or consisting of any Collateral which is or represents an equity or
ownership interest in any Person ("SECURITIES COLLATERAL"), Administrative
Lender may notify issuers of the Securities Collateral to make payments of all
Dividends directly to Administrative Lender and Administrative Lender may take
control of all proceeds of any Securities Collateral. Until Administrative
Lender elects to exercise such rights, during the continuance of an Event of
Default, Debtor, as agent of Administrative Lender, shall collect and segregate
all Dividends and other amounts paid or distributed with respect to the
Securities Collateral.
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3.08. ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT. Debtor hereby
irrevocably appoints Administrative Lender Debtor's attorney-in-fact, with full
authority in the place and stead of Debtor and in the name of Debtor or
otherwise to take any action and to execute any instrument which Administrative
Lender may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to Administrative
Lender pursuant to SECTION 3.03,
(b) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral,
(c) to receive, indorse, and collect any drafts or other Instruments,
documents and Chattel Paper, in connection therewith, and
(d) to file any claims or take any action or institute any proceedings
which Administrative Lender may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Collateral or the rights of Administrative Lender with respect
to any of the Collateral. DEBTOR HEREBY IRREVOCABLY GRANTS TO ADMINISTRATIVE
LENDER DEBTOR'S PROXY (EXERCISABLE FROM AND AFTER THE OCCURRENCE OF AN EVENT OF
DEFAULT WHICH IS CONTINUING) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS
ADMINISTRATIVE LENDER DEBTOR'S ATTORNEY-IN-FACT TO PERFORM ALL OBLIGATIONS OF
DEBTOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF ADMINISTRATIVE LENDER'S
RIGHTS HEREUNDER. THE PROXY AND EACH POWER OF ATTORNEY HEREIN GRANTED ARE
COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF
THE OBLIGATIONS.
Secured Party shall not exercise any powers granted pursuant to this
appointment as attorney-in-fact at any time that Debtor is fully performing its
obligations hereunder. This appointment as attorney-in-fact shall terminate
upon the termination of this Agreement pursuant to SECTION 5.03 hereof.
IV. RIGHTS AND POWERS OF ADMINISTRATIVE LENDER
4.01. ADMINISTRATIVE LENDER MAY PERFORM. If Debtor fails to perform
any agreement contained herein, Administrative Lender may itself perform, or
cause performance of, such agreement, and the expenses of Administrative Lender
incurred in connection therewith shall be payable by Debtor under SECTION 4.05.
4.02. ADMINISTRATIVE LENDER'S DUTIES. The powers conferred on
Administrative Lender 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 safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Administrative Lender
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions,
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exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not Administrative Lender has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Administrative Lender
accords its own property, except to the extent of any gross negligence or
willful misconduct of the Administrative Lender. Except as provided in this
SECTION 4.02, Administrative Lender shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating Administrative Lender, and Administrative Lender shall not be
required or obligated, to (i) present or file any claim or notice or take any
action, with respect to any Collateral or in connection therewith or (ii) notify
Debtor of any decline in the value of any Collateral.
4.03. REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) Administrative Lender may exercise in respect of the Collateral, in
addition to 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
Uniform Commercial Code in effect in the State of Texas at that time (the "UCC")
(whether or not the Uniform Commercial Code applies to the affected Collateral),
and also may (i) require Debtor to, and Debtor hereby agrees that it will at its
expense and upon request of Administrative Lender forthwith, assemble all or
part of the Collateral as directed by Administrative Lender and make it
available to Administrative Lender at a place to be designated by Administrative
Lender which is reasonably convenient to both parties or (ii) without notice,
except as specified below, sell the Collateral or any portion thereof in one or
more parcels at public or private sale, at any of Administrative Lender's
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Administrative Lender may deem commercially reasonable. Debtor
agrees that, to the extent notice of sale shall be required by law, ten days'
written notice to Debtor 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. Administrative Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Administrative
Lender 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.
(b) All cash proceeds received by Administrative Lender upon any sale of,
collection of, or other realization upon, all or any part of the Collateral
shall be applied as follows:
FIRST: To the payment of all reasonable out-of-pocket costs and
expenses incurred in connection with the sale of, collection of or other
realization upon Collateral, including reasonable attorneys' fees and
disbursements;
SECOND: To the payment of the Obligations as provided in the Credit
Agreement and in such order and in such manner consistent with Applicable
Laws as Administrative Lender in its discretion shall decide (with Debtor
remaining liable for any deficiency); and
THIRD: To the extent of the balance (if any) of such proceeds, to
Debtor or other Person legally entitled thereto.
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(c) All payments received by Debtor under or in connection with any
Collateral shall be received in trust for the benefit of Administrative Lender,
shall be segregated from other funds of Debtor and shall be forthwith paid over
to Administrative Lender in the same form as so received (with any necessary
indorsement).
(d) Because of the Securities Act of 1933, as amended ("SECURITIES ACT"),
and other laws, including without limitation state "blue sky" laws, or
contractual restrictions or agreements, there may be legal restrictions or
limitations affecting Administrative Lender in any attempts to dispose of the
Collateral and the enforcement of its rights hereunder. For these reasons,
Administrative Lender is hereby authorized by Debtor, but not obligated, during
the continuance of any Event of Default, to sell or otherwise dispose of any of
the Collateral at private sale, subject to an investment letter, or in any other
manner which will not require the Collateral, or any part thereof, to be
registered in accordance with the Securities Act, or the rules and regulations
promulgated thereunder, or any other law. Administrative Lender is also hereby
authorized by Debtor, but not obligated, to take such actions, give such
notices, obtain such consents, and do such other things as Administrative Lender
may deem required or appropriate under the Securities Act or other securities
laws or other laws or contractual restrictions or agreements in the event of a
sale or disposition of any Collateral. Debtor clearly understands that
Administrative Lender may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the Collateral than would otherwise be obtainable if same were
registered and sold in the open market. No sale so made in good faith by
Administrative Lender shall be deemed to be not "commercially reasonable"
because so made. Debtor agrees that in the event Administrative Lender shall,
during the continuance of an Event of Default, sell the Collateral or any
portion thereof at any private sale or sales, Administrative Lender shall have
the right to rely upon the advice and opinion of appraisers and other Persons,
which appraisers and other Persons are acceptable to Administrative Lender, as
to the best price reasonably obtainable upon such a private sale thereof. In
the absence of actual fraud, such reliance shall be conclusive evidence that
Administrative Lender handled such matter in a commercially reasonable manner
under Applicable Law.
(e) If Administrative Lender shall determine to exercise its right to sell
any or all of the Collateral, and if in the opinion of counsel for
Administrative Lender it is necessary, or if in the opinion of Administrative
Lender it is advisable, to have the Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act, Debtor will, to the
fullest extent it has the capability to do so, cause the issuers of the
Collateral contemplated to be sold to execute and deliver, and cause the
directors and officers of each thereof to execute and deliver, all at Debtor's
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things, as may be necessary or, in the opinion of
Administrative Lender, advisable to register the Collateral or that portion
thereof to be sold, 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 Administrative Lender may deem appropriate to
facilitate the sale or other disposition of such Collateral from the date of the
first public offering of the Collateral or that portion thereof to be sold, and
to make all amendments thereto and/or to the related prospectus which, in the
opinion of Administrative Lender, are necessary or advisable, all in conformity
with the requirements of the Securities Act. Debtor shall use its best efforts
to cause each issuer of Collateral to comply with the provisions of the
securities or "blue sky" laws of any jurisdiction which Administrative Lender
shall designate and to cause each Issuer to make available to its security
holders, as soon as practicable, an earnings statement which will satisfy
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the provisions of the Securities Act and applicable "blue sky" laws.
(f) (i) Debtor will maintain the accounts listed as restricted
and blocked accounts on SCHEDULE 3 (the "RESTRICTED ACCOUNTS") with
Administrative Lender, in the name of Debtor, but such Restricted Accounts
shall be owned by Administrative Lender and shall be under the sole control
and dominion of Administrative Lender.
(ii) It shall be a term and condition of each Restricted
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to such Restricted Account, that no amount (including
interest and other proceeds of the cash and other property in the
Restricted Account) shall be paid or released to or for the account of, or
withdrawn by or for the account of, Debtor or any other Person from such
Restricted Account.
(iii) After the occurrence of an Event of Default,
Debtor will promptly instruct each account debtor in respect of Receivables
arising from any sale of Inventory in the ordinary course of business to
make payment to the Restricted Accounts.
Debtor understands and acknowledges that Administrative Lender may and permits
Administrative Lender to remove amounts from the Restricted Accounts from time
to time and use the amounts to reduce the Obligations.
4.04. FURTHER APPROVALS REQUIRED.
(a) In connection with the exercise by Administrative Lender of its rights
hereunder that effects the disposition of or use of any Collateral, it may be
necessary to obtain the prior consent or approval of Tribunals and other Persons
to a transfer or assignment of Collateral.
(b) Debtor hereby agrees, during the continuance of an Event of Default,
to execute, deliver, and file, and hereby appoints Administrative Lender as its
attorney-in-fact, during the continuance of an Event of Default, to execute,
deliver, and file on Debtor's behalf and in Debtor's name, all applications,
certificates, filings, instruments, and other documents (including without
limitation any application for an assignment or transfer of control or
ownership) that may be necessary or appropriate, in Administrative Lender's
opinion, to obtain such consents, waivers, or approvals. Debtor further agrees
to use its best efforts to obtain the foregoing consents, waivers, and
approvals, including receipt of consents, waivers, and approvals under
applicable agreements prior to a Default or Event of Default. Debtor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this SECTION 4.04 and that such failure would not be
adequately compensable in damages, and therefore agrees that this SECTION 4.04
may be specifically enforced. Secured Party shall not exercise any powers
granted pursuant to this appointment as attorney-in-fact at any time that Debtor
is fully performing its obligations hereunder. This appointment as attorney-in-
fact shall terminate upon the termination of this Agreement pursuant to
SECTION 5.03 hereof.
4.05. INDEMNITY AND EXPENSES. (a) Debtor agrees to indemnify
Administrative Lender and each Secured Party from and against any and all
claims, losses and liabilities (including reasonable attorneys' fees) growing
out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), expressly including such claims, losses or
liabilities arising out of mere negligence of Administrative Lender or any
Secured Party, except claims,
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losses or liabilities resulting from Administrative Lender's or any Secured
Party's gross negligence or willful misconduct.
(b) Debtor will upon demand pay to Administrative Lender and each Secured
Party the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which
Administrative Lender and each Secured Party may incur in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of
Administrative Lender or any Secured Party hereunder or (iv) the failure by
Debtor to perform or observe any of the provisions hereof.
V. MISCELLANEOUS
5.01. CUMULATIVE RIGHTS. All rights of Administrative Lender and each
other Secured Party under the Loan Documents are cumulative of each other and of
every other right which Administrative Lender and each other Secured Party may
otherwise have at law or in equity or under any other contract or other writing
for the enforcement of the security interest herein or the collection of the
Obligations. The exercise of one or more rights shall not prejudice or impair
the concurrent or subsequent exercise of other rights.
5.02. MODIFICATIONS; AMENDMENTS; ETC. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by Debtor here
from, shall in any event be effective unless the same shall be in writing and
signed by Administrative Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
5.03. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the later of (i) the final payment in full of the
Obligations and all amounts payable under this Agreement (other than Obligations
which are contingent and unliquidated and not due and owing on such date and
which pursuant to the provisions of the Credit Agreement, the Letters of Credit
or the Collateral Documents survive the termination of the Credit Agreement, the
termination of the Commitments, or the expiration or cancellation of the Letters
of Credit) and (ii) the expiration or termination of the obligation of all
Secured Parties to extend credit to Debtor and the expiration of all Letters of
Credit, (b) be binding upon Debtor, its successors and assigns, and (c) inure to
the benefit of, and be enforceable by, Administrative Lender and its successors,
transferees and assigns. Upon any such termination, Administrative Lender will,
at Debtor's expense, execute and deliver to Debtor such documents as Debtor
shall reasonably request to evidence such termination. Debtor agrees that to
the extent that Administrative Lender or any Secured Party receives any payment
or benefit and such payment or benefit, or any part thereof, is subsequently
invalidated, declared to be fraudulent or preferential, set aside or is required
to be repaid to a trustee, receiver, or any other party under any Debtor Relief
Law, common law or equitable cause, then to the extent of such payment or
benefit, the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment or benefit had
not been made and, further, any such repayment by Administrative Lender or any
Secured Party, to the extent that Administrative Lender or any Secured Party did
not directly receive a corresponding cash payment, shall be added to and be
additional Obligations payable upon
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demand by Administrative Lender or any Secured Party and secured hereby, and, if
the lien and security interest hereof shall have been released, such lien and
security interest shall be reinstated with the same effect and priority as on
the date of execution hereof all as if no release of such lien or security
interest had ever occurred.
5.04. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR 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 TEXAS. UNLESS OTHERWISE DEFINED
HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 9 OF THE UCC ARE USED
HEREIN AS THEREIN DEFINED.
5.05. WAIVER OF JURY TRIAL. ADMINISTRATIVE LENDER AND DEBTOR HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
5.06. ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS. Administrative
Lender may exercise its rights under this Agreement through an agent or other
designee.
5.07. NO INTERFERENCE, COMPENSATION OR EXPENSE. Administrative Lender
may exercise its rights under this Agreement (a) without resistance or
interference by Debtor and (b) without payment of any rent, license fee or
compensation of any kind to Debtor.
5.08. WAIVERS OF RIGHTS INHIBITING ENFORCEMENT. Debtor waives (a) any
claim that, as to any part of the Collateral, a public sale, should
Administrative Lender elect so to proceed, is, in and of itself, not a
commercially reasonable method of sale for such Collateral, (b) except as
otherwise provided in this Agreement, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OR JUDICIAL HEARING IN CONNECTION WITH ADMINISTRATIVE LENDER'S
DISPOSITION OF ANY OF THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT DEBTOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF
SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF ADMINISTRATIVE
LENDER'S RIGHTS HEREUNDER and (c) all rights of redemption, appraisal, valuation
or to the marshalling of assets.
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5.09. NOTICES AND DELIVERIES.
(a) MANNER OF DELIVERY. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall, except in those cases where
giving notice by telephone is expressly permitted, be given or delivered in
writing. All written notices, communications and materials shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
telecopier, or delivered by hand. In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be deemed the effective notice except to the extent
Administrative Lender or Debtor has acted in reliance on such telephonic notice.
(b) ADDRESSES. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
(i) if to Debtor, to it at:
Power-One, Inc.
000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
(ii) if to Administrative Lender, to it at:
NationsBank of Texas, N.A.
NationsBank Plaza
000 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(c) EFFECTIVENESS. Each notice, communication and any material to be
given or delivered to Administrative Lender or Debtor pursuant to this Agreement
shall be effective or deemed delivered or furnished (i) if sent by mail, on the
fifth Business Day after such notice, communication or material is deposited in
the mail, addressed as above provided, (ii) if sent by telecopier, when such
notice, communication or material is transmitted to the appropriate number
determined as above provided in this SECTION 5.09 and the appropriate receipt is
received or otherwise acknowledged and (iii) if sent by hand delivery or
overnight courier, when left at the
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address of the addressee addressed as above provided.
5.10. SUCCESSORS AND ASSIGNS. All of the provisions of this Agreement
shall be binding and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
5.11. LOAN DOCUMENT. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
5.12. DEFINITIONS. Capitalized terms not otherwise defined herein have
the meaning specified in the Credit Agreement and, to the extent of any
conflict, terms as defined in the Credit Agreement shall control (PROVIDED, that
a more expansive or explanatory definition shall not be deemed a conflict).
5.13. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws during the term
thereof, such provision shall be fully severable, this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
IN LIEU of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a legal, valid, and enforceable
provision as similar in terms to the illegal, invalid, or unenforceable
provision as may be possible.
5.14. OBLIGATIONS NOT AFFECTED. To the fullest extent permitted by
Applicable Law, the obligations of Debtor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:
(a) any amendment or modification or addition or supplement to any Loan
Document, any instrument delivered in connection therewith or any assignment
or transfer thereof;
(b) any exercise, non-exercise, or waiver by Administrative Lender or
any Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty, any collateral or the Collateral
or any part thereof provided pursuant to, this Agreement or any other Loan
Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement or any other Loan Document or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Debtor, any Obligor or
any other Person, whether or not Debtor shall have notice or knowledge of any
of the foregoing.
5.15. COUNTERPARTS. This Agreement may be executed in any number of
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.
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5.16. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers or members
as of the date first above written.
DEBTOR:
POWER-ONE, INC.
By:
---------------------------------------
Name:
---------------------------------
Title:
-------------------------------
ADMINISTRATIVE LENDER:
NATIONSBANK OF TEXAS, N.A.
By:
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A.
By:
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
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Schedule 1
Equipment, Inventory and Fixtures Locations
*To Be Provided By Debtor*
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Schedule 2
Trade Names
*To Be Provided By Debtor*
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Schedule 3
Restricted Accounts
*To Be Provided By Debtor*
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