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Exhibit 10.3.2.b
SECURITY AGREEMENT
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Security Agreement, dated as of August 6, 1996, by and among Telxon
Corporation, a Delaware corporation (the "BORROWER"), and The Bank of New York
("BNY"), as Agent (as the same may be amended, supplemented or otherwise
modified from time to time, this "AGREEMENT").
RECITALS
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I. Reference is made to the Credit Agreement, dated as March 8, 1996, by
and among the Borrower, the Lenders party thereto, and BNY, as Issuer, Swing
Line Lender and Agent, as amended by Amendment Xx. 0 ("XXXXXXXXX XX. 0"), dated
as of the date hereof, by and among the Borrower and BNY (as the same may be
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT").
II. It is a condition precedent to the effectiveness of Amendment No. 1
that the Borrower shall have executed and delivered this Agreement.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Agent hereby
agree as follows:
1. DEFINED TERMS
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(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto as follows:
"APPLICABLE COLLATERAL": (a) as of the Perfection Date, any Equipment
and Inventory located in the States of Ohio and Texas, and (b) as of any date
thereafter, (i) any Equipment or Inventory located in Ohio and Texas, and (ii)
any Equipment or Inventory located in Ohio or Texas on or after the Perfection
Date.
"COLLATERAL": as defined in Section 2.
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"EVENT OF DEFAULT": as defined in Section 5 hereof.
"FINANCING STATEMENTS": the UCC financing statements, copies of which
are annexed hereto as Annex A.
"NYUCC": the UCC as in effect in the State of New York on the date
hereof.
"OBLIGATIONS": all of the obligations and liabilities of the
Borrower under the Loan Documents, in each case whether fixed, contingent, now
existing or hereafter arising, created, assumed, incurred or acquired.
"OFFICE LOCATION": as defined in Section 3(a)(i) hereof.
"PERMITTED LIEN": a Lien permitted by Section 8.2 of the Credit
Agreement.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the NYUCC: "ACCOUNT",
"EQUIPMENT", "INVENTORY", "PROCEEDS", "SECURED PARTY" and "SECURITY INTEREST".
2. GRANT OF SECURITY INTEREST
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Subject to Section 7 of this Agreement, to secure the prompt and
complete payment, observance and performance of the Obligations, the Borrower
grants to the Agent, for its benefit and the ratable benefit of the Issuer, the
Swing Line Lender and the Lenders, a Security Interest in and to all of the
Borrower's right, title and interest in and to all Accounts, Equipment,
Inventory and all of the Proceeds (which shall include all dividends,
distributions, accessions and income on and in respect of all of the foregoing
and all other rights and benefits in respect thereof) of all of the foregoing,
whether now owned or existing or hereafter arising or acquired (collectively,
the "Collateral").
3. REPRESENTATIONS AND WARRANTIES
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The Borrower hereby represents and warrants to the Agent as follows:
(a) GENERALLY. (i) The Borrower's place of business or, if the
Borrower has more than one place of business, its
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chief executive office, is, and has been continuously for the immediately
preceding 5 month period, located (the "OFFICE LOCATION") at (A) the address set
forth for notices to the Borrower contained in the Credit Agreement, or (B) such
other location in respect of which (1) the Borrower shall have provided the
Agent with at least 30 days' prior written notice thereof, and (2) UCC financing
statements (or amendments thereto), in form and substance reasonably
satisfactory to the Agent, shall have been filed within two months after the
later of (x) the Perfection Date, or (y) such change. The Borrower has not
changed its legal name during the last 6 years.
(ii) All of the information set forth on each of the Schedules
hereto is true, complete and correct.
(iii) On and after the Perfection Date, this Agreement shall
create a continuing "enforceable" Security Interest in the Collateral in favor
of the Agent. There are no Liens upon the Collateral other than Permitted
Liens, if any. Upon the presentation for filing of the Financing Statements at
the respective offices listed thereon together with the appropriate filing fee
therefor, such Security Interest shall be perfected.
(b) ACCOUNTS. All records concerning any Account constituting
Collateral are located at the Office Location, and no such Account (other than
with respect to one or more Accounts which are over 90 days past due and which,
in the aggregate, are not in excess of $500,000) is evidenced by a promissory
note or other instrument.
(c) EQUIPMENT AND INVENTORY. The Borrower has exclusive possession and
control of all Equipment and Inventory constituting the Collateral, all of which
is and has been continuously for the last 5 month period, located at (i) one or
more of the places listed on Schedule I hereto, or (ii) such other places
located within the United States in respect of which (A) the Borrower shall have
provided the Agent with at least 10 days' prior written notice, and (B) UCC
financing statements (or amendments thereto), in form and substance satisfactory
to the Agent, shall have been filed within two months after the later of (1) the
Perfection Date, or (2) such change.
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4. COVENANTS
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The Borrower hereby covenants with the Agent as follows:
(a) GENERALLY. (i) The Borrower shall maintain its place of business,
or if it has more than one place of business, its chief executive office, at the
Office Location.
(ii) It shall, at its own expense, (A) promptly after each
request by the Agent cause to be provided to the Agent UCC, federal tax,
judgment and other lien search reports with respect to each applicable public
office where Liens are or may be filed disclosing that there are no Liens of
record in such official's office covering any Collateral or showing the Borrower
as debtor thereunder (other than Permitted Liens), (B) promptly execute and
deliver all certificates, documents, instruments (other than instruments which
represent Accounts which are over 90 days past due and which, in the aggregate,
are not in excess of $500,000), financing and continuation statements and
amendments thereto, notices and other agreements, and (C) take all further
action, in each case that the Agent may reasonably request from time to time, in
order to perfect and protect the Security Interest granted hereby in the
Collateral (other than Equipment and Inventory which is not Applicable
Collateral) or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to the Collateral (other than Equipment and
Inventory which is not Applicable Collateral). The Debtor hereby irrevocably
appoints the Secured Party as the Debtor's true and lawful attorney-in-fact, in
the name, place and stead of the Debtor, to perform on behalf of the Debtor any
and all obligations of the Debtor under this Agreement, and the Debtor agrees
that the power of attorney herein granted constitutes a power coupled with an
interest, provided, however, that the Secured Party shall have no obligation to
perform any such obligation and such performance shall be at the sole cost and
expense of the Debtor. If the Debtor fails to comply with any of its obligations
hereunder, the Secured Party may do so in the Debtor's name or in the Secured
Party's name, but at the Debtor's expense, and the Debtor hereby agrees to
reimburse the Secured Party in full for all reasonable expenses, including
reasonable attorney's fees, incurred by the Secured Party in connection
therewith.
(iii) The Borrower shall, at its own expense, furnish to the
Agent such information, reports, statements and schedules with respect to the
Collateral as the Agent may reasonably request from time to time.
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(iv) The Borrower shall, at its own expense, defend the
Collateral against all claims of any kind or nature (other than Permitted Liens,
if any) of all Persons at any time claiming the same or any interest therein
adverse to the interests of the Agent, the Issuer, the Swing Line Lender or any
Lender, and it shall not cause, permit or suffer to exist any Lien upon the
Collateral other than (A) the Lien granted hereby, and (B) Permitted Liens, if
any.
(v) Except as otherwise required by law, the Borrower agrees
that, with respect to the Collateral, neither the Agent, the Issuer, the Swing
Line Lender nor any Lender has any obligation to preserve rights against prior
or third parties.
(vi) The Agent's only duty with respect to the Collateral
delivered to it shall be to use reasonable care in the custody and preservation
of the Collateral, and the Borrower agrees that if the Agent accords the
Collateral substantially the same kind of care as the Agent accords its own
Property, such care shall conclusively be deemed reasonable.
(vii) Anything herein to the contrary notwithstanding, (A) the
Borrower 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 the Agent of any of its rights hereunder shall not
release the Borrower from any of its duties or obligations under any such
contract or agreement, (C) neither the Agent, the Issuer, the Swing Line Lender
nor any Lender shall have any obligation or liability, including indemnification
obligations, under any such contract or agreement by reason of this Agreement,
nor shall the Agent, the Issuer, the Swing Line Lender or any Lender be
obligated to perform any of the obligations or duties of the Borrower
thereunder, to make any payment, to make any inquiry as to the nature or
sufficiency of any payment received by the Borrower or the sufficiency of any
performance by any party under any such contract or agreement or to take any
action to collect or enforce any claim for payment assigned hereunder, and (D)
neither the Agent, the Issuer, the Swing Line Lender nor any Lender shall be
under any duty to send notices, perform services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for insurance, taxes
or other charges or take any action of any kind in connection with the
management of the Collateral.
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(b) ACCOUNTS. Except as otherwise provided in this Section 4(b), the
Borrower shall continue to collect in accordance with its customary practice, at
its own expense, all amounts due or to become due to the Borrower in respect of
the Borrower's Accounts and, prior to the occurrence of an Event of Default, the
Borrower shall have the right to adjust, settle or compromise the amount or
payment of any such Account, all in accordance with its customary practices. In
connection with such collections, the Borrower may take and, at the direction of
the Agent at any time that an Event of Default shall have occurred and be
continuing shall take, such action as the Borrower or the Agent may reasonably
deem necessary or advisable to enforce collection of such Accounts.
(c) EQUIPMENT AND INVENTORY. (i) The Borrower shall keep the Equipment
and Inventory constituting the Collateral at the places listed on Schedule I
hereto, and such other places located within the United States in respect of
which (A) the Borrower shall have provided the Agent with at least 10 days'
prior written notice, and (B) UCC financing statements (or amendments thereto),
in form and substance satisfactory to the Agent, shall have been filed within
two months after the later of (1) the Perfection Date, or (2) such change.
(ii) The Borrower shall promptly furnish to the Agent a statement
respecting any material loss or damage to any of the Equipment or Inventory
constituting the Collateral with an aggregate fair market value exceeding
$500,000 as a result of a single occurrence except to the extent that such loss
or damage shall be insured pursuant to policies required to be maintained
pursuant to the Credit Agreement.
5. EVENTS OF DEFAULT
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Each of the following shall constitute an "EVENT OF DEFAULT":
(a) If the Borrower shall fail to observe or perform any term,
covenant or agreement contained in this Agreement; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
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6. REMEDIES
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(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Agent may:
(i) exercise any and all rights and remedies (A) granted to a
Secured Party by the UCC in effect in the State of New York or
otherwise allowed at law, and (B) otherwise provided by this
Agreement, and
(ii) dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place
and terms are commercially reasonable, and the Borrower agrees that,
without limitation, the following are each commercially reasonable:
(A) the Agent shall not in any event be required to give more than 14
days' prior notice to the Borrower of any such disposition, (B) any
place within the City of New York or the counties of Nassau, Suffolk,
and Westchester in New York State may be designated by the Agent for
disposition, and (C) the Agent 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) To the extent permitted by law, the Borrower hereby expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
7. EFFECTIVENESS OF SECURITY INTEREST
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Notwithstanding anything herein to the contrary, Section 2 of this
Agreement shall not be effective until the Perfection Date.
8. NOTICES
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All notices and other communications provided for or otherwise
required hereunder or in connection herewith shall be given in the manner and to
the addresses set forth in Section 11.2 of the Credit Agreement.
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9. RELATIONSHIP TO CREDIT AGREEMENT
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This Agreement is the Security Agreement under, and as such term is
defined in, the Credit Agreement, and is subject to, and should be construed in
accordance with, the provisions thereof.
10. FINANCING STATEMENTS
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The Agent shall not file the Financing Statements prior to the
Perfection Date.
11. GOVERNING LAW
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This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York, without regard to principles of conflict of laws.
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IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
TELXON CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: Senior Vice President,
Chief Financial Officer
and Treasurer
THE BANK OF NEW YORK, as Agent
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Vice President
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