$150,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
July 15, 1998
among
Iomega Corporation,
The Banks Party Hereto,
Citibank, N.A.,
as Administrative Agent,
and
Xxxxxx Guaranty Trust Company of New York,
as Documentation Agent
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Accounting Terms and Determinations...........................17
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend...........................................17
SECTION 2.02. Method of Borrowing...........................................18
SECTION 2.03. Maturity of Loans.............................................19
SECTION 2.04. Interest Rates................................................19
SECTION 2.05. Method of Electing Interest Rates.............................21
SECTION 2.06. Fees..........................................................22
SECTION 2.07. Termination or Reduction of Commitments.......................23
SECTION 2.08. Optional Prepayments..........................................23
SECTION 2.09. Mandatory Prepayments.........................................23
SECTION 2.10. General Provisions as to Payments.............................25
SECTION 2.11. Funding Losses................................................25
SECTION 2.12. Computation of Interest and Fees..............................26
SECTION 2.13. Notes.........................................................26
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing.......................................................26
SECTION 3.02. Consequence of Effectiveness..................................28
SECTION 3.03. Borrowings....................................................28
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.................................29
SECTION 4.02. Corporate and Governmental Authorization; No Contravention....29
SECTION 4.03. Binding Effect................................................29
SECTION 4.04. Financial Information.........................................29
SECTION 4.05. Litigation....................................................30
SECTION 4.06. Compliance with ERISA.........................................30
SECTION 4.07. Environmental Matters.........................................30
SECTION 4.08. Taxes.........................................................31
SECTION 4.09. Subsidiaries..................................................31
SECTION 4.10. Regulatory Restrictions on Borrowing..........................31
SECTION 4.11. Full Disclosure...............................................31
SECTION 4.12. Representations in Collateral Documents True and Correct......32
SECTION 4.13. Solvency......................................................32
SECTION 4.14. Properties....................................................32
SECTION 4.15. Year 2000.....................................................32
ARTICLE 5
COVENANTS
SECTION 5.01. Information...................................................33
SECTION 5.02. Payment of Obligations........................................36
SECTION 5.03. Maintenance of Property; Insurance............................36
SECTION 5.04. Conduct of Business and Maintenance of Existence..............37
SECTION 5.05. Compliance with Laws..........................................37
SECTION 5.06. Inspection of Property, Books and Records.....................38
SECTION 5.07. Mergers and Sales of Assets...................................38
SECTION 5.08. Use of Proceeds...............................................38
SECTION 5.09. Negative Pledge...............................................39
SECTION 5.10. Limitation on Debt............................................40
SECTION 5.11. Minimum Consolidated Tangible Net Worth.......................40
SECTION 5.12. Debt to Consolidated Tangible Net Worth.......................41
SECTION 5.13. Minimum Consolidated EBITDA...................................41
SECTION 5.14. Maximum Cash Conversion Days..................................41
SECTION 5.15. Capital Expenditures..........................................42
SECTION 5.16. Restricted Payments...........................................42
SECTION 5.17. Investments...................................................43
SECTION 5.18. Transactions with Affiliates..................................43
SECTION 5.19. Restrictive Agreements........................................43
SECTION 5.20. Accounting Changes............................................44
SECTION 5.21. Modification of Certain Documents.............................44
SECTION 5.22. Capital Stock.................................................44
SECTION 5.23. Further Assurances............................................44
SECTION 5.24. Landlord and Warehouseman Waivers.............................46
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default.............................................46
SECTION 6.02. Notice of Default.............................................49
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization.................................49
SECTION 7.02. Agents and Affiliates.........................................49
SECTION 7.03. Action by Agents..............................................49
SECTION 7.04. Consultation with Experts.....................................49
SECTION 7.05. Liability of Agents...........................................50
SECTION 7.06. Indemnification...............................................50
SECTION 7.07. Credit Decision...............................................50
SECTION 7.08. Successor Agents..............................................51
SECTION 7.09. Agents' Fees..................................................51
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair......51
SECTION 8.02. Illegality....................................................52
SECTION 8.03. Increased Cost and Reduced Return.............................52
SECTION 8.04. Taxes.........................................................54
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans....55
SECTION 8.06. Substitution of Bank..........................................56
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices......................................................56
SECTION 9.02. No Waivers....................................................57
SECTION 9.03. Expenses; Indemnification.....................................57
SECTION 9.04. Sharing of Set-offs...........................................57
SECTION 9.05. Amendments and Waivers; Release of Collateral.................58
SECTION 9.06. Successors; Participation and Assignments.....................58
SECTION 9.07. No Reliance on Margin Stock...................................60
SECTION 9.08. Governing Law; Submission to Jurisdiction.....................60
SECTION 9.09. Counterparts; Integration; Effectiveness......................60
SECTION 9.10. WAIVER OF JURY TRIAL..........................................61
SECTION 9.11. Confidentiality...............................................61
SECTION 9.12. Right of Set-off..............................................61
COMMITMENT SCHEDULE
PRICING SCHEDULE
SCHEDULE I - Debt
SCHEDULE II - None
EXHIBIT A - Note
EXHIBIT B - Opinion of Counsel for the Borrower
EXHIBIT C - Opinion of Special Counsel for the Agents
EXHIBIT D - Assignment and Assumption Agreement
EXHIBIT E - Security Agreement
EXHIBIT F - Pledge Agreement
EXHIBIT G - Subordinated Note
AGREEMENT dated as of July 15, 1998 among IOMEGA CORPORATION, the BANKS
party hereto, CITIBANK, N.A., as Administrative Agent, and XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK, as Documentation Agent.
WHEREAS, the Borrower, the banks referred to therein, Citibank, N.A.,
as administrative agent for such banks, and Xxxxxx Guaranty Trust Company of New
York, as documentation agent for such banks, are parties to a Credit Agreement
dated as of March 11, 1997 and amended and restated as of January 23, 1998;
WHEREAS, such parties desire to amend and restate said Credit Agreement
as provided in this Agreement and, upon satisfaction of the conditions specified
in Section 3.01, said Credit Agreement will be so amended and restated; and
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings: "Administrative Agent" means Citibank, N.A., in its capacity
as administrative agent for the Banks hereunder, and its successors in such
capacity.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent,
completed by such Bank and returned to the Administrative Agent (with a copy to
the Borrower and the Documentation Agent).
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to vote 10% or
more of any class of voting securities of a Person or to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agents" means the Administrative Agent and the Documentation Agent,
and "Agent" means either of the foregoing.
"Agreement", when used with reference to this Agreement, means this
Amended and Restated Credit Agreement dated as of July 15, 1998, as it may be
amended from time to time.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office, and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by the Borrower or
any of its domestic Subsidiaries of any Collateral, including without limitation
any sale-leaseback transaction, whether or not involving a capital lease, but
excluding (i) dispositions of inventory, cash, cash equivalents and other cash
management investments and obsolete, unused or unnecessary equipment and
undeveloped real estate, in each case in the ordinary course of business, (ii)
dispositions of production equipment to the extent proceeds of such disposition
do not exceed $5,000,000 in any Fiscal Year of the Borrower and $7,000,000
during the period from and including the Effective Date through and including
the Termination Date, (iii) dispositions to the Borrower or a domestic
Wholly-Owned Subsidiary and (iv) dispositions from the Borrower to [Iomega
Malaysia] of manufacturing equipment.
"Assignee" has the meaning set forth in Section 9.06(c).
"Available Amount" means (i) on any day on or prior to May 15, 1999,
the greater of the Base Amount and the Borrowing Base in effect on such day, and
(ii) on any day thereafter, the Borrowing Base in effect on such day.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Amount" means $110,000,000, as such amount may be reduced from
time to time pursuant to Section 2.09(a) or (b).
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means a Loan which bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.05(a) or Article 8.
"Borrower" means Iomega Corporation, a Delaware corporation, and its
successors.
"Borrower Plan" means the memorandum dated July 8, 1998 furnished to
the Banks in connection with the transactions contemplated hereby.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower on the same day pursuant to Article 2, all of which Loans are of the
same type (subject to Article 8) and, except in the case of Base Rate Loans,
have the same initial Interest Period. A Borrowing is a Base Rate Borrowing if
such Loans are Base Rate Loans or a Euro-Dollar Borrowing if such Loans are
Euro-Dollar Loans.
"Borrowing Base" means, on any date, the amount of the Borrowing Base
as of the date of the Borrowing Base Certificate then most recently delivered
pursuant to Section 5.01(n), determined by calculating the sum of (i) a
percentage to be agreed by the Borrower and the Agents on the basis of the
Initial Information and notified to the Banks within 21 days after the Effective
Date (or, upon 30 days' notice from the Administrative Agent, such lesser
percentage as the Required Banks shall determine in their reasonable discretion
based on the overall creditworthiness of the account debtors and specify to the
Borrower, through the Administrative Agent, as being appropriate for these
purposes) of the aggregate amount of Eligible Receivables at such date, plus
(ii) a percentage to be agreed by the Borrower and the Agents on the basis of
the Initial Information and notified to the Banks within 21 days after the
Effective Date (or, upon 30 days' notice from the Administrative Agent, such
lesser percentage as the Required Banks shall determine in their reasonable
discretion based on the marketability, accessibility and value of Inventory and
specify to the Borrower, through the Administrative Agent, as being appropriate
for these purposes) of the aggregate amount of Eligible Inventory at such date
less (iii) the aggregate amount of Letter of Credit Exposure in respect of
letters of credit issued by any Bank which are secured by a security interest in
the Collateral pursuant to the Collateral Documents.
"Borrowing Base Certificate" means a certificate, duly executed by a
senior financial or accounting officer of the Borrower, satisfactory in form and
substance to the Agents.
"Capital Stock" means (i) in the case of a corporation, any shares of
its capital stock, (ii) in the case of a partnership, any participation interest
(whether general or limited), (iii) in the case of any other business entity,
any participation or other interest in the equity or profits thereof or (iv) any
warrant, option or other right to acquire any Capital Stock described in the
foregoing clauses (i), (ii) and (iii).
"Collateral" means collateral subject to the Collateral Documents.
"Collateral Documents" means the Pledge Agreement, the Security
Agreement, any additional pledge or security agreements required to be delivered
pursuant to the Loan Documents and any instruments of assignment, lockbox
letters or other instruments or agreements executed pursuant to the foregoing.
"Commitment" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank on the
Commitment Schedule, and (ii) with respect to any Assignee, the amount of the
transferor Bank's Commitment assigned to it pursuant to Section 9.06(c), in each
case as such amount may be changed from time to time pursuant to Section 2.07 or
9.06(c).
"Commitment Schedule" means the Commitment Schedule attached hereto.
"Consolidated Debt" means, at any date, the Debt of the Borrower and
its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated EBITDA" means, for any period, the net income of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
for such period, after excluding the effect of any extraordinary or other
non-recurring gain (but not loss), plus, to the extent deducted in determining
such net income for such period, the aggregate amount of (i) interest expense,
(ii) income tax expense, (iii) depreciation, amortization and other similar
non-cash charges, iv) Nomai R&D Expenses and (v) the Permitted Second Quarter
Addback.
"Consolidated Subsidiary" means, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means, at any date, the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries less
their consolidated Intangible Assets, all determined as of such date, plus the
sum of (i) Nomai R&D Expenses, (ii) the Permitted Second Quarter Addback and
(iii) amortization of goodwill and other intangible assets relating to the
acquisition by the Borrower of a controlling interest in Nomai. As used herein,
"Intangible Assets" means the amount (to the extent reflected in determining
such consolidated stockholders' equity) of (i) all write-ups (except write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) after September 30, 1996 in the book value of any asset owned by the
Borrower or a Consolidated Subsidiary, (ii) all Investments in unconsolidated
Subsidiaries and all equity Investments in Persons which are not Subsidiaries
and (iii) all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, anticipated
future benefit of tax loss carry-forwards, copyrights, organization or
developmental expenses and other intangible assets.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (v) all non-contingent obligations (and, for purposes of
Section 5.09 and the definitions of Material Debt and Material Financial
Obligations, all contingent obligations) of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, (vi) all Debt secured by a Lien on any asset of such Person, whether
or not such Debt is otherwise an obligation of such Person, and (vii) all
Guarantees by such Person of Debt of another Person (each such Guarantee to
constitute Debt in an amount equal to the amount of such other Person's Debt
Guaranteed thereby).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Documentation Agent" means Xxxxxx Guaranty Trust Company of New York,
in its capacity as documentation agent for the Banks hereunder, and its
successors in such capacity.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Eligible Inventory" means, at any date of determination thereof, the
value (determined at the lower of cost or market) of all Inventory other than
those types of Inventory agreed by the Borrower and the Agents on the basis of
the Initial Information and notified to the Banks within 21 days after the
Effective Date.
"Eligible Receivables" means, at any date of determination thereof, the
aggregate of all Receivables at such date other than those classes of
Receivables agreed by the Borrower and the Agents on the basis of the Initial
Information and notified to the Banks within 21 days after the Effective Date.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment or the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including (without limitation)
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means a Loan which bears interest at a Euro-Dollar
Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election.
"Euro-Dollar Margin" has the meaning set forth in Section 2.04(b).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.04(b) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
"Events of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Existing Credit Agreement" means the Credit Agreement dated as of
March 11, 1997 and amended and restated as of January 23, 1998 among the
Borrower, the banks referred to therein, Citibank, N.A., as administrative
agent, and Xxxxxx Guaranty Trust Company of New York, as documentation agent, as
in effect from time to time prior to the Effective Date.
"Existing Bank" means a "Bank" (as such term is defined in the Existing
Credit Agreement) that is a party to the Existing Credit Agreement immediately
prior to the Effective Date.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Citibank, N.A. on such day on such
transactions as determined by the Administrative Agent.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred in by
the Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks.
"Group of Loans" means, at any time, a group of Loans consisting of (i)
all Loans which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans
having the same Interest Period at such time, provided that, if a Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Article
8, such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise), (ii) to reimburse a bank for amounts drawn under a
letter of credit for the purpose of paying such Debt or (iii) entered into for
the purpose of assuring in any other manner the holder of such Debt or other
obligation of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term Guarantee used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Initial Information" means the information as to Inventory and
Receivables distributed to the Banks on July 14, 1998.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in such notice; provided that
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Inventory" shall mean inventory (as defined in Article 9 of the New
York Uniform Commercial Code) to the extent comprised of readily marketable
materials of a type manufactured, consumed or held for resale (including raw
materials and work-in-process) by the Borrower in the ordinary course of
business.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, Guarantee, time deposit or otherwise
(but not including any demand deposit).
"Letter of Credit Exposure" shall mean, at any time and in respect of
any letter of credit, the sum of (i) the amount available for drawings under
such letter of credit issued for the account of the Borrower plus (ii) the
aggregate unpaid amount of all reimbursement obligations at the time due and
payable in respect of previous drawings made under such letter of credit minus
(iii) the amount available for drawings not in excess of $20,000,000 under any
such letter of credit that is a standby letter of credit issued in connection
with litigation resulting in preliminary injunctive relief.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has substantially the same practical effect as a
security interest, in respect of such asset. For purposes hereof, the Borrower
or any Subsidiary shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a loan made by a Bank pursuant to Section 2.01.
"Loan Documents" means this Agreement, the Notes and the Collateral
Documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.04(b).
"Major Casualty Proceeds" means (i) the aggregate insurance proceeds
received by the Borrower or any of its domestic Subsidiaries in connection with
one or more related events under any insurance policy maintained by the Borrower
or any of its domestic Subsidiaries covering losses with respect to tangible
real or personal property or improvements or losses from business interruption
or (ii) any award or other compensation with respect to any condemnation of
property (or any transfer or disposition of property in lieu of condemnation)
received by the Borrower or any of its domestic Subsidiaries, if the amount of
such aggregate proceeds or award or other compensation exceeds $1,000,000.
"Material Adverse Effect" means (i) any material adverse effect upon
the condition (financial or otherwise), results of operations, properties,
assets or business of the Borrower and its Subsidiaries, taken as a whole; (ii)
a material adverse effect on the ability of the Borrower or any other Person to
consummate the transactions contemplated hereby to occur on the Effective Date;
(iii) a material adverse effect on the ability of the Borrower to perform under
this Agreement and the Notes and the other Loan Documents; or (iv) a material
adverse effect on the rights and remedies of the Agents and the Banks under this
Agreement and the Notes and the other Loan Documents.
"Material Debt" means Debt (except Debt outstanding hereunder) of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal or face amount exceeding
$5,000,000.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment or collateralization obligations in respect of Derivatives
Obligations of the Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, exceeding in the aggregate
$5,000,000.
"Material Plan" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $5,000,000.
"Multiemployer Plan" means, at any time, an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Net Cash Proceeds" means, with respect to any Asset Sale, an amount
equal to the cash proceeds received by the Borrower or any of its Subsidiaries
from or in respect of such Asset Sale (including any cash proceeds received as
income or other proceeds of any noncash proceeds of such Asset Sale), less (x)
any expenses reasonably incurred by such Person in respect of such Asset Sale,
(y) the amount of any Debt secured by a Lien on any asset disposed of in such
Asset Sale and discharged from the proceeds thereof and (z) any taxes actually
paid or to be payable by such Person (as estimated by a senior financial or
accounting officer of the Borrower, giving effect to the overall tax position of
the Borrower) in respect of such Asset Sale.
"Nomai" means Nomai S.A., a societe anonyme organized under the laws of
the Republic of France.
"Nomai R&D Expenses" means all expenses relating to the writeoff of
in-process research and development expenses of Nomai recorded in the third
Fiscal Quarter of 1998 in connection with the acquisition by the Borrower of a
controlling interest in Nomai.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the Borrower's obligation to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Notice of Interest Rate Election" has the meaning set forth in Section
2.05.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" shall mean any Proposed Acquisition with
respect to which the following conditions have been met:
(i) the Security Agent shall have received (A) a perfected
lien on all of the Capital Stock (or, in the case of the Capital Stock
of a foreign Person, no more than 65% of the outstanding Capital Stock
thereof) and assets (to the extent owned by a Person domiciled under
the laws of the United States or any political subdivision thereof)
acquired in connection with the Proposed Acquisition, junior to no
other Liens, except as permitted by Section 5.09, and (B) a guarantee
from any Subsidiary organized under the laws of the United States or
any political subdivision thereof acquired or created in connection
with such Proposed Acquisition;
(ii) the Borrower shall have delivered a written notice to the
Agents and the Banks of its intention to make such Proposed Acquisition
(other than any Proposed Acquisition the purchase price of which does
not exceed $1,000,000) no less than 10 Business Days (or such shorter
period agreed to by the Agents) prior to the proposed consummation date
thereof (the "Consummation Date"), setting forth the material terms
thereof and the source of funding of the purchase price of such
Proposed Acquisition;
(iii) the sum of the cash purchase price of all Proposed
Acquisitions, including any deferred purchase price, does not exceed
$10,000,000; provided that such Proposed Acquisition is otherwise
permitted by Section 5.17(d);
(iv) the amount of Debt assumed (directly or indirectly) as a
result of all Proposed Acquisitions does not exceed $5,000,000 in the
aggregate; provided that the incurrence of such Debt is permitted under
Section 5.10(e);
(v) the sum of the fair market value of that portion of the
purchase price of all Proposed Acquisitions payable in common equity of
the Borrower does not exceed $10,000,000;
(vi) on the Consummation Date for such Proposed Acquisition
and after giving effect thereto, (A) no Default shall have occurred and
be continuing and (B) all representations and warranties under the Loan
Documents shall be true and correct in all material respects as though
made on and as of such date; and
(vii) the Borrower shall have provided the Agents and the Banks
such other financial information, financial analyses, documentation or
other information relating to such Proposed Acquisition (other than a
Proposed Acquisition the purchase price of which does not exceed
$1,000,000) as either Agent or the Required Banks may reasonably
request.
"Permitted Second Quarter Addback" means special charges taken in the
second Fiscal Quarter of 1998 to the extent such special charges exceed
$10,000,000 and are less than $20,000,000 (and to the extent that such special
charges exceed $20,000,000 then such special charges will be deemed to equal
$20,000,000), so long as the cash portion of all special charges taken in such
Fiscal Quarter does not exceed $14,000,000.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means, at any time, an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Pledge Agreement" means the pledge agreement dated as of the Effective
Date substantially in the form of Exhibit F hereto between the Borrower and the
Security Agent, as amended from time to time.
"Pricing Schedule" means the Pricing Schedule attached hereto.
"Prime Rate" means the rate of interest publicly announced by Citibank,
N.A. in New York City from time to time as its Prime Rate.
"Proposed Acquisition" shall mean (a) any purchase by the Borrower or
any Wholly-Owned Subsidiary of (i) any capital stock of any Person if, following
such purchase, such Person would be a Subsidiary, or (ii) any merger or
consolidation of a Wholly-Owned Subsidiary with any Person, provided that, in
each such case referred to in this clause (a), such Person is in the same or a
similar line of business as the Borrower, and (b) any acquisition by the
Borrower or any Wholly-Owned Subsidiary of all or substantially all of the
assets, operations, any division or any operating unit of any Person, provided
that, in each such case, such Person is in (or such assets are usable in, or
such operations or division are in) the same or a similar line of business as
the Borrower.
"Quarterly Payment Dates" means each March 31, June 30, September 30
and December 31.
"Receivable" means, as at any date of determination thereof, the unpaid
portion of the obligation, as stated in the respective invoice, of a customer of
the Borrower in respect of Inventory sold or services rendered in the ordinary
course of business, which amount has been earned by performance under the terms
of the related contract and recognized as a receivable on the books of the
Borrower, net of any credits, rebates or offsets owed to the customer and also
net of any commissions payable to Persons other than Subsidiaries or Affiliates
of the Borrower or any of their employees.
"Reference Banks" means the principal London offices of Fleet National
Bank, Citibank, N.A. and Xxxxxx Guaranty Trust Company of New York, and
"Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means, at any time, Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, holding at least 51% of the aggregate unpaid principal amount of the
Loans.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock other than mandatorily redeemable preferred stock)
or (ii) any payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Borrower's capital stock or (b) any option,
warrant or other right to acquire shares of the Borrower's capital stock (but
not including payments of principal, premium (if any) or interest made pursuant
to the terms of convertible debt securities prior to conversion). It is
understood that the net exercise of stock options and other employee awards not
involving any cash payments by the Borrower, pursuant to plans described in the
Borrower's filings with the Securities and Exchange Commission, does not
constitute a Restricted Payment by the Borrower.
"Revolving Credit Period" means the period from and including the
Effective Date to but not including the Termination Date.
"SEC" means the Securities and Exchange Commission.
"Security Agent" means Citicorp USA, Inc., in its capacity as agent for
the Banks under the Collateral Documents, and its successors in such capacity.
"Security Agreement" means the security agreement dated as of the
Effective Date substantially in the form of Exhibit E hereto among the Borrower,
the Security Agent and Northern Trust Company, as Concentration Bank, as amended
from time to time.
"Subordinated Notes" means one or more Senior Subordinated Promissory
Notes in an aggregate principal amount not to exceed $40,000,000, in the form of
Exhibit H hereto.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"Temporary Cash Investment" 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 at least
A-1 by Standard & Poor's Ratings Services or P-1 by Xxxxx'x Investors Service,
Inc., (iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized or licensed under the laws of the United States or any State thereof
(or, if the Investment is made outside the United States by a foreign
Subsidiary, any office located in the United Kingdom, Switzerland or the
Netherlands of any bank or trust company which is organized or licensed under
the laws of the United Kingdom, Switzerland or the Netherlands, the unsecured
long-term debt of which is rated at least A by Standard & Poor's Ratings Service
or A2 by Xxxxx'x Investors Services, Inc.) and has capital, surplus and
undivided profits aggregating at least $1,000,000,000, (iv) repurchase
agreements with respect to securities described in clause (i) above entered into
with an office of a bank or trust company meeting the criteria specified in
clause (iii) above, or (v) any other obligation which meets the criteria
established in the Borrower's U.S. cash investment policy as in effect on the
date hereof.
"Termination Date" means July 14, 2000, or, if such day is not a
Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America.
"Usage" means at any date the percentage equivalent of a fraction (i)
the numerator of which is the aggregate outstanding principal amount of the
Loans at such date, after giving effect to any borrowing or payment on such
date, and (ii) the denominator of which is the aggregate amount of the
Commitments at such date. If for any reason any Loans remain outstanding after
termination of the Commitments, the Usage for each date on or after the date of
such termination shall be deemed to be greater than 66%.
"Wholly-Owned Subsidiary" means, at any time, a Subsidiary, all the
outstanding Capital Stock (other than qualifying director's shares) of which is
owned, directly or indirectly, by the Borrower at such time.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP;
provided that, if the Borrower notifies the Administrative Agent that the
Borrower wishes to amend any provision hereof to eliminate the effect of any
change in GAAP on the operation of such provision (or if the Administrative
Agent notifies the Borrower that the Required Banks wish to amend any provision
hereof for such purpose), then the Borrower's compliance with such provision
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Borrower and the
Required Banks.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make loans to the Borrower from
time to time during the Revolving Credit Period; provided that, immediately
after each such loan is made, the aggregate outstanding principal amount of all
Loans by such Bank shall not exceed the lesser of its Commitment and its pro
rata share of the Available Amount. Each Borrowing under this Section shall be
in an aggregate principal amount of $5,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate amount of the
unused Commitments) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the foregoing limits, the
Borrower may borrow under this Section, prepay Loans to the extent permitted by
Section 2.08 and reborrow at any time during the Revolving Credit Period under
this Section.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give the
Administrative Agent notice (a "Notice of Borrowing") not later than 12:00 Noon
(New York City time) on (x) the date of each Base Rate Borrowing and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (i
the date of such Borrowing, which shall be a Domestic Business Day in the case
of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or a Euro-Dollar Rate; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period.
In no event shall the total number of Groups of Loans at any one time
outstanding exceed twenty.
(b) Promptly after receiving a Notice of Borrowing, the Administrative
Agent shall notify each Bank of the contents thereof and of such Bank's ratable
share of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(c) Not later than 1:00 P.M. (New York City time) on the date of each
Euro-Dollar Borrowing or 2:00 P.M. (New York City time) on the date of each Base
Rate Borrowing, each Bank shall make available its ratable share of such
Borrowing, in Federal or other funds immediately available in New York City, to
the Administrative Agent at its address specified in or pursuant to Section
9.01. Unless the Administrative Agent determines that any applicable condition
specified in Article 3 has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address.
(d) Unless the Administrative Agent shall have received notice from a
Bank before the date of any Borrowing (or, in the case of a Base Rate Borrowing,
prior to 1:30 P.M.(New York City time) on the date of such Borrowing) that such
Bank will not make available to the Administrative Agent such Bank's share of
such Borrowing, the Administrative Agent may assume that such Bank has made such
share available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (b) of this Section and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Administrative Agent, such Bank and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) if such amount is repaid by the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.04 and (ii) if such
amount is repaid by such Bank, the Federal Funds Rate. If such Bank shall repay
to the Administrative Agent such corresponding amount, the Borrower shall not be
required to repay such amount and the amount so repaid by such Bank shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.03. Maturity of Loans. Each Loan shall mature, and the principal
amount thereof shall be due and payable (together with interest accrued
thereon), on the Termination Date.
SECTION 2.04. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the sum of (x)
the Base Rate Margin (as determined in accordance with the Pricing Schedule)
plus (y) the Base Rate for such day. Such interest shall be payable quarterly in
arrears on each Quarterly Payment Date and, with respect to the principal amount
of any Base Rate Loan converted to a Euro-Dollar Loan, on the date such amount
is so converted. Any overdue principal of or interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the Base Rate Margin for such day plus the
Base Rate for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus
the Adjusted London Interbank Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such day plus
the Adjusted London Interbank Offered Rate applicable to such Loan on the day
before such payment was due and (ii) the sum of 2% plus the Euro-Dollar Margin
for such day plus a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than three months as the Administrative Agent may select)
deposits in dollars in an amount approximately equal to such overdue payment due
to each of the Reference Banks are offered to such Reference Bank in the London
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the Base Rate for such day).
(d) The Administrative Agent shall determine each interest rate applicable
to the Loans hereunder. The Administrative Agent shall promptly notify the
Borrower and the participating Banks of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.
(e) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
SECTION 2.05. Method of Electing Interest Rates. (a) The Loans included in
each Borrowing shall bear interest initially at the type of rate specified by
the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each Group of Loans (subject to subsection (d) of this Section and the
provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day
and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, subject to Section
2.10 if any such conversion is effective on any day other than the last day
of an Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Administrative Agent not later than 10:30 A.M. (New York
City time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such Notice applies, and the remaining portion to which it does not
apply, are each at least $5,000,000 (unless such portion is comprised of Base
Rate Loans). If no such notice is timely received before the end of an Interest
Period for any Group of Euro-Dollar Loans, the Borrower shall be deemed to have
elected that such Group of Loans be converted to Base Rate Loans at the end of
such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans resulting from such conversion are
to be Euro-Dollar Loans, the duration of the next succeeding Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall notify
each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any Loans to,or
continue any Loans for an additional Interest Period as, Euro-Dollar Loans if
(i) the aggregate principal amount of any Group of Euro-Dollar Loans created or
continued as a result of such election would be less than $5,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower delivers notice
of such election to the Administrative Agent.
SECTION 2.06. Fees. (a) Commitment Fee. The Borrower shall pay to the
Administrative Agent, for the account of the Banks ratably in proportion to
their Commitments, a commitment fee at the Commitment Fee Rate (determined daily
in accordance with the Pricing Schedule) per annum on the daily average amount
by which the aggregate amount of the Commitments exceeds the aggregate
outstanding principal amount of the Loans. Such commitment fee shall accrue from
and including the Effective Date to but excluding the date on which the
Commitments terminate in their entirety, and shall be payable quarterly in
arrears on each Quarterly Payment Date and on the date on which the Commitments
terminate in their entirety.
(b) Utilization Fee. For each day on which Usage exceeds 33%, the Borrower
shall pay to the Administrative Agent for the account of the Banks ratably in
proportion to their Commitments, a utilization fee at the Utilization Fee Rate
(determined daily in accordance with the Pricing Schedule) per annum on the
aggregate principal amount of Loans outstanding on such day. Such utilization
fee shall be payable quarterly in arrears on each Quarterly Payment Date and on
the Termination Date.
SECTION 2.07. Termination or Reduction of Commitments.(a) The Borrower may,
upon at least three Domestic Business Days' notice to the Administrative Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce from time to time, by an aggregate amount of at
least $25,000,000, the aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans. Promptly after receiving a
notice pursuant to this subsection, the Administrative Agent shall notify each
Bank of the contents thereof.
(b) Unless previously terminated, the Commitments shall terminate in their
entirety on the Termination Date.
SECTION 2.08. Optional Prepayments. (a) Subject in the case of Euro-Dollar
Loans to Section 2.10, the Borrower may, upon at least one Domestic Business
Day's notice to the Administrative Agent, prepay any Group of Base Rate Loans or
upon at least three Euro-Dollar Business Days' notice to the Administrative
Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time,
or from time to time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with interest accrued thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group of Loans.
(b) Promptly after receiving a notice of prepayment pursuant to this
Section, the Administrative Agent shall notify each Bank of the contents thereof
and of such Bank's ratable share of such prepayment, and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.09. Mandatory Prepayments. (a) If at any time after the date
hereof, the Borrower or any of its domestic Subsidiaries shall receive any Net
Cash Proceeds of any Asset Sale, (i) the Borrower shall forthwith prepay the
Loans in an aggregate principal amount equal to 100% of such Net Cash Proceeds
and (ii) if such Net Cash Proceeds are received on any date on or before May 15,
1999, the Base Amount on such date shall be reduced in an amount equal to 100%
of such Net Cash Proceeds; provided that in the case of the sale or disposition
of equipment, the Base Amount shall be reduced only on the 90th day after
receipt of such Net Cash Proceeds, and only in an amount equal to the amount (if
any) by which (x) the amount such Person shall not have expended or committed to
expend during such 90-day period for the replacement of the equipment in respect
of which such Net Cash Proceeds were received exceeds (y) the aggregate
principal amount of Loans prepaid on the first day of such 90-day period.
(b) If at any time after the date hereof, the Borrower or any of its
domestic Subsidiaries shall receive any Major Casualty Proceeds, (i) the
Borrower shall forthwith prepay the Loans in an aggregate principal amount equal
to the aggregate Major Casualty Proceeds received by such Person and (ii) if
such Major Casualty Proceeds are received on any date on or before May 15, 1999,
the Base Amount on such date shall be reduced in an amount equal to 100% of such
Major Casualty Proceeds; provided that the Base Amount shall be reduced only on
the 180th day after receipt of such Major Casualty Proceeds, and only in an
amount equal to the amount (if any) by which (x) the amount such Person shall
not have expended or committed to expend during such 180-day period for the
restoration or replacement of the asset in respect of which such Major Casualty
Proceeds were received (or for investment in any other fixed assets) exceeds (y)
the aggregate principal amount of Loans prepaid on the first day of such 180-day
period.
(c) If on any Domestic Business Day the aggregate outstanding principal
amount of the Loans exceeds the lesser of the Commitments and the Available
Amount, the Borrower shall prepay no later than the next Domestic Business Day a
principal amount of Loans equal to such excess.
(d) The prepayments required by subsection (a) shall be made forthwith upon
receipt by the Borrower or any of its Subsidiaries, as the case may be, of such
Net Cash Proceeds; provided that if the Net Cash Proceeds in respect of any
Asset Sale is less than $1,000,000, such prepayment shall be made upon receipt
of proceeds such that, together with all other such amounts not previously
applied, such Net Cash Proceeds is equal to at least $1,000,000; and provided
further that if any such prepayment would otherwise require prepayment of
Euro-Dollar Loans or portions thereof prior to the last day of the related
Interest Period, such prepayment shall, unless the Administrative Agent
otherwise notifies the Borrower upon the instructions of the Required Banks, be
deferred to such last day. The Borrower shall give the Administrative Agent at
least five Euro-Dollar Business Days' notice of each prepayment required
pursuant to subsection (a).
SECTION 2.10. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder not later than 1:00 P.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York City, to the
Administrative Agent at its address specified in or pursuant to Section 9.01.
The Administrative Agent will promptly distribute to each Bank its ratable share
of each such payment received by the Administrative Agent for the account of the
Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Borrower notifies the Administrative Agent before the date
on which any payment is due to the Banks hereunder that the Borrower will not
make such payment in full, the Administrative Agent may assume that the Borrower
has made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance on such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Administrative Agent forthwith on demand
such amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.11. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan, or any Euro-Dollar Loan is
converted to a Base Rate Loan (whether such payment or conversion is pursuant to
Article 2, 6 or 8 or otherwise), on any day other than the last day of an
Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.04(c), or if the Borrower fails to borrow, prepay,
convert or continue any Euro-Dollar Loans after notice has been given to any
Bank in accordance with Section 2.02(b), 2.05(c) or 2.08(b), the Borrower shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant which has
purchased or agreed to purchase a participation in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties, but excluding loss of margin for the period after
such payment or conversion or failure to borrow, prepay, convert or continue;
provided that such Bank shall have delivered to the Borrower a certificate as to
the amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.12. Computation of Interest and Fees. All interest and fees shall
be computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 2.13. Notes. (a) The Borrower's obligation to repay the Loans of
each Bank shall be evidenced by a single Note payable to the order of such Bank
for the account of its Applicable Lending Office
(b) Each Bank may, by notice to the Borrower and the Administrative Agent,
request that the Borrower's obligation to repay such Bank's Loans of a
particular type be evidenced by a separate Note. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate modifications to
reflect the fact that it relates solely to Loans of the relevant type. Each
reference in this Agreement to the "Note" of such Bank shall be deemed to refer
to and include any or all of such Notes, as the context may require.
(c) Promptly after it receives each Bank's Note pursuant to Section
3.01(a), the Documentation Agent shall forward such Note to such Bank. Each Bank
shall record the date, amount and type of each Loan made by it and the date and
amount of each payment of principal made by the Borrower with respect thereto,
and may, if such Bank so elects in connection with any transfer or enforcement
of its Note, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding; provided that a Bank's failure to make any such recordation or
endorsement shall not affect the Borrower's obligations hereunder or under the
Notes. Each Bank is hereby irrevocably authorized by the Borrower so to endorse
its Note and to attach to and make a part of its Note a continuation of any such
schedule as and when required.
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur when (i) the
Documentation Agent has received all the following documents, each dated the
Effective Date unless otherwise indicated, and (ii) the other conditions
specified below shall have been satisfied:
(a) a duly executed Note for the account of each Bank dated on or
before the Effective Date and complying with the provisions of Section
2.13;
(b) either a counterpart hereof signed by the Required Banks and the
Borrower or facsimile or other written confirmation satisfactory to the
Documentation Agent confirming that such party has signed a counterpart
hereof;
(c) an opinion of Xxxx and Xxxx LLP, counsel for the Borrower,
substantially in the form of Exhibit B hereto, and covering such additional
matters relating to the transactions contemplated hereby as the Required
Banks may reasonably request;
(d) an opinion of Xxxxx Xxxx & Xxxxxxxx, special counsel for the
Documentation Agent, substantially in the form of Exhibit C hereto, and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(e) duly executed counterparts of each of the Collateral Documents,
together with evidence satisfactory to the Agents of the effectiveness and
perfection (to the extent required thereby) of the Liens contemplated
thereby, including the filing of UCC-1's and the delivery of any stock
certificates comprising the Collateral;
(f) the binders referred to in Section 5.03(c);
(g) the Borrower shall have paid in full (or made arrangements
satisfactory to the Documentation Agent for paying in full) on the
Effective Date, all fees and other amounts (if any) then due and payable by
the Borrower to the Banks and the Agents to the extent invoiced at least
one Domestic Business Day prior to the Effective Date;
(h) evidence satisfactory to it that all fees and expenses payable for
the account of the Banks and the Agents and their affiliates on or before
the Effective Date have been paid in full in the amounts previously agreed
upon on or before the Effective Date; and
(i) all documents the Documentation Agent may reasonably request
relating to the existence of the Borrower, the corporate authority for and
the validity of the Loan Documents, and any other matters relevant hereto,
all in form and substance satisfactory to the Documentation Agent.
Promptly after the Effective Date occurs, the Documentation Agent shall
notify the Borrower, the Administrative Agent and the Banks thereof, and such
notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. Consequence of Effectiveness. On the Effective Date, without
further action by any of the parties thereto, the Existing Credit Agreement will
be automatically amended and restated to read as this Agreement reads. On and
after the Effective Date, the rights and obligations of the parties hereto shall
be governed by the provisions hereof. The rights and obligations of the parties
to the Existing Credit Agreement with respect to the period prior to the
Effective Date shall continue to be governed by the provisions thereof as in
effect prior to the Effective Date. No Borrowing or Interest Period in existence
prior to the Effective Date shall be affected by the occurrence of the Effective
Date.
SECTION 3.03. Borrowings. The obligation of any Bank to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) the fact that the Effective Date shall have occurred on or
before July 31, 1998;
(b) receipt by the Administrative Agent of a Notice of Borrowing
as required by Section 2.02;
(c) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed
the lesser of the aggregate Commitments and the Available Amount;
(d) the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the
date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c), (d) and (e) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all corporate powers and all material
governmental licenses, consents, authorizations and approvals required to carry
on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Borrower of the Loan Documents
are within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (other than in connection with
the Collateral Documents) and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the Borrower's certificate
of incorporation or by-laws or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any Subsidiary, the
contravention of which instrument or default under which instrument could
reasonably be expected to have a Material Adverse Effect, or result in the
creation or imposition of any Lien on any asset of the Borrower or any
Subsidiary.
SECTION 4.03. Binding Effect. The Loan Documents (other than the Notes)
constitute valid and binding agreements of the Borrower and each Note, when
executed and delivered in accordance with this Agreement, will constitute a
valid and binding obligation of the Borrower, in each case enforceable in
accordance with its terms except (i) as may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (ii) as rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
SECTION 4.04. Financial Information. (a) The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of December 31, 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the Fiscal Year then ended, reported on by Xxxxxx Xxxxxxxx LLP , a
copy of which financial statements has been delivered to each of the Banks,
fairly present, in conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such Fiscal Year. (b
Except as previously disclosed to the Banks prior to the Effective Date, since
December 31, 1997 there has been no material adverse change in the business,
financial position, results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. Except with respect to clause (i) of the
definition of "Material Adverse Effect" in the event of an adverse decision in
any of the legal proceedings referenced in the Borrower's Quarterly Report on
Form 10-Q for the Fiscal Quarter ended March 29, 1998, there is no action, suit
or proceeding pending against, or to the Borrower's knowledge threatened against
or affecting, the Borrower or any Subsidiary before any court or arbitrator or
any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could materially adversely affect the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole, or
which in any manner draws into question the validity or enforceability of the
Loan Documents.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of complying with Environmental Laws,
are unlikely to have a material adverse effect on the business, financial
condition or results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes or other governmental charges are, in the
Borrower's reasonable opinion, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate Subsidiaries
which has consolidated assets of at least $1,000,000 is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.10. Regulatory Restrictions on Borrowing. The Borrower is not (i)
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) otherwise subject to
any regulatory scheme which restricts its ability to incur debt.
SECTION 4.11. Full Disclosure. (a All information heretofore furnished by
the Borrower to the Agents or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agents or any Bank will
be, true and accurate in all material respects on the date as of which such
information is stated or certified. The Borrower has disclosed to the Banks any
and all facts which materially and adversely affect, or may materially and
adversely affect (to the extent the Borrower can now reasonably foresee), the
business, operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the Borrower's ability to perform its
obligations under the Loan Documents.
(b) The projections set forth in the Borrower Plan were based on reasonable
assumptions and as of their date represented the best estimate of future
performance of the Borrower and its Subsidiaries. During the period from the
respective dates as of which information is stated in the Borrower Plan to and
including the Effective Date, no event has occurred and no condition has come
into existence which would have caused the projections therein to be materially
misleading.
SECTION 4.12. Representations in Collateral Documents True and Correct.
Each of the representations and warranties of the Borrower contained in the
Collateral Documents is true and correct.
SECTION 4.13. Solvency. As of each of the Effective Date and the date of
each Borrowing, after giving effect to the transactions contemplated hereby to
occur on such date: (i) the aggregate fair market value of the assets of the
Borrower will exceed its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (ii) the Borrower will be able to pay
its debts as they mature and (iii) the Borrower will not have unreasonably small
capital for the business in which it is engaged.
SECTION 4.14. Properties. (a) Each of the Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe (as determined in a judicial or alternative
dispute resolution proceeding) upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.15. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's systems interface)
which are material to the operations of the Borrower and the testing of all such
systems and equipment, as so reprogrammed, will be completed by June 30, 1999.
The cost to the Borrower of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Borrower (including, without
limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. Except for
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue to be, sufficient to permit the Borrower to conduct its business
without Material Adverse Effect.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any principal of or interest on any Loan remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the Banks:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of operations, stockholders' equity and cash flows
for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all reported on in a manner
acceptable to the SEC by Xxxxxx Xxxxxxxx LLP or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter, the related consolidated
statement of operations for such Fiscal Quarter and the related
consolidated statements of operations and cash flows for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter, setting forth in the
case of each such statement of operations and cash flows in comparative
form the figures for the corresponding period in the previous Fiscal Year,
all certified (subject to normal year-end adjustments) as to fairness of
presentation and consistency with GAAP by the Borrower's chief financial
officer or chief accounting officer;
(c) as soon as available and in any event within 30 days after the end
of each fiscal month of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at the end of such month, the
related consolidated statements of operations for such month and the
related consolidated statement of operations and cash flows for the portion
of the Fiscal Year ended at the end of such month setting forth in each
case in comparative form the figures for the corresponding periods of the
previous Fiscal Year all certified (subject to normal quarterly and
year-end adjustment and to the absence of footnotes) as to fairness of
presentation and consistency with GAAP by the Borrower's chief financial
officer or chief accounting officer;
(d) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
Borrower's chief financial officer or chief accounting officer (i) setting
forth in reasonable detail the calculations required to establish whether
the Borrower was in compliance with the requirements of Sections 5.09 to
5.15, inclusive, and Section 5.17, and the calculation of the Borrowing
Base on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto;
(e) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements stating
whether anything has come to their attention to cause them to believe that
(i) any Default existed on the date of such statements and (ii) the
calculations set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c) above are not correct;
(f) promptly upon receipt thereof, copies of all reports (other than
drafts of final reports) submitted to the Borrower by its independent
public accountants in connection with each annual, interim or special audit
of the financial statements of the Borrower made by such accountants,
including the comment letter submitted by such accountants to management in
connection with their annual audit;
(g) within five Domestic Business Days after any officer of the
Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the Borrower's chief financial officer or
chief accounting officer setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(h) as soon as reasonably practicable after any officer of the
Borrower obtains knowledge thereof, notice of any event or condition which
has had or could reasonably be expected to have a Material Adverse Effect
and the nature of such Material Adverse Effect;
(i) as soon as reasonably practicable after any officer of the
Borrower obtains knowledge of the commencement of, or of a threat of the
commencement of, an action, suit or proceeding against the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable likelihood of an
adverse decision which could have a Material Adverse Effect or which in any
manner questions the validity of the Loan Documents, a certificate of a
senior financial officer of the Borrower setting forth the nature of such
pending or threatened action, suit or proceeding and such additional
information with respect thereto as may be reasonably requested by any
Bank;
(j) promptly after the mailing thereof to the Borrower's shareholders
generally, copies of all financial statements, reports and proxy statements
so mailed;
(k) promptly after the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) filed by the Borrower with the SEC;
(l) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice
and other information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the Borrower's chief financial officer or chief
accounting officer setting forth details as to such occurrence and the
action, if any, which the Borrower or applicable member of the ERISA Group
is required or proposes to take;
(m) within 30 days after the commencement of each Fiscal Year, the
Borrower's operating and capital expenditure budgets and cash flow forecast
on a quarterly basis for such Fiscal Year and on an annual basis for the
succeeding Fiscal Years through the Termination Date;
(n) on or before the 21st day of each calendar month, a Borrowing Base
Certificate setting forth a calculation of the Borrowing Base as of the
last Domestic Business Day of the immediately preceding calendar month; and
(o) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as
either Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and discharge,
and will cause each Subsidiary to pay and discharge, at or before maturity, all
their respective material obligations and liabilities (including, without
limitation, tax liabilities and claims of materialmen, warehousemen and the like
which if unpaid might by law give rise to a Lien), except where the same are
contested in good faith, and will maintain, and will cause each Subsidiary to
maintain, in accordance with GAAP, if and to the extent appropriate, reserves
for the accrual thereof.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in reasonably good working order and condition, ordinary wear
and tear excepted.
(b) The Borrower will, and will cause each Subsidiary to, maintain (either
in the Borrower's name or in such Subsidiary's own name) with financially sound
and responsible insurance companies, insurance on all their respective material
properties in at least such amounts, against at least such risks and with no
greater risk retention as are usually maintained, insured against or retained,
as the case may be, in the same general area by companies of established repute
engaged in the same or a similar business.
(c) On or prior to the Effective Date, the Borrower shall cause the
Security Agent to be named as an additional insured and loss payee on each
insurance policy required to be maintained pursuant to this Section 5.03. The
Borrower will deliver to the Banks (i) on the Effective Date, binders from the
Borrower insurance broker dated such date showing the amount of coverage as of
such date, (ii) upon the request of any Bank through the Administrative Agent
from time to information presented in reasonable detail as to the insurance
carried, (iii) within five days of receipt of notice from any insurer, a copy of
any notice of cancellation, nonrenewal or material change in coverage from that
existing on the Effective Date and (iv) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower.
SECTION 5.04. Conduct of Business and Maintenance of Existence.The Borrower
and its Subsidiaries will continue to engage in business of the same general
type as now conducted by the Borrower and its Subsidiaries, and will preserve,
renew and keep in full force and effect their respective corporate existences
and their respective rights, privileges and franchises necessary or desirable in
the normal conduct of business; provided that nothing in this Section shall
prohibit:
(i) the merger of a Subsidiary into the Borrower if, after giving
effect thereto, no Default shall have occurred and be continuing;
(ii) the merger or consolidation of a Subsidiary with or into a
Person other than the Borrower if the corporation surviving such
consolidation or merger is a Wholly-Owned Subsidiary and, after giving
effect thereto, no Default shall have occurred and be continuing; or
(iii) the termination of the corporate existence of a Subsidiary
if the Borrower in good faith determines that such termination is in
the best interest of the Borrower and is not materially disadvantageous
to the Banks.
The Borrower will not modify its policy for classification of doubtful
accounts in any manner materially detrimental to the interests of the Banks
(including, without limitation, in any manner which would result in an increase
in the Borrowing Base) without the consent of the Required Banks.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply, in all respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder), except (i) where the necessity of compliance therewith
is contested in good faith by appropriate proceedings or (ii) where such
noncompliance could not reasonably be expected to have a Material Adverse
Effect.
SECTION 5.06. Inspection of Property, Books and Records. The Borrower will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries shall be made of all dealings and transactions
in relation to its business and activities; and will permit, and will cause each
Subsidiary to permit, representatives of any Bank at such Bank's expense to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times
(including reasonable notice) and as often as may reasonably be requested.
SECTION 5.07. Mergers and Sales of Assets. (a) Except in connection with a
Permitted Acquisition, the Borrower will not, and will not permit any Subsidiary
to, consolidate or merge with or into, or transfer all or substantially all of
its assets to, any other Person, provided that (i) the Borrower may merge with a
Wholly-Owned Subsidiary if the Borrower is the corporation surviving such merger
and immediately after giving effect to such merger, no Default shall have
occurred and be continuing, and (ii) any Wholly-Owned Subsidiary or Nomai may
merge with, or transfer all or substantially all of its assets to, any other
Wholly-Owned Subsidiary and immediately after giving effect to such merger or
transfer, no Default shall have occurred and be continuing.
(b) Except in connection with a Permitted Acquisition, none of the Borrower
and its Subsidiaries will acquire the Capital Stock of or all or substantially
all of the assets, operations, any division or any operating unit of any Person
(other than (i) Nomai and (ii) a Wholly-Owned Subsidiary). None of the Borrower
and its Subsidiaries will act as a general partner under any partnership
agreement with any other Person.
(c) The Borrower and its Subsidiaries will not sell, lease or otherwise
transfer, directly or indirectly, any property except for (i) sales of inventory
in the ordinary course of business, (ii) sales or dispositions of obsolete or no
longer useful equipment, (iii) sales of production equipment to the extent the
proceeds of such sale do not exceed $5,000,000 in any fiscal year and $7,000,000
during the period from and including the Effective Date to but excluding the
Termination Date and (iv) the granting of licenses in the ordinary course of
business.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used by
the Borrower for general corporate purposes. None of such proceeds will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning of
Regulation U.
SECTION 5.09. Negative Pledge. Neither the Borrower nor any Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such
event;
(b) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
asset, including, without limitation, Liens securing obligations under
capital leases, provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof;
(c) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(d) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in
contemplation of such acquisition;
(e) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not
increased and is not secured by any additional assets;
(f) Liens arising in the ordinary course of its business (i)
which do not secure Debt or Derivatives Obligations, (ii) which do not
secure any single obligation (or class of obligations having a common
cause) in an amount exceeding $10,000,000 and (iii) as to which no
financing statement or other document similar in effect is on file in
any recording office;
(g) Liens on intellectual property of the Borrower in favor of
the holders of the Subordinated Notes; provided that such Liens are
junior to the Liens created by the Collateral Documents;
(h) Liens created by the Collateral Documents; and
(i) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal or face amount
not at any time exceeding $15,000,000.
Notwithstanding the foregoing, neither the Borrower nor any of its
Subsidiaries (other than Foreign Subsidiaries (as defined in the Pledge
Agreement) not incorporated under the laws of, or having a principal place of
business in, Canada) will create, assume or suffer to exist any Lien on any
Inventory (other than Liens described in clause (f) or (h) above) or Receivables
(other than Liens described in clause (h) above).
SECTION 5.10. Limitation on Debt. The Borrower will not, and will not
permit any of its Subsidiaries to, incur or at any time be liable with respect
to any Debt except:
(a) Debt under this Agreement;
(b) Debt outstanding on the date hereof not in excess of
$52,100,000 in aggregate principal amount and identified on Schedule I
hereto;
(c) Debt of the Borrower of a type described in clause (b) of
Section 5.09 incurred in an aggregate amount not in excess of (i)
during the period from and including the Effective Date through and
including December 31, 1998, $15,000,000, (ii) during the period from
and including January 1, 1999 through and including December 31, 1999,
$30,000,000 and (iii) thereafter, $15,000,000;
(d) Debt in respect of the Subordinated Notes; and
(e) Debt of the Borrower and its Subsidiaries not otherwise
permitted by this Section incurred after the Effective Date in an
aggregate principal amount at any time outstanding not to exceed
$15,000,000.
SECTION 5.11. Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth will at no time be less than an amount equal to the sum of
(i) $375,000,000 plus (ii) an amount equal to 75% of Consolidated Net Income for
each Fiscal Quarter ending after March 31, 1998 but before the date of
determination, in each case, for which Consolidated Net Income is positive (but
with no deduction on account of negative Consolidated Net Income for any Fiscal
Quarter) plus (iii) 75% of the aggregate net proceeds, including the fair market
value of property other than cash (as determined in good faith by the Borrower's
board of directors), received by the Borrower from the issuance and sale after
the date hereof of any capital stock of the Borrower (other than the proceeds of
any issuance and sale of any capital stock (x) to a Subsidiary or (y) which is
required to be redeemed, or is redeemable at the option of the holder, if
certain events or conditions occur or exist or otherwise) or in connection with
the conversion or exchange of any Debt of the Borrower into capital stock of the
Borrower after March 31, 1998.
SECTION 5.12. Debt to Consolidated Tangible Net Worth. Consolidated Debt
will not at any time exceed 60% of Consolidated Tangible Net Worth. SECTION
5.13. Minimum Consolidated EBITDA. On the last day of each Fiscal Quarter
set forth below, Consolidated EBITDA for the four consecutive quarters then most
recently ended shall not be less than the corresponding amount set forth below:
------------------------------------------------------ ------------------------
Fiscal Quarter Ending on or Closest to Amount
June 28, 1998 $60,000,000
September 27, 1998 $15,000,000
December 31, 1998 $3,000,000
March 31, 1999 $57,500,000
June 30, 1999 $120,000,000
September 30, 1999 $120,000,000
December 31, 1999 $120,000,000
March 31, 2000 $120,000,000
June 30, 2000 $120,000,000
SECTION 5.14. Maximum Cash Conversion Days. Cash Conversion Days for each
Fiscal Quarter set forth below shall not exceed the corresponding amount set
forth below:
Fiscal Quarter Ending on or Closest to Amount
June 28, 1998 100
September 27, 1998 80
December 31, 1998 70
March 31, 1999 70
June 30, 1999 70
September 30, 1999 70
December 31, 1999 60
March 31, 2000 60
June 30, 2000 60
For purposes of this Section, "Cash Conversion Days" means the sum of (i)
Accounts Receivable Days and (ii) Inventory Days, minus (iii) Accounts Payable
Days; "Accounts Receivable Days" means, for any period, consolidated trade
receivables, less allowance for doubtful accounts, of the Borrower and its
Consolidated Subsidiaries on the last day of such period, divided by
consolidated average daily sales of the Borrower and its Consolidated
Subsidiaries during such period; "Inventory Days" means, for any period,
consolidated inventories of the Borrower and its Consolidated Subsidiaries on
the last day of such period divided by the consolidated average daily cost of
sales of the Borrower and its Consolidated Subsidiaries for such period; and
"Accounts Payable Days" means, for any period, consolidated accounts payable of
the Borrower and its Consolidated Subsidiaries on the last day of such period
divided by the consolidated average daily cost of sales of the Borrower and its
Consolidated Subsidiaries for such period.
SECTION 5.15. Capital Expenditures. The aggregate amount of Consolidated
Capital Expenditures during any period set forth below shall not exceed the
amount set forth below opposite such period:
Fiscal Quarter Ending on Amount
September 27, 1998 $40,000,000
December 31, 1998 $40,000,000
Fiscal Year Ending on
December 31, 1999 $130,000,000
Two Fiscal Quarters Ending Closest to June 30, 2000
$70,000,000
; provided that amounts for any period set forth above shall be increased by the
remainder, if any, of (x) the amount of Consolidated Capital Expenditures
permitted to be made in the immediately preceding period minus (y) the amount of
Consolidated Capital Expenditures made in such immediately preceding period;
provided further that amounts for any period set forth above shall not be
increased pursuant to the immediately preceding proviso by more than
$10,000,000.
SECTION 5.16. Restricted Payments. Neither the Borrower nor any Subsidiary
will declare or make any Restricted Payment.
SECTION 5.17. Investments. Neither the Borrower nor any Subsidiary will
hold, make or acquire any Investment in any Person other than: (a) Investments
in Persons which are Subsidiaries on the date hereof;
(b) up to an aggregate of $44,000,000 of Investments in Nomai to
permit the Borrower to acquire a controlling interest in Nomai;
(c) Temporary Cash Investments; provided that the Security Agent has a
perfected Lien on all such domestic Temporary Cash Investments owned by the
Borrower; and
(d) any Investment not otherwise permitted by the foregoing clauses of
this Section if, immediately after such Investment is made or acquired, (i) no
Default shall have occurred and be continuing and (ii) the aggregate net book
value of all Investments permitted by this clause (d) does not exceed (A)
$10,000,000, in respect of the portion of such Investments for which the
consideration is cash, (B) $5,000,000, in respect of the portion of such
Investments for which the consideration is the assumption of Debt and (C)
$10,000,000, in respect of the portion of such Investments for which the
consideration is common equity of the Borrower.
SECTION 5.18. Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly, pay any funds to or for
the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any Affiliate except on an arms-length basis on terms at least as favorable to
the Borrower or such Subsidiary as could have been obtained from a third party
that was not an Affiliate.
SECTION 5.19. Restrictive Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Debt of the Borrower or
any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule II (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Debt permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Debt and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases, licenses and other contracts restricting the assignment
thereof.
SECTION 5.20. Accounting Changes. The Borrower will not change its Fiscal
Year from a Fiscal Year ending on December 31. The Borrower will not adopt any
non-mandatory change in GAAP or the application thereof without 30 days' prior
notice to the Administrative Agent, accompanied, in the case of any material
change, by evidence of concurrence in such change by the public accounting firm
regularly employed by the Borrower.
SECTION 5.21. Modification of Certain Documents. Without the consent of the
Required Banks, the Borrower will not, and will not permit any of its
Subsidiaries to, consent to or solicit or enter into any amendment or supplement
to, or any waiver or other modification of, (A) the certificate of
incorporation, bylaws or other organizational document of the Borrower or any of
its Subsidiaries, which amendment, supplement, waiver or modification, as the
case may be, could reasonably be expected to have a material adverse effect on
the rights of the Banks or the Administrative Agent under the Loan Documents or
(B) any agreement or instrument governing the terms of the Subordinated Notes or
of any other Debt which by its terms is expressly subordinated in right of
payment to the Loans, other than any amendment, supplement, waiver or other
modification that extends the maturity thereof without payment of additional
consideration therefor.
SECTION 5.22. Capital Stock. None of the Borrower's Subsidiaries shall
issue any shares of Capital Stock except shares of Capital Stock issued to the
Borrower or a Wholly-Owned Subsidiary.
SECTION 5.23. Further Assurances. (a) The Borrower will at its sole cost
and expense, do, execute, acknowledge and deliver all such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment and transfers as the
Administrative Agent shall from time to time request, which may be necessary in
the reasonable judgment of the Administrative Agent from time to time to assure,
perfect, convey, assign and transfer to the Administrative Agent the property
and rights conveyed or assigned pursuant to the Collateral Documents, or which
may facilitate the performance of the terms of the Collateral Documents, or the
filing, registering or recording of the Collateral Documents.
(b) All costs and expenses in connection with the grant of any security
interests under the Collateral Documents, including without limitation
reasonable legal fees and other reasonable costs and expenses in connection with
the granting, perfecting and maintenance of any security interests under the
Collateral Documents or the preparation, execution, delivery, recordation or
filing of documents and any other acts as the Administrative Agent may
reasonably request in connection with the grant of such security interests shall
be paid by the Borrower promptly upon demand.
(c) The Borrower will not enter into or become subject to any agreement
which would impair its ability to comply, or which would purport to prohibit it
from complying, with the provisions of this Section.
(d) The Borrower will:
(i) cause each Person which becomes a Subsidiary (other than a
Foreign Subsidiary (as defined in the Pledge Agreement)) after
the Effective Date to (x) become a party to a guaranty of the
Borrower's obligations under the Credit Agreement in form and
substance satisfactory to the Administrative Agent and (y)
enter into a security agreement and a pledge agreement,
substantially in the form of the Security Agreement and the
Pledge Agreement, respectively, with such changes as are
necessary or desirable in the judgment of the Administrative
Agent, in order to grant perfected first priority security
interests upon substantially all of its assets to secure its
obligations under such guaranty; and
(ii) cause each Person described in clause (i) above to take
such actions as may be necessary or desirable to effect the
foregoing within 30 days after such Person becomes a
Subsidiary, including without limitation causing such Person
to (1) execute and deliver to the Administrative Agent such
number of copies as the Administrative Agent may specify of
such agreements and other documents creating security
interests and (2) deliver such certificates, evidences of
corporate action and legal opinions or other documents as the
Administrative Agent may reasonably request, all in form and
substance satisfactory to the Administrative Agent, relating
to the satisfaction of the Borrower's obligations under this
subsection (d).
SECTION 5.24. Landlord and Warehouseman Waivers. The Borrower shall use its
best efforts to deliver to the Administrative Agent waivers of contractual and
statutory landlord's, landlord's mortgagee's and warehouseman's Liens in form
and substance reasonably satisfactory to the Administrative Agent under each
existing lease, warehouse agreement or similar agreement to which the Borrower
or any Subsidiary that is domiciled or organized under the laws of the United
States or any political subdivision thereof is a party; provided that such
waivers will in any event be incorporated when the existing lease, warehouse
agreement or similar agreement is amended, renewed or extended and the Borrower
will obtain waivers of both contractual and statutory landlord's, landlord's
mortgagee's and warehouseman's Liens in form and substance reasonably
satisfactory to the Administrative Agent in connection with each new lease,
warehouse agreement or similar agreement for a location at which inventory is
held, entered into by the Borrower or any Subsidiary that is domiciled or
organized under the laws of the United States or any political subdivision
thereof.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan, or shall fail to pay within three Domestic Business Days of the
due date thereof any interest, fee or other amount payable hereunder;
(b) the Borrower shall fail to observe or perform (i) any
covenant contained in Article 5, other than those contained in
Sections 5.01 through 5.06 and Section 5.18 and Section 5.23, or (ii)
any covenant contained in Section 4(A) or 4(H) of the Security
Agreement or Section 5(B) of the Pledge Agreement;
(c) the Borrower shall fail to observe or perform any covenant or
agreement (other than those covered by clause (a) or (b) above)
contained in the Loan Documents for 10 days after the Administrative
Agent gives notice thereof to the Borrower at the request of any Bank;
(d) any representation, warranty, certification or statement made
by the Borrower or any Subsidiary in any Loan Document or in any
certificate, financial statement or other document delivered pursuant
to any Loan Document shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make one or more
payments in respect of Material Financial Obligations when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the
holder of such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer, any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $5,000,000;
(j) judgments or orders for the payment of money exceeding
$5,000,000 in aggregate amount shall be rendered against the Borrower
or any Subsidiary and such judgments or orders shall continue
unsatisfied and unstayed for a period of 20 days;
(k) any Lien created by any of the Collateral Documents shall at
any time fail to constitute a valid and (to the extent required by the
Collateral Documents) perfected Lien on all of the Collateral
purported to be subject thereto, securing the obligations purported to
be secured thereby, with the priority required by the Loan Documents,
or the Borrower shall so assert in writing; or
(l) any person or group of persons (within the meaning of Section
13 or 14 of the Exchange Act) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the SEC under said
Act) of 30% or more of the outstanding shares of common stock of the
Borrower; or, during any period of twelve consecutive calendar months,
individuals who were directors of the Borrower on the first day of
such period ("Initial Directors") or who were nominated for election
by at least 66b% of the Initial Directors shall cease to constitute a
majority of the Borrower's board of directors;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the Commitments, by notice
to the Borrower terminate the Commitments and they shall thereupon terminate,
and (ii) if requested by Banks holding more than 50% of the aggregate unpaid
principal amount of the Loans, by notice to the Borrower declare the Loans
(together with accrued interest thereon) to be, and the Loans (together with
accrued interest thereon) shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; provided that, if any Event of Default
specified in clause 6.01(g) or 6.01(h) occurs with respect to the Borrower, then
without any notice to the Borrower or any other act by the Agents or the Banks,
the Commitments shall thereupon terminate and the Loans (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.02. Notice of Default. The Administrative Agent shall give notice
to the Borrower under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably appoints
and authorizes each Agent and the Security Agent to enter into and act as its
agent in connection with the Collateral Documents and to take such action as
agent on its behalf and to exercise such powers under the Loan Documents as are
delegated to such Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Each of Citibank, N.A. and Xxxxxx
Guaranty Trust Company of New York shall have the same rights and powers under
the Loan Documents as any other Bank and may exercise or refrain from exercising
the same as though it were not an Agent, and each of Citibank, N.A. and Xxxxxx
Guaranty Trust Company of New York 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 an Agent. SECTION
SECTION 7.03. Action by Agents. The obligations of the Agents hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, neither Agent shall be required to take any action with respect to
any Default, except as expressly provided with respect to the Administrative
Agent in Article 6.
SECTION 7.04. Consultation with Experts. Each Agent may consult with legal
counsel (who may be counsel for the Borrower), 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.
SECTION 7.05. Liability of Agents. Neither Agent nor any of its affiliates
or any of their respective directors, officers, agents or employees 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 such different number of
Banks as any provision hereof expressly requires for such consent or request) or
(ii) in the absence of its own gross negligence or willful misconduct. Neither
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 the Loan Documents or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article 3, except receipt
of items required to be delivered to such Agent; or (iv) the validity,
effectiveness or genuineness of the Loan Documents or any other instrument or
writing furnished in connection herewith. Neither Agent shall incur any
liability by acting in reliance upon any notice, consent, certificate, statement
or other writing (which may be a bank wire, telex, facsimile or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
Without limiting the generality of the foregoing, the use of the term "agent" in
this Agreement with reference to the Agents is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.
SECTION 7.06. Indemnification. The Banks shall, ratably in proportion to
their Commitments, indemnify each Agent, its affiliates and their respective
directors, officers, agents and employees (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 such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with the Loan Documents or any action taken or
omitted by such indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance on either Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance on either Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under the Loan Documents.
SECTION 7.08. Successor Agents. Either Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint 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 Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States 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 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 Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent resigns as Agent hereunder,
the provisions of this Article shall inure to its benefit as to actions taken or
omitted to be taken by it while it was Agent.
SECTION 7.09. Agents' Fees. The Borrower shall pay to each Agent for its
own account fees in the amounts and at the times previously agreed upon by the
Borrower and such Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . If
on or before the first day of any Interest Period for any Euro-Dollar Loan:
(a) the Administrative Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the London interbank market for such
Interest Period, or
(b) Banks holding 50% or more of the aggregate principal amount
of the affected Loans advise the Administrative Agent that the
Adjusted London Interbank Offered Rate as determined by the
Administrative Agent will not adequately and fairly reflect the cost
to such Banks of funding their Euro-Dollar Loans for such Interest
Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans or to continue or convert
outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto. Unless the
Borrower notifies the Administrative Agent at least two Domestic Business Days
before the date of any affected Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans or continue outstanding Loans as Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Administrative Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice
is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Base Rate Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan as a Euro-Dollar Loan to such day or (b) immediately
if such Bank shall determine that it may not lawfully continue to maintain and
fund such Loan as a Euro-Dollar Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
any such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Bank (or its
Applicable Lending Office) or shall impose on any Bank (or its Applicable
Lending Office) or the London interbank market any other condition affecting its
Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar Loans and the
result of any of the foregoing is to increase the cost to such Bank (or its
Applicable Lending Office) of making or maintaining any Euro-Dollar Loan, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Administrative Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) For the purposes of this Section, the following
terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment by the Borrower
pursuant to this Agreement or under any Note, and all liabilities with respect
thereto, excluding (i) in the case of each Bank and Agent, taxes imposed on its
net income, and franchise or similar taxes imposed on it, by a jurisdiction
under the laws of which such Bank or Agent (as the case may be) is organized or
in which its principal executive office is located or, in the case of each Bank,
in which its Applicable Lending Office is located and (ii) in the case of each
Bank, any United States withholding tax imposed on such payment, but not any
portion of such tax that exceeds the United States withholding tax which would
have been imposed on such a payment to such Bank under the laws and treaties in
effect when such Bank first became a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, any Loan Document.
(b) All payments by the Borrower to or for the account of any Bank or Agent
hereunder or under any Note shall be made without deduction for any Taxes or
Other Taxes; provided that, if the Borrower shall be required by law to deduct
any Taxes or Other Taxes from any such payment, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such Bank
or Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law
and (iv) the Borrower shall promptly furnish to the Administrative Agent, at its
address specified in or pursuant to Section 9.01, the original or a certified
copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted (whether or not correctly) by any jurisdiction
on amounts payable under this Section) paid by such Bank or Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be paid within 15
days after such Bank or Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the United
States, before it signs and delivers this Agreement in the case of each Bank
listed on the signature pages hereof and before it becomes a Bank in the case of
each other Bank, and from time to time thereafter if requested in writing by the
Borrower (but only so long as such Bank remains lawfully able to do so), shall
provide each of the Borrower and the Administrative Agent with Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which exempts
the Bank from United States withholding tax or reduces the rate of withholding
tax on payments of interest for the account of such Bank or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States.
(e) For any period with respect to which a Bank has failed to provide the
Borrower or the Administrative Agent with the appropriate form referred to in
Section 8.04(d) (unless such failure is due to a change in treaty, law or
regulation occurring after the date on which such form originally was required
to be provided), such Bank shall not be entitled to indemnification under
Section 8.04(b) or (c) with respect to Taxes imposed by the United States;
provided that if a Bank, that is otherwise exempt from or subject to a reduced
rate of withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section as a result of a change in law or
treaty occurring after such Bank first became a party to this Agreement, then
such Bank will, at the Borrower's request, change the jurisdiction of its
Applicable Lending Office if, in the judgment of such Bank, such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) is not otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans.
If (i) the obligation of any Bank to make, or to continue or convert outstanding
Loans as or to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or 8.04 with respect
to its Euro-Dollar Loans, and in any such case the Borrower shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this Section shall
apply to such Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for compensation no
longer exist, all Loans which would otherwise be made by such Bank as (or
continued as or converted to) Euro-Dollar Loans shall instead be Base Rate Loans
(on which interest and principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks). If such Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist, the principal amount of each such Base Rate Loan
shall be converted into a Euro-Dollar Loan on the first day of the next
succeeding Interest Period applicable to the related Euro-Dollar Loans of the
other Banks.
SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank to
make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any
Bank has demanded compensation under Section 8.03 or 8.04, the Borrower shall
have the right, with the assistance of the Agents, to require such Bank to
transfer, pursuant to an Assignment and Assumption Agreement substantially in
the form of Exhibit D hereto, its Note and Commitment to a substitute bank or
banks (which may be one or more of the Banks) satisfactory to the Borrower and
the Agents.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. Communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile or similar writing) and shall be
given to such party: (a) in the case of the Borrower or either Agent, at its
address, facsimile number or telex number set forth on the signature pages
hereof, (b) in the case of any Bank, at its address, facsimile number or telex
number set forth in its Administrative Questionnaire or (c) in the case of any
party, at such other address, facsimile number or telex number as such party may
hereafter specify for the purpose by notice to the Agents and the Borrower. 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; provided that notices to the Administrative Agent under Article
2 or Article 8 shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by either Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law. SECTION
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Agents and the Security Agent,
including fees and disbursements of special counsel for each Agent and the
Security Agent, in connection with the preparation and administration of the
Loan Documents, any waiver or consent thereunder or any amendment thereof or any
Default or alleged Default thereunder and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by either Agent, the Security Agent and each
Bank, including (without duplication) the fees and disbursements of outside
counsel and the allocated cost of inside counsel, in connection with such Event
of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each Agent and Bank, their respective
affiliates (including, without limitation, the Security Agent and the
Concentration Bank (as defined in the Security Agreement)) and the respective
directors, officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel (including the
allocated cost of in-house counsel), which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of the Loan Documents or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 9.04. Sharing of Set-offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest then due with
respect to the Loans held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and interest then
due with respect to the Loans held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participation in the Loans
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Loans held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness hereunder. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Loan, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers; Release of Collateral. Any provision
of this Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Required
Banks (and, if the rights or duties of either Agent are affected thereby, by
such Agent); provided that no such amendment or waiver shall, unless signed by
all the Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for the
termination of any Commitment or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Loans, or the number of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement. Any provision of
the Collateral Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Security
Agent with the consent of the Required Banks; provided that no such amendment or
waiver shall, unless signed by all the Banks, effect or permit a release of all
or substantially all of the Collateral. Notwithstanding the foregoing,
Collateral shall be released from the Lien of the Collateral Documents from time
to time as necessary to effect any sale or pledge of assets permitted by the
Loan Documents, and the Security Agent shall execute and deliver all release
documents reasonably requested to evidence such release.
SECTION 9.06. Successors; Participation and Assignments. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may
not assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. If a Bank grants any such participating interest to a
Participant, whether or not upon notice to the Borrower and the Agents, such
Bank shall remain responsible for the performance of its obligations hereunder,
and the Borrower and the Agents shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the Borrower's obligations hereunder, including
(without limitation) the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii) or (iii) of, or in the
proviso in the penultimate sentence of, Section 9.05 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
8 with respect to its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection.
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to an
initial Commitment of not less than $10,000,000) of all, of its rights and
obligations under this Agreement and its Note, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
substantially in the form of Exhibit D hereto signed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the Borrower,
which shall not be unreasonably withheld, and the Agents; provided that if an
Assignee is an affiliate of such transferor Bank or was a Bank immediately
before such assignment, no such consent shall be required; provided further that
if an Event of Default shall have occurred and be continuing, no such consent of
the Borrower shall be required. When such instrument has been signed and
delivered by the parties thereto and such Assignee has paid to such transferor
Bank the purchase price agreed between them, such Assignee shall be a Bank party
to this Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection, the transferor Bank,
the Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to the Assignee. In connection with any
such assignment, the transferor Bank shall pay to the Administrative Agent an
administrative fee for processing such assignment in the amount of $3,000. If
the Assignee is not incorporated under the laws of the United States or a State
thereof, it shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Note to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights shall
be entitled to receive any greater payment under Section 8.03 or 8.04 than such
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to
designate a different Applicable Lending Office under certain circumstances or
at a time when the circumstances giving rise to such greater payment did not
exist.
SECTION 9.07. No Reliance on Margin Stock. Each of the Banks represents to
the Agents and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This Agreement and
each Note shall be governed by and construed in accordance with the laws of the
State of New York. The Borrower hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION 9.09. Counterparts; Integration; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. SECTION
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Confidentiality. Each Agent, the Security Agent and Bank
agrees to keep any information delivered or made available by the Borrower
pursuant to this Agreement confidential from anyone other than persons employed
or retained by such Bank who are engaged in evaluating, approving, structuring
or administering the credit facility contemplated hereby; provided that nothing
herein shall prevent either Agent or any Bank from disclosing such information
(a) to any other Bank or to either Agent, (b) to any other Person if reasonably
incidental to the administration of the credit facility contemplated hereby, (c)
upon the order of any court or administrative agency, (d) upon the request or
demand of any regulatory agency or authority, (e) which had been publicly
disclosed other than as a result of a disclosure by either Agent or any Bank
prohibited by this Agreement, (f) in connection with any litigation to which
either Agent, any Bank or its subsidiaries or Parent may be a party, (g) to the
extent necessary in connection with the exercise of any remedy hereunder, (h) to
such Bank's or Agent's legal counsel and independent auditors and (i) subject to
provisions substantially similar to those contained in this Section, to any
actual or proposed Participant or Assignee; provided, further, that for purposes
of this Section, "information" does not mean any information which (x) was
already in the possession of such Bank or Agent at the time of its disclosure by
the Borrower or (y) is made available to such Bank or Agent by a third party
which, to the knowledge of such Bank or Agent, did not violate any
confidentiality obligation by doing so.
SECTION 9.12. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set-off and
otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Bank, whether or not such Bank shall have
made any demand under this Agreement or the Note held by such Bank and although
such obligations may be unmatured. Such Bank agrees promptly to notify the
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Bank may have.
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: Vice President and Treasurer
Address: 0000 Xxxx Xxxxxx Xxx
Xxx, Xxxx 00000
Attention:
Facsimile:
BANKS
------
CITIBANK, N.A.
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
GRB/IRM Dept.
XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
FLEET NATIONAL BANK
By /s/Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Xxxxx XxXxxxx
Name: Xxxxx XxXxxxx
Title: Managing Director
FIRST SECURITY BANK OF UTAH, N.A.
By /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Commercial Banking Officer
ABN AMRO BANK N.V.
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Group Vice President
By /s/ Xxxxxxx X. XxXxxxx
Name: Xxxxxxx X. XxXxxxx
Title: Vice President
THE SUMITOMO TRUST & BANKING
CO., LTD.
By /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Deputy General Manager
THE NORTHERN TRUST COMPANY
By /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Second Vice President
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By
Name:
Title:
By
Name:
Title:
THE SANWA BANK, LIMITED, LOS
ANGELES BRANCH
By /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Assistant Vice President
CITIBANK, N.A., as Administrative Agent
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
GRB/IRM Dept
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile:
XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK, as
Documentation Agent
By /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
Address: 00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile:
ACKNOWLEDGED AND AGREED:
CITICORP USA, INC., as Security Agent
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
GRB/IRM Dept
COMMITMENT SCHEDULE
Bank Commitment
Citibank, N.A. $ 18,750,000
Xxxxxx Guaranty Trust Company of New York $ 18,750,000
Fleet National Bank $ 15,000,000
Bank of America National Trust and Savings
Association $ 9,750,000
First Security Bank of Utah, N.A. $ 15,000,000
KeyBank National Association $ 15,000,000
ABN AMRO Bank N.V. $ 15,000,000
The Sumitomo Trust & Banking Co., Ltd. $ 9,750,000
The Northern Trust Company $ 9,750,000
Istituto Bancario San Paolo di Torino S.p.A. $ 7,500,000
The Sanwa Bank, Limited, Los Angeles Branch $ 7,500,000
Union Bank of California, N.A. $ 9,750,000
Total $ 150,000,000
PRICING SCHEDULE
Each of "Euro-Dollar Margin", "Base Rate Margin", "Commitment Fee Rate" and
"Utilization Fee Rate" means, (i) for any date before delivery by the Borrower
of the financial statements required by Section 5.01(b) with respect to the
Fiscal Quarter ending on or closest to June 30, 1999, the rate set forth below
in the row opposite such term in the column corresponding to Pricing Level III
(and, in the case of the Utilization Fee Rate, to the Usage on such date) and
(ii) for any date thereafter, the percentage as set forth below in the row
opposite such term and in the column corresponding to the "Pricing Level" (and,
in the case of the Utilization Fee Rate, the Usage) that applies on such date:
Xxxxx Xxxxx Xxxxx Xxxxx
X II III IV
----------------------------------- -------------- --------------- --------------- ---------------
Euro-Dollar 1.25% 1.50% 2.00% 2.75%
Margin
Base Rate 0% .375% .875% 1.625%
Margin
Commitment Fee Rate .250% .375% .500% .625%
Utilization Fee Rate
Usage > 66% .250% .500% .500% .500%
Usage > 33% # 66% .125% .250% .250% .250%
----------------------------------- -------------- --------------- --------------- ---------------
For purposes of this Schedule, the following terms have the following
meanings:
Subject to the first paragraph of this Schedule, "Level I Pricing"
applies at any date if, as of such date, Consolidated EBITDA for the four Fiscal
Quarters then most recently ended is greater than $200,000,000.
Subject to the first paragraph of this Schedule, "Level II Pricing"
applies at any date if, as of such date, (i) Consolidated EBITDA for the four
Fiscal Quarters then most recently ended is greater than $175,000,000 and (ii)
Level I Pricing does not apply.
Subject to the first paragraph of this Schedule, "Level III Pricing"
applies at any date if, as of such date, (i) Consolidated EBITDA for the four
Fiscal Quarters then most recently ended is greater than $150,000,000 and (ii)
neither Level I Pricing nor Level II Pricing applies.
Subject to the first paragraph of this Schedule, "Level IV Pricing"
applies at any date if, as of such date, no other Pricing Level applies.
"Pricing Level" refers to the determination of which of Level I, Level
II, Level III or Level IV applies at any date.
SCHEDULE I - Debt
Iomega Corporation
JUNE 1998
DEBT
Book Balance
------------
USL Lease #1
44,468.76
USL Lease #2 107,134.19
USL Lease #3 344,634.72
USL Lease #4 657,461.92
------------
1,153,699.59
Oracle 1,283,027.11
Steel Case 472,475.47
Seimens Rolm 261,028.20
Pitney Xxxxx #1 1,456,175.25
Pitney Xxxxx #2 637,867.01
------------
2,094,042.26
Fleet 1,062,384.74
Clarklift 75,879.65
------------
Total Capital Leases 6,402,537.02
------------
Convertible Subordinated Notes
45,683,000.00
-------------
Total 52,085,537.02
-------------
SCHEDULE II
NONE
EXHIBIT A
Note
New York, New York
___________ __, 1998
For value received, Iomega Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of ______________________ (the
"Bank"), for the account of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below on the maturity date provided for in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Citibank, N.A., _________________, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the Borrower's obligations hereunder or under the
Credit Agreement.
This note is one of the Notes referred to in the Amended and Restated
Credit Agreement dated as of July 15, 1998 among Iomega Corporation, the Banks
party thereto, Citibank, N.A., as Administrative Agent, and Xxxxxx Guaranty
Trust Company of New York, as Documentation Agent (as the same may be amended
from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration
of the maturity hereof.
IOMEGA CORPORATION
By____________________
Name:
Title:
Loans and Payments of Principal
Date Amount of Type of Amount of Notation Made
Loan Loan Principal By
Repaid
--------------------- ---------- -------- --------- -------------
EXHIBIT B
Counsellors at Law
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
000-000-0000 $ fax 000-000-0000
July 15, 1998
To the Banks and the Agents
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Documentation Agent
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel for Iomega Corporation (the "Borrower") in
connection with the Amended and Restated Credit Agreement of even date herewith
(the "Credit Agreement") among the Borrower, the Banks party thereto, Citibank,
N.A. as Administrative Agent, and Xxxxxx Guaranty Trust Company of New York as
Documentation Agent. Capitalized terms used but not otherwise defined herein
have the meanings ascribed to such terms in the Credit Agreement. This opinion
is furnished to you pursuant to Section 3.01(c) of the Credit Agreement.
For purposes of the opinions expressed below, we have examined the
following:
1. the Credit Agreement;
2. the Borrower's promissory notes of even date herewith in the
aggregate original principal amount of $150,000,000, made by the
Borrower in favor of the Banks (the "Notes");
3. the Security Agreement of even date among the Borrower, Citicorp
USA, Inc., as security agent, and The Northern Trust Company, as
agent for the Secured Parties (the "Security Agreement");
4. the Pledge Agreement of even date between the Borrower and
Citicorp USA, Inc. (the "Pledge Agreement");
5. the Patent Security Agreement of even date between the Borrower
and Citicorp USA, Inc. (the "Patent Agreement");
6. the Trademark Security Agreement of even date between the
Borrower and Citicorp USA, Inc. (the "Trademark Agreement");
7. the Copyright Security Agreement of even date between the
Borrower and Citicorp USA, Inc. (the "Copyright Agreement");
8. the Control Agreements of even date among the Borrower, the
securities intermediaries named therein (the "Securities
Intermediaries") and Citicorp USA, Inc. (the "Control
Agreements") ;
9. those certain UCC-1 financing statements in the form annexed
hereto as Exhibit A (the "Financing Statements") for filing in
the filing offices listed on Schedule I;
10. that certain Secretary's Certificate of the Borrower of even date
herewith (the "Secretary's Certificate");
11. those certain resolutions of the board of directors of the
Borrower in the form annexed to the Secretary's Certificate as
Exhibit C (the "Resolutions");
12. the Borrower's Certificate of Incorporation, as amended, in the
form attached to the Secretary's Certificate as Exhibit A (the
"Articles of Organization");
13. the By-Laws of the Borrower in the form annexed to the
Secretary's Certificate as Exhibit B (the "By-Laws");
14. that certain Certificate of Legal Existence and Good Standing for
the Borrower dated July 9, 1998, issued by the Secretary of State
of the State of Delaware (the "Good Standing Certificate");
15. that certain Certificate of Foreign Qualification for the
Borrower dated July 9, 1998, issued by the Secretary of the State
of the State of Utah (the "Foreign Qualification Certificate");
and
16. such other documents, instruments and certificates (including,
but not limited to, certificates of public officials and officers
of the Borrower) as we have considered necessary for purposes of
this opinion.
The Credit Agreement, the Notes, the Security Agreement, the Pledge
Agreement, the Patent Agreement, the Trademark Agreement, the Copyright
Agreement and the Control Agreements shall hereinafter collectively be referred
to as the "Loan Documents."
In our examination of the documents described above, we have assumed
the genuineness of all signatures (other than signatures of officers of the
Borrower certified to us), the capacity, power and authority of all parties
(other than the Borrower) to execute and deliver all applicable documents, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all copies of documents submitted to us as certified or
photostatic copies, and the authenticity of the originals of such latter
documents. As to any facts material to this opinion, we have relied upon
representations made to us by one or more officers or employees of the Borrower.
Any reference to "our knowledge" or "knowledge" or any variation
thereof shall mean the conscious awareness of the attorneys in this firm who
have rendered substantive attention to this transaction of any facts which would
contradict our opinions set forth below. Although we have not undertaken any
independent investigation to determine the existence or absence of such facts,
and no inference as to our knowledge of the existence or absence of such facts
should be drawn from the fact of our representation of the Borrower, nothing has
come to our attention leading us to question the accuracy of such matters.
Without limiting the generality of the foregoing, with respect to our opinions
in paragraphs 8 and 10 below, we have not conducted a search of the dockets of
any court or administrative or other regulatory agency.
We have assumed that the Agents, the Security Agent, each Bank and each
of the Securities Intermediaries has the power and authority and has taken the
corporate action necessary to execute and deliver the Loan Documents to which it
is a party, and that no consent, approval, authorization, declaration or filing
by or with any governmental commission, board or agency is required for the
valid execution and delivery of such documents by the Agents, the Security
Agent, each such Bank and each of the Securities Intermediaries. We have assumed
the due execution and delivery by the Agents, the Security Agent, each Bank and
each of the Securities Intermediaries of such of the Loan Documents to which it
is a party, and that such Loan Documents constitute the valid and binding
obligations of the Agents, the Security Agent, each Bank and each of the
Securities Intermediaries, enforceable against it in accordance with their
terms. We have also assumed that each Bank is subject to control, regulation or
examination by a state or federal regulatory agency.
We have caused to have searched the UCC filing offices for the
Secretary of State of the States of Utah, Colorado, California, North Carolina
and Texas. The results of those searches, provided to us by LEXIS Document
Services, are attached hereto as Exhibit B(1). We have also caused to have
searched the United States Patent and Trademark Office and United States
Copyright Office records maintained by Xxxxxxxx & Xxxxxxxx, the results of which
are attached hereto as Exhibit B(2).
Except as provided in the next sentence, we express no opinion herein
with respect to the laws of any state or jurisdiction other than the
Commonwealth of Massachusetts, the Delaware General Corporation Law statute and
the federal laws of the United States of America. Our opinions in paragraphs 3,
4, 5, 6 and 9 with respect to the laws of the States of California, Colorado,
Idaho, Iowa, New York, North Carolina, Texas and Utah (the "Applicable
Jurisdictions") are based solely upon our examination of the descriptions of the
laws of each such state contained in 1 Secured Transaction Guide (CCH) & 21 at
1036-37 (1997), 1038-39 (1997), 1048-49 (1996), 1054-55 (1998), 1088-1089
(1997), 1090-91 (1997), 1109-11 (1998) and 1111-3 (1993), respectively. We note
that the Loan Documents provide that they are governed by the laws of the State
of New York. With your permission, we have assumed, without investigation, for
purposes of the opinions expressed below, that the laws of the Commonwealth of
Massachusetts are identical to the laws of the State of New York.
While we have assumed that New York law governs the creation,
perfection and priority of your interests in the Subsidiary Shares under the
Pledge Agreement, and without limiting such assumption, we note that the issuers
of the Subsidiary Shares are corporations organized under the laws of France,
Japan and Switzerland and that the laws of France, Japan and Switzerland, as the
case may be, might affect the validity and enforceability of the terms of the
Pledge Agreement and/or the perfection and priority of your rights or remedies
thereunder or interests granted therein. We express no opinions herein with
respect to any such foreign laws and our opinions in paragraphs 5 and 6 below
are limited accordingly.
The opinion expressed in paragraph 1 below, insofar as it relates to
the valid existence and corporate good standing of the Borrower in Delaware, is
based solely upon the Good Standing Certificate and is rendered as of the date
thereof. Our opinions in paragraph 1 below, to the extent pertaining to the
qualification of Borrower to do business in the State of Utah is based solely
upon the Foreign Qualification Certificate and is rendered as of the date
thereof.
Our opinions below are qualified to the extent that the validity or
enforceability of the documents referred to or of any of the rights granted to
any party pursuant thereto may be subject to or affected by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or similar laws affecting the rights of creditors generally, (ii)
statutory or decisional law concerning recourse by creditors to security in the
absence of notice or hearing, and (iii) duties and standards imposed on
creditors and parties to contracts, including, without limitation, requirements
of good faith, reasonableness and fair dealing. Furthermore, we express no
opinion as to the availability of any equitable or specific remedy upon any
breach of such documents or any of the agreements, documents or obligations
referred to therein, as the availability of such remedies may be subject to the
discretion of a court. We express no opinion as to the enforceability of a
waiver of rights granted by the Constitution of the United States of America, or
any state or political subdivision thereof, or the vesting of jurisdiction in,
or the consent to the exercise of jurisdiction by, any court.
We note that Section 9.12 of the Credit Agreement limits the ability of
each Bank to exercise set-off or similar rights to the extent such is prohibited
by law. However, we bring to your attention that such laws may limit the rights
of the Banks or any person claiming through the Bank to set-off against the
accounts of the Borrower, to the extent that (i) the funds on deposit in such
accounts are subjected to trustee process or any other valid claim or right of a
third party, (ii) the accounts are special accounts created solely for the
benefit of another party, such as payroll or tax escrow accounts, (iii) the
funds on deposit are contained in a separate account containing the proceeds of
collateral securing the obligation of the Borrower to a secured party other than
the Banks or the Security Agent under Article 9 of the Uniform Commercial Code
(the "Code") as enacted in the Applicable Jurisdictions, (iv) the Banks' set-off
is directed against uncollected checks or drafts naming the Borrower as payee
and held by any Bank solely as collecting agent (and not as depository), or (v)
the obligations against which any deposit account is set-off are not due and
payable.
Based upon and subject to the foregoing, and further subject to the
qualifications set forth below, it is our opinion that:
1. The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
is qualified to do business as a foreign corporation in the State
of Utah, with all requisite corporate power and authority to own,
operate or lease its properties and assets and to carry on its
business as, to our knowledge, it is now being conducted.
2. The execution, delivery and performance by the Borrower of the
Loan Documents are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action on
the part of the Borrower.
3. The Security Agreement creates, in favor of the Security Agent, a
valid and enforceable security interest under Article 9 of the
Code as enacted in the State of New York (the "New York Code")
with respect to the Collateral (as such term is defined in the
Security Agreement). The Security Agent's security interest will
be perfected (i) under Article 9 of the Code as enacted in the
Applicable Jurisdictions with respect to the Collateral as to
which the law of the Applicable Jurisdictions governs perfection
by virtue of the location of the Borrower's chief executive
office in the State of Utah or the location of any Collateral in
the Applicable Jurisdiction, by the filing of the Financing
Statements in the offices listed in Schedule I hereto and (ii) to
the extent such Collateral is comprised of "investment property"
(as defined in the New York Code) to the extent the Security
Agent has "control" (as defined in the New York Code) of such
Collateral. To the extent that such Collateral is comprised of
(x) a "securities account" (as defined in the New York Code)
maintained by a "securities intermediary" (as defined in the New
York Code) for the Borrower and such "securities intermediary" is
acting in such capacity as a party to the respective Control
Agreement or (y) a "securities entitlement" (as defined in the
New York Code) of the Borrower in a "financial asset" (as defined
in the New York Code) credited to a "securities account" (as
defined in the New York Code) which is the subject of the
respective Control Agreement and for which the respective
"securities intermediary" is acting in such capacity as a party
thereto, the Security Agent will have "control" (as defined in
the New York Code) over such Collateral pursuant to Section
8-106(d) of the New York Code by virtue of the execution and
delivery of the Control Agreements by the parties thereto. For
purposes of our opinions in clause (ii) above, we have assumed
that (i) the Investment Accounts which are the subject of the
Control Agreements constitute "securities accounts" as defined
under the New York Code, and (ii) that the parties to the Control
Agreements, other then the Borrower and the Security Agent, which
maintain the Investment Accounts which are the subject thereof,
are "securities intermediaries" as defined in the New York Code
and are acting in such capacity under the respective Control
Agreement.
4. The Security Interests (as defined in the Security Agreement)
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
after 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 3 above with respect to such future Loans.
5. The Pledge Agreement creates valid security interests under the
New York Code in favor of the Security Agent in the Subsidiary
Shares (as defined therein).
6. Under the New York Code, by virtue of the taking of possession of
stock certificates evidencing the Subsidiary Shares (other than
the shares of Nomai, S.A. which are not certificated) together
with the related duly executed stock powers as contemplated by
the Pledge Agreement, assuming that (a) the Agents, the Security
Agent and the Banks have no knowledge of any other security
interest, lien or encumbrance or adverse claim in, on or to such
Pledged Stock and (b) the Security Agent maintains continuous
possession of such stock certificates in the State of New York,
the Security Agent has a perfected security interest in the
Borrower's right, title and interest in and to such Subsidiary
Shares (other than the shares of Nomai, S.A.).
7. The Loan Documents have been duly executed and delivered by the
Borrower, and constitute the legal, valid and binding obligation
of the Borrower enforceable in accordance with their respective
terms.
8. The execution and delivery by the Borrower of the Loan Documents,
the performance by the Borrower of the respective terms and
provisions thereof and the consummation of the transactions
contemplated thereby, will not violate, conflict with, result in
a breach or termination of, or a default under (or an event
which, with or without due notice or lapse of time, or both,
would constitute a default under) or accelerate the performance
required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties
or assets of the Borrower (except for the security interests
created pursuant to the Loan Documents) under any of the terms,
conditions or provisions of (i) the Articles of Organization or
By-Laws, (ii) any laws applicable to the Borrower, (iii) to our
knowledge, any judgment, order, decree, ruling or injunction
specifically naming the Borrower or specifically applicable to
its properties, of any court or governmental authority, or (iv)
any of the agreements to which the Borrower is a party which have
been filed as exhibits to the Borrower's filings with the
Securities and Exchange Commission, and which will remain in
effect following consummation of the Credit Agreement.
9. Except for the filings described in paragraph 3 above, no other
recording, filing or other action under the laws of the
Applicable Jurisdictions is required in order to perfect the
security interest in the Collateral, as defined in the Security
Agreement, under the Code as enacted in the Applicable
Jurisdictions to the extent a security interest in the Collateral
can be perfected by the filing of financing statements in the
Applicable Jurisdictions.
10. To our knowledge, without independent investigation or inquiry of
any kind, except as disclosed in the Borrower's public filings
with the Securities and Exchange Commission, there is no action,
suit, proceeding or investigation pending or threatened against
the Borrower before any court or governmental department, which
could prevent the consummation of the transactions contemplated
by the Loan Documents or purports by its terms to challenge the
validity or enforceability of the Loan Documents or any action
taken or to be taken in connection with the transactions
contemplated thereby, or which, if adversely determined, could
have a material adverse effect on the business, condition,
affairs or operations of the Borrower or any material impairment
of the right or ability of the Borrower to carry on its
operations as now conducted.
The foregoing opinions are subject to the following comments and
qualifications:
1. We express no opinion as to the existence of, or the right, title
or interest of the Borrower in, to or under, any property in
which the Borrower has granted a security interest to you.
2. We express no opinion as to the creation of security interests in
property (including intellectual property) in which a security
interest cannot be created under the New York Code or the
perfection of security interests in property (including
intellectual property) (i) excluding the Pledge Stock, in which a
security interest cannot be perfected by the filing of UCC-1
financing statements pursuant to Article 9 of the Code as enacted
in the Applicable Jurisdictions or (ii) which is not described in
both the Security Agreement and the Financing Statements. We call
your attention to the decision of the United States Bankruptcy
Court for the District of Arizona in In re Avalon, 209 B.R. 517
(Bankr. D. Ariz. 1997) regarding the perfection of a security
interest in proceeds of certain intellectual property, but advise
you that there have been no similar decisions by courts sitting
in the Commonwealth of Massachusetts.
3. Under certain circumstances, described in Section 9-306 of the
Code as enacted in the Applicable Jurisdictions and the New York
Code, the right of a secured party to enforce a perfected
security interest in the proceeds of Collateral may be limited.
4. The grant of, or any realization on, security interests in
governmental licenses, permits, authorizations and other rights,
in contracts with government or governmental instrumentalities,
commissions, boards or agencies and in the proceeds thereof are
or may be subject to restrictions or limitations set forth
therein or in applicable statutes, laws, rules or regulations,
and we express no opinion as to the creation or perfection of
security interest in such rights, contracts or proceeds.
5. We express no opinion as to the priority of any security
interests granted by the Borrower to the Banks under any of the
Loan Documents.
6. The perfection of the Security Interests may be terminated as to
any Collateral acquired more than four months after the Borrower
changes its name, identity or corporate structure so as to make
the Financing Statements seriously misleading (within in the
meaning of Section 9-402(7) of the Code as enacted in the
Applicable Jurisdictions) unless new, appropriate financing
statements indicating the new name, identity or corporate
structure of the Borrower are properly filed before the
expiration of such four-month period and all fees in connection
therewith are paid. The perfection of security interests in
accounts, including receivables, general intangibles and certain
other Collateral may be terminated if the Borrower changes the
location of its chief executive offices outside of the State of
Utah.
7. Pursuant to the Code as enacted in the Applicable Jurisdictions,
continuation statements are required from time to time to be
filed in order to preserve valid, perfected security interests.
8. We have assumed that the Collateral (other than the Subsidiary
Shares) is located at the locations described on Schedule II
hereto and that the chief executive office of the Borrower is
located in Roy, Utah.
9. We express no opinion as to the adequacy of the description of
the Collateral as defined in the Security Documents insofar as
such description includes terms which are not defined under
Article 9 of the Code as enacted in the Applicable Jurisdictions
and the New York Code.
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions, and we disclaim any obligation to advise you
of any change in any of these sources of law or subsequent legal or factual
developments which might affect any matters or opinions set forth herein.
Please note that we are opining only as to the matters expressly set
forth herein, and no opinion should be inferred as to any other matters. This
opinion is solely for your benefit, and the benefit of your counsel, in
connection with the consummation of the transactions contemplated by the Loan
Documents, and may not be quoted or relied upon by any other person without our
prior written consent.
Very truly yours,
/s/ XXXX AND XXXX LLP
XXXX AND XXXX LLP
Schedule I
(Financing Offices)
1. Utah Secretary of State
2. North Carolina Secretary of State
3. _____________, North Carolina Clerk
4. California Secretary of State
5. Colorado Secretary of State
6. Texas Secretary of State
7. Idaho Secretary of State
8. Iowa Secretary of State
Schedule II
(Location of Collateral)
0000 Xxxx Xxxxxx Xxx
Xxx, Xxxx 00000
[North Carolina]
[California]
[Colorado]
[Texas]
Exhibit A
(Financing Statements)
See attached.
Exhibit B(1)
(UCC Search Results)
See attached.
Exhibit B(2)
(Patent, Trademark and Copyright Search Results)
See attached.
EXHIBIT C
Opinion of
Xxxxx Xxxx & Xxxxxxxx, Special Counsel
for the Documentation Agent
July 15, 1998
To the Banks and the Agents
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Documentation Agent
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We have participated in the preparation of the Amended and Restated
Credit Agreement dated as of July 15, 1998 (the "Credit Agreement") among Iomega
Corporation, a Delaware corporation (the "Borrower"), the Banks party thereto,
Citibank, N.A., as Administrative Agent, and Xxxxxx Guaranty Trust Company of
New York, as Documentation Agent, and have acted as special counsel for the
Documentation Agent for the purpose of rendering this opinion pursuant to
Section 3.01(d) of the Credit Agreement. Terms defined in the Credit Agreement
are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and each Note issued thereunder today constitutes a valid and
binding obligation of the Borrower, in each case enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other Person without our prior written consent.
Very truly yours,
EXHIBIT D
Assignment and Assumption Agreement
AGREEMENT dated as of _________, 19__ among (NAME OF ASSIGNOR) (the
"Assignor"), (NAME OF ASSIGNEE) (the "Assignee")[, IOMEGA CORPORATION (the
"Borrower"), CITIBANK, N.A., as Administrative Agent, and XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK, as Documentation Agent (collectively, the "Agents").]
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Amended and Restated Credit Agreement dated as of July 15, 1998
among the Borrower, the Assignor and the other Banks party thereto and the Agent
(as amended from time to time, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed
$__________;
WHEREAS, Loans made to the Borrower by the Assignor under the Credit
Agreement in the aggregate principal amount of $__________ are outstanding at
the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of each of its outstanding Loans, and the
Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined herein
have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of each
of the Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, [the Borrower and
the Agent] and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Bank under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount,
and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced
by a like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.*
Commitment and/or facility fees accrued before the date hereof are for the
account of the Assignor and such fees accruing on and after the date hereof with
respect to the Assigned Amount are for the account of the Assignee. Each of the
Assignor and the Assignee agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party's
interest therein and promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the Agents. This Agreement is
conditioned upon the consent of the Borrower and the Agents pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agents is evidence of their consent. Pursuant to Section 9.06(c), the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition or statements of the Borrower, or the
validity and enforceability of the Borrower's obligations under the Credit
Agreement or any Note. The Assignee acknowledges that it has, independently and
without reliance on the Assignor, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of the
Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
(NAME OF ASSIGNOR)
By
Name:
Title:
(NAME OF ASSIGNEE)
By
Name:
Title:
[IOMEGA CORPORATION
By
Name:
Title:]
EXHIBIT E
SECURITY AGREEMENT
AGREEMENT dated as of July 15, 1998 among IOMEGA CORPORATION (with its
successors, the "Borrower"), CITICORP USA, INC., as Security Agent (with its
successors in such capacity, the "Security Agent"), and THE NORTHERN TRUST
COMPANY, 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.
"Control Agreements" means the Securities Account Control Agreements dated
as of the date hereof among the Borrower, the securities intermediaries named
therein and the Security Agent.
"Copyright License" means any agreement now or hereafter in existence
granting to the Borrower, or pursuant to which the Borrower has granted to any
other Person, any right to use, copy, reproduce, distribute, prepare derivative
works, display or publish any records or other materials on which a Copyright is
in existence or may come into existence.
"Copyrights" means all the following: (i) all copyrights under the laws of
the United States (whether or not the underlying works of authorship have been
published), all registrations and recordings thereof, all intellectual property
rights to works of authorship (whether or not published), and all applications
for copyrights under the laws of the United States, including, without
limitation, registrations, recordings and applications in the United States
Copyright Office or in any similar office or agency of the United States, any
State thereof, (ii) all reissues, renewals and extensions thereof, (iii) all
claims for, and rights to xxx for, past or future infringements of any of the
foregoing, and (iv) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including, without
limitation, damages and payments for past or future infringements thereof.
"Copyright Security Agreement" means a Copyright Security Agreement
executed and delivered by the Borrower in favor of the Collateral Agent, for the
benefit of the Secured Parties, substantially in the form of Annex E hereto, as
the same may be amended from time to time.
"Documents" means all "documents" (as defined in the UCC) or other receipts
covering, evidencing or representing goods, now owned or hereafter acquired by
the Borrower.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Borrower located in the United States, including
without limitation all motor vehicles, trucks, trailers, railcars and barges,
and all accessions thereto.
"Financial Asset" shall mean any "financial asset", as defined in Section
8-102(a)(9) of the UCC.
"General Intangibles" means all "general intangibles" (as defined in the
UCC) now owned or hereafter acquired by the Borrower, including, without
limitation, (i) all obligations or indebtedness owing to the Borrower (other
than Receivables) from whatever source arising, (ii) all domestic patents,
patent licenses, trademarks, trademark licenses, rights in intellectual
property, goodwill, trade names, service marks, trade secrets, copyrights,
permits and licenses, (iii) all rights or claims in respect of refunds for taxes
paid and (iv) all rights in respect of any pension plan or similar arrangement
maintained for employees of any member of the ERISA Group.
"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, now owned or hereafter
acquired by the Borrower.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by the Borrower, located in the United States, and shall also
mean and include, without limitation, all raw materials and other materials and
supplies, work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto.
"Investment Accounts" means the investment accounts referred to in the
ControlAgreements.
"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 B hereto or has entered into the other
arrangements described in Section 5(B).
"Patent License" means any agreement now or hereafter in existence granting
to the Borrower, or pursuant to which the Borrower has granted to any other
person, any right with respect to any Patent or any invention now or hereafter
in existence, whether patentable or not, whether a patent or application for
patent is in existence on such invention or not, and whether a patent or
application for patent on such invention may come into existence.
"Patents" means all of the following: (i) all letters patent and design
letters patent of the United States and all applications for letters patent and
design letters patent of the United States, including, without limitation,
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof, the District of
Columbia, including, without limitation, those described in the Perfection
Certificate, (ii) all reissues, divisions, continuations, continuations-in-part,
renewals and extensions of any of the foregoing, (iii) all claims for, and
rights to xxx for, past or future infringements of any of the foregoing and (iv)
all income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.
"Patent Security Agreement" means the Patent Security Agreement executed
and delivered by the Borrower in favor of the Security Agent, for the benefit of
the Secured Parties, substantially in the form of Annex C hereto, as the same
may be amended from time to time.
"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.
"Permitted Liens" means Liens referred to in Section 5.09 of the Credit
Agreement.
"Proceeds" means all cash and other proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
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, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or requisition
payments with respect to any Collateral, in each case 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, book debts,
notes drafts and other obligations or indebtedness owing to the Borrower arising
from the sale, lease or exchange of goods or other property by it and/or the
performance of services by it (including without limitation, any such obligation
which might be characterized as an account, contract right or general intangible
under the UCC) and all of the Borrower's rights in, to and under all purchase
orders for goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to the Borrower under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by it (whether or not yet earned by performance on the part of the Borrower), in
each case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contacts and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Secured Obligations" means the obligations secured under this Agreement
including (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, (c) all Letter of Credit
Exposure relating to letters of credit issued by one or more Banks aggregating
not more than $20,000,000 which have been designated as "Secured Obligations"
under this Agreement by the Borrower by written notice to the Security Agent and
(d) 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 10 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 Entitlement" means (i) a "security entitlement" as defined in
Section 8-102(a)(17) of the UCC and (ii) to the extent not covered by the
foregoing a "Security Entitlement" as defined in 31 CFR ' 357.2.
"Securities Intermediaries" means the securities intermediaries party to
the Control Agreements and "Securities Intermediary" means any of the foregoing.
"Security Interests" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
"Trademark License" means any agreement now or hereafter in existence
granting to the Borrower, or pursuant to which the Borrower has granted to an
other Person, any right to use any Trademark, including without limitation, the
agreements identified on Schedule 1 to Annex D hereto.
"Trademarks" means all of the following: (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, brand names, trade dress, prints and labels on
which any of the foregoing have appeared or appear, package and other designs,
and any other source of business identifiers, and general intangibles of like
nature, and the rights in any of the foregoing which arise under the laws of the
United States, (ii) the goodwill of the business symbolized thereby or
associated with each of them, (iii) all registrations and applications in
connection therewith, including, without limitation, registrations and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof, (iv) all reissues,
extensions and renewals thereof, (v) all claims for, and rights to xxx for, past
or future infringements of any of the foregoing and (vi) all income, royalties,
damages and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"Trademark Security Agreement" means the Trademark Security Agreement
executed and delivered by the Borrower in favor of the Security Agent, for the
benefit of the Secured Parties, substantially in the form of Annex D hereto, as
the same may be amended from time to time.
"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, except Permitted 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 Permitted Liens, 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 and warehousemen, carriers
or other bailees may from time to time assert claims to or security interests in
Inventory in their possession. The Borrower has not consented (and will not
consent, or attempt to consent) to any other person other than the Security
Agent having "control" (within the meaning of Section 8-106 of the UCC) over any
of the Collateral constituting Investment Property.
(C) On or before the Effective Date, 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 (except Inventory in
transit) to the extent that a security interest therein may be perfected by
filing pursuant to the UCC, prior to all other Liens except Permitted Liens and
rights of others therein. When the Patent Security Agreement and the Trademark
Security Agreement have been filed with the United States Patent and Trademark
Office, the Security Interests shall constitute perfected (to the extent that a
security interest therein may be perfected by such filing) security interests in
all right, title and interest of the Borrower in Patents and Trademarks listed
in such agreements, prior to all other Liens (except Permitted Liens) and rights
of others therein. When a Copyright Security Agreement has been filed with the
United States Copyright Office, the Security Interests shall constitute
perfected (to the extent that a security interest therein may be perfected by
such filing) security interests in all right, title and interest of the Borrower
in Copyrights listed therein, prior to all other Liens (except Permitted Liens)
and right of others therein.
(E) The Inventory and Equipment are insured in accordance with the
requirements of the Credit Agreement.
(F) All activities of the Borrower with respect to Inventory are
conducted by the Borrower in compliance with the applicable requirements of the
Fair Labor Standards Act, as amended.
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) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) 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;
(8) The Investment Accounts and all successor accounts
that are subject to this Agreement or the Control
Agreements and all property credited thereto, whether
investment property, Financial Assets, securities or
cash;
(9) All of the Security Entitlements with respect to
Financial Assets (i) that are or may in the future be
credited to any Investment Account, (ii) that have
been received and accepted or may in the future be
received and accepted for credit to such Investment
Account by the relevant Securities Intermediary and
(iii) as to which such Securities Intermediary is, or
may in the future become, obligated by law,
regulation, rule or agreement to credit to such
Investment Account;
(10) All of the cash (i) that is or may in the future be
credited to any Investment Account, (ii) that has
been received and accepted or may in the future be
received and accepted for credit to such Investment
Account by the relevant Securities Intermediary and
(iii) as to which such Securities Intermediary is or
may in the future become obligated by law,
regulation, rule or agreement to credit to the
Investment Account;
(11) All Proceeds with respect to such Financial Assets
(i) that are or may in the future be credited to any
Investment Account, (ii) that have been received and
accepted or may in the future be received and
accepted for credit to such Investment Account by the
relevant Securities intermediary and (iii) as to
which such Securities Intermediary is or may in the
future become obligated by law, regulation, rule or
agreement to credit to such Investment Account;
(12) All successor accounts substitutions and replacements
for any or all of the foregoing Collateral described
in clauses 8 through 11;
(13) 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;
and
(14) All Proceeds of all or any of the Collateral
described in Clauses 1 through 13 hereof to the
extent, if any not otherwise covered above.
Notwithstanding the foregoing, the Collateral shall not include and no
Security Interest shall be granted or deemed to be granted in any contracts
or agreements, including, without limitation, any Copyright License, Patent
License or Trademark License, to the extent that inclusion thereof or the
granting of a Security Interest therein would violate a prohibition on
assignment or similar restriction that is effective under applicable law.
(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(M). 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(M).
(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,
any filings with the United States Patent and Trademark Office and any filings
with the United States Copyright Office, provided that, unless an Event of
Default has occurred and is continuing, filings with the United States Patent
and Trademark Office and the United States Copyright Office need only be made
with respect to Material Patents, Material Trademarks and Material Copyrights)
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 warehouseman, bailee or any of the Borrower's agents or processors, the
Borrower shall upon the occurrence of an Event of Default notify such
warehouseman, bailee, agent or processor 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 or Instruments 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) The Borrower shall, (i) as soon as practicable after the date
hereof,, in the case of any piece of Equipment in excess of $100,000 now owned
constituting goods in which a security interest is perfected by a notation on
the certificate of title or similar evidence of the ownership of such goods, and
(ii) except as otherwise provided in the Credit Agreement, within 10 days of
acquiring any other similar Equipment (x) having a value in excess of $100,000
or (y) having a value in excess of $50,000, if the aggregate value of all such
items owned by the Borrower at any time is greater than $250,000 deliver to the
Security Agent any and all certificates of title, applications for title or
similar evidence of ownership of such Equipment and shall cause the Security
Agent to be named as lienholder on any such certificate of title or other
evidence of ownership. The Borrower shall promptly inform the Security Agent of
any material additions to or deletions from the Equipment and shall not permit
any such items to become a fixture to real estate or an accession to other
personal property.
(I) Without the prior written consent of the Security Agent, the
Borrower will not sell, lease, exchange, assign or otherwise dispose of, or
grant any option with respect to, any Collateral except that, subject to the
rights of the Security Agent and the Banks hereunder if an Event of Default
shall have occurred and be continuing, the Borrower may (a) sell or dispose of
Inventory and obsolete or no longer useful Equipment in the ordinary course of
business, (b) sell production equipment to the extent the proceeds of such sale
do not exceed $5,000,000 in any fiscal year and $7,000,000 during the period
from and including the Effective Date to but excluding the Termination Date and
(c) grant licenses in the ordinary course of business whereupon, in the case of
such a sale, disposition or grant, the Security Interests created hereby in such
item (but not in any Proceeds arising from such sale, disposition or grant)
shall cease immediately without any further action on the part of the Security
Agent.
(J) Prior to the date of the first Borrowing under the Credit
Agreement, the Borrower will cause the Security Agent to be named as an insured
party and loss payee on each insurance policy covering risks relating to any of
its Inventory and Equipment. The Borrower will deliver to the Security Agent,
upon request of the Security Agent, the insurance policies for such insurance or
certificates of insurance evidencing such coverage. Each such insurance policy
shall include effective waivers by the insurer of all claims for insurance
premiums against the Security Agent or any Bank, provide for coverage to the
Security Agent regardless of the breach by the Borrower of any warranty or
representation made therein, not be subject to co-insurance, and provide that no
cancellation, termination or material modification thereof shall be effective
until at least 10 days after receipt by the Security Agent of notice thereof, in
the case of cancellation for non-payment of premium, and at least 30 days after
receipt by the Security Agent of notice thereof, in all other cases. The
Borrower hereby appoints the Security Agent as its attorney-in-fact to make
proof of loss, claim for insurance and adjustments with insurers, and to execute
or endorse all documents, checks or drafts in connection with payments made as a
result of any insurance policies upon the occurrence of and during the
continuance of an Event of Default.
(K) The Borrower will, promptly upon request, provide to the Security
Agent all information and evidence it may reasonably request concerning the
Collateral 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.
(L) The Borrower shall notify the Security Agent promptly if it knows,
or has reason to know, that any application or registration relating to any
Material Copyright, Material Patent or Material Trademark may become abandoned
or dedicated, or of any material adverse determination or development
(including, without limitation, any such determination or development in, any
proceeding in the United States Copyright Office, United States Patent and
Trademark Office or any federal, state or local court in the United States)
regarding the Borrower's ownership of any Material Copyright, Material Patent or
Material Trademark, its right to register or patent the same, or to keep and
maintain the same; provided that no notice is required for United States Patent
and Trademark Office office actions (including denials of claims) which are
routinely received as a Patent or Trademark is prosecuted. For purposes of this
subsection (L) of Section 4, "Material Copyright", "Material Patent" and
"Material Trademark" shall mean one or more Copyrights, Patents or Trademarks,
respectively, which individually has a fair market value in excess of $250,000.
In the event that any right to any Copyright, Copyright License, Patent, Patent
License, Trademark or Trademark License is infringed, misappropriated or diluted
by a third party and such infringement, misappropriation or dilution could
reasonably be expected to have a Material Adverse Effect, the Borrower shall
notify the Security Agent promptly after it learns thereof and shall promptly
take any and all action that would be prudent and in the best interests of the
Borrower as reasonably determined by the Borrower to be appropriate. The
Borrower shall provide the Security Agent, on an annual basis, with a list of
any applications for the registration of any Material Copyright with the United
States Copyright Office Material Patent or Material Trademark with the United
States Patent and Trademark Office filed by the Borrower and, upon request of
the Security Agent, shall execute and deliver any and all agreements,
instruments, documents and papers the Security Agent may request to evidence the
Security Interests in such Material Patent or Material Trademark and the
goodwill and general intangibles of the Borrower relating thereto or represented
thereby.
(M) Not more than six months nor less than 30 days prior to each date
on which the Borrower proposes to take any action contemplated by Section
4(A)(I) or (II) and not more than 30 days after written request from the
Security Agent to the Borrower with respect to 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 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 No. 89079 of Citicorp USA,
Inc., as Security Agent under the Security Agreement dated as of July 15, 1998
among Iomega Corporation, Citicorp USA, Inc. and The Northern Trust Company"
(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 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, subject to subsection (C)
of this Section, 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 shall vest in the Security Agent and, together with any
Liquid Investments from time to time made pursuant to subsection (D) of this
Section, 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
B 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 10.
(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 10. 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 States 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. Investment Account.
(A) The Borrower has established the Investment Accounts with the
Securities Intermediaries. All Temporary Cash Investments shall be maintained by
the Borrower in the Investment Accounts.
(B) The Borrower, each Securities Intermediary and the Security Agent
have entered into the Control Agreements, pursuant to which the Securities
Intermediaries agree to comply, upon receipt of notice from the Security Agent
(which notice the Security Agent shall give only upon the occurrence and during
the continuation of an Event of Default), with any orders directing transfer or
redemption of any Collateral originated by the Security Agent without any
further consent by the Borrower.
(C) All items of income, gain, expense and loss recognized in the
Investment Account shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of the Borrower.
(D) Each of the parties hereby agrees that each item of property,
including Proceeds and cash, (i) that is or may in the future be standing to the
credit of any Investment Account, (ii) that has been received and accepted or
may in the future be received and accepted for credit to any Investment Account
by the relevant Securities Intermediary or (iii) as to which the relevant
Securities Intermediary is or may in the future become obligated by law,
regulation, rule or agreement to credit to the Investment Account shall in each
case be treated as a "financial asset" for purposes of Section 8-102(a)(9)(iii)
of the UCC, this Agreement and the Control Agreements.
SECTION 7. 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 8. 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 10
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 7 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.
(C) Without limiting the generality of the forgoing, if any Event of
Default has occurred and is continuing, and the Security Agent has given at
least 60 days' notice to the Borrower of its intent to exercise its remedies
under this subsection (C),
(i) the Security Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Copyrights, Patents or Trademarks
included in the Collateral throughout the world for such term
or terms, on such conditions and in such manner as the
Security Agent shall in its sole discretion determine;
(ii) the Security Agent may (without assuming any obligations
or liability thereunder), at any time and from time to time,
in its sole discretion, enforce (and shall have the exclusive
right to enforce) against any licensee or sublicensee all
rights and remedies of the Borrower in, to and under any
Copyright Licenses, Patent Licenses or Trademark Licenses and
take or refrain from taking any action under any thereof, and
the Borrower hereby releases the Security Agent and each of
the other Secured Parties from, and agrees to hold the
Security Agent and each of the other Secured Parties free and
harmless from and against any claims and expenses arising out
of, any lawful action so taken or omitted to be taken with
respect thereto; and
(iii) upon request by the Security Agent, the Borrower will
execute and deliver to the Security Agent a power of attorney,
in form and substance satisfactory to the Security Agent, for
the implementation of any lease, assignment, license,
sublicense, grant of option, sale or other disposition of a
Copyright, Patent or Trademark or any action related thereto.
In the event of any such disposition pursuant to this Section,
the Borrower shall supply its know-how and expertise relating
to the manufacture and sale of the products bearing Trademarks
or the products or services made or rendered in connection
with Patents, and its customer lists and other records
relating to such patents or Trademarks and to the distribution
of said products, to the Security Agent.
SECTION 9. 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 10. Application of Proceeds.
(A) 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 12 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.
(B) The Security Agent may make distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof. If at any time any
monies collected or received by the Security Agent are distributable pursuant to
this Section in respect of any Letter of Credit Exposure which is a contingent
obligation at such time, then the Security Agent shall invest such amounts in
Liquid Investments selected by it and shall hold all such amounts so
distributable and all such Liquid Investments and the net proceeds thereof in
trust for application to the payment of any Letter of Credit Exposure at such
time as such Letter of Credit Exposure is no longer a contingent obligation. If
the Security Agent holds any amounts which were distributable in respect of any
Letter of Credit Exposure after all letters of credit have expired and all
amounts payable with respect thereto have been paid, such amounts shall be
applied in the order set forth in subsection (A) above.
(C) In making the determinations and allocations required by this
Section, the Security Agent shall have no liability to any Secured Party for
actions taken in reliance on information supplied by the Secured Parties as to
the amounts of the Secured Obligations held by them. All distributions made by
the Security Agent pursuant to this Section shall be final, and the Security
Agent shall have no duty to inquire as to the application by the Secured Parties
of any amount distributed to them. However, if at any time the Security Agent
determines that an allocation or distribution previously made pursuant to this
Section was based on a mistake of fact (including, without limiting the
generality of the foregoing, mistakes based on any assumption that principal or
interest has been paid by payments which are subsequently recovered from the
recipient thereof through the operation of any bankruptcy, reorganization,
insolvency or other laws or otherwise), the Security Agent may in its
discretion, but shall not be obligated to, adjust subsequent allocations and
distributions hereunder so that, on a cumulative basis, the Security Agent and
the other Secured Parties receive the distributions to which they would have
been entitled if such mistake of fact had not been made.
SECTION 11. 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, its affiliates and their
respective directors, officers, agents and employees (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 indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees 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 9 and 11 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 9 and 11 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 11).
SECTION 12. 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 13. 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 14. 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 15. 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 16. 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 17. 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 18. 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 19. 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.
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: Vice President Treasurer
Address: 0000 Xxxx Xxxxxx Xxx
Xxx, Xxxx 00000
Facsimile:
CITICORP USA, INC., as Security Agent
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
GRB/IRM Dept.
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile:
THE NORTHERN TRUST COMPANY., as
Concentration Bank
By /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Second Vice President
Address: 00 X. Xxxxxxx Xx.
Xxxxxxx, XX 00000
Facsimile:000-000-0000
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 July 15, 1998 among the
Borrower, Citicorp USA, Inc., as Security Agent, and The Northern Trust Company,
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.1
(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 with an aggregate face amount in
excess of $50,000:
Mailing
Name Address County State
(c) The following are all the places of business of the Borrower not
identified above (excluding any sales offices):
Mailing
Name Address County State
(d) The following are all the locations where the Borrower maintains any
Inventory with an aggregate book value in excess of $50,000 not identified
above:
Mailing
Name Address County State
(e) The following are the names and addresses of all Persons other than the
Borrower which have possession of any of the Borrower's Inventory with an
aggregate book value in excess of $50,000:
Mailing
Name Address County State
3. Prior Locations. (a) 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:
(b) Set forth below is the information required by subparagraphs (d) and
(e) of paragraph 2 with respect to each location or bailee where or with whom
Inventory has been lodged at any time during the past four months:
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. We have delivered duly signed financing statements on Form
UCC-1 in substantially the form of Schedule 6(A) hereto for filing in the
Uniform Commercial Code filing office in each jurisdiction identified in
paragraph 2 hereof.
7. Schedule of Filings. Within 45 days of the date hereof we will deliver a
schedule in the form of Schedule 7 attached hereto 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 or will be paid.
9. Patents. All material patents issued in the United States owned by the
Borrower as of the date hereof are listed on Schedule 1 to the Patent Security
Agreement.
10. Trademarks. All trademarks registered in the United States owned by the
Borrower and all trademark applications applied for in the United States by the
Borrower as of the date hereof are listed on Schedule 1 to the Trademark
Security Agreement.
11. Copyrights. All material copyrights registered in the United States
owned by the Borrower as of the date hereof are listed on Schedule 1 to the
Copyright Security Agreement.
-
IN WITNESS WHEREOF, we have hereunto set our hands this day of July,
1998.
----------------------------
Name:
Title:
----------------------------
Name:
Title:
SCHEDULE 6(A)
Description of Collateral
All accounts, chattel paper, contract rights, general intangibles,
inventory, investment property, equipment and documents, now owned or hereafter
acquired, wherever located, and all proceeds thereof.
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing1
------ -------------- ----------- ---------------
________________
1 Indicate lapse date, if other than fifth aniversary
ANNEX B
[FORM OF LOCKBOX LETTER]
July 15, 1998
[Name and Address of Lockbox Bank]
Re: Iomega Corporation
Gentlemen:
We hereby notify you that effective July 15, 1998, 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 The Northern Trust
Company, 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
July __, 1998
[LOCKBOX BANK]
By_________________________
Title:
ANNEX C
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)
WHEREAS, Iomega Corporation, a Delaware corporation (herein
referred to as "Grantor"), owns the Patents listed on Schedule 1 annexed hereto,
and is a party to certain Patent Licenses;
WHEREAS, the Grantor, 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, pursuant to the terms of the Security Agreement of
even date herewith (as said Agreement may be amended and in effect from time to
time, the "Security Agreement") between Grantor, Citicorp USA, Inc., as Security
Agent (in such capacity, together with its successors in such capacity pursuant
to the terms of such Security Agreement, the "Grantee") and The Northern Trust
Company, Grantor has granted to Grantee for the ratable benefit of such secured
parties a security interest in substantially all the assets of the Grantor
including all right, title and interest of Grantor in, to and under all
Grantor's Patents (as defined in the Security Agreement), together with any
reissue, continuation, continuation-in-part or extension thereof, all Grantor's
Patent applications and all Grantor's Patent Licenses (as defined in the
Security Agreement), whether presently existing or hereafter arising or
acquired, and all products and proceeds thereof, including any and all causes of
action which may exist by reason of infringement thereof for the full term of
the Patents, to secure the payment of all amounts owing by the Grantor under the
Credit Agreement and the other Loan Document;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor does hereby
grant to Grantee a continuing security interest in all of Grantor's right, title
and interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Patent Collateral"),
whether presently existing or hereafter arising or acquired:
(i) each Patent and Patent application, including each Patent
referred to in Schedule 1 annexed hereto;
(ii) each Patent License; and
(iii) all products and proceeds of the foregoing, including
any claim by Grantor against third parties for past, present or future
infringement of any Patent, including any Patent referred to in
Schedule 1 annexed hereto, and any Patent licensed under any Patent
License.
Notwithstanding the foregoing, the Collateral shall not
include and no security interest shall be granted or deemed to be granted in any
contracts or agreements, including, without limitation, any Copyright License,
Patent License or Trademark License, to the extent that inclusion thereof or the
granting of a security interest therein would violate a prohibition on
assignment or similar restriction that is effective under applicable law.
This security interest is granted in conjunction with the
security interests granted to the Grantee pursuant to the Security Agreement.
Grantor does hereby further acknowledge and affirm that the rights and remedies
of Grantee with respect to the security interest in the Patent Collateral made
and granted hereby are more fully set forth in the Security Agreement, the terms
and provisions of which are incorporated by reference herein as if fully set
forth herein.
IN WITNESS WHEROF,Grantor has caused this Patent Security Agreement to
be duly executed by it officer thereunto duly authorized as of the 15th day
of July, 1998.
IOMEGA CORPORATION
By: ________________
Name:
Title:
Acknowledged:
CITICORP USA, INC.,
as Security Agent
By:_______________
Name:
Title:
STATE OF )
COUNTY OF )
I, _______________________, Notary Public in and for said County, in the
foresaid, DO HEREBY CERTIFY, that _________________, of IOMEGA CORPORATION,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such ____________, this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and volutary act and as the free and voluntary act of said company, for the
uses and purposes therein set forth being duly authorized so to do.
__________________________
Signature of Notary Public
My Commission expires:
Schedule 1 to
Patent Security Agreement
PATENTS
Reg. No. Reg. Date
Name (App. No.) (App. Date)
--------------------------------------- ------------ ----------
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--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
--------------------------------------- ------------ ----------
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ANNEX D
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, Iomega Corporation, a Delaware corporation (herein
referred to as "Grantor"), owns the Trademarks (as defined in the Security
Agreement referred to below) listed on Schedule 1 annexed hereto, and is a party
to the Trademark Licenses (as defined in the Security Agreement referred to
below) identified in Schedule 1 annexed hereto;
WHEREAS, the Grantor, 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"); and
WHEREAS, pursuant to the terms of the Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor, Citicorp USA, Inc., as Security Agent
(in such capacity, together with its successors in such capacity pursuant to the
terms of such Security Agreement, the "Grantee") and The Northern Trust Company,
Grantor has granted to Grantee for the ratable benefit of such secured parties a
security interest in substantially all the assets of the Grantor including all
right, title and interest of Grantor in, to and under the Trademark Collateral
(as defined herein), whether now owned or existing or hereafter acquired or
arising, to secure the Secured Obligations (as defined in the Security
Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Trademark Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Trademark, including, without limitation, each
Trademark application referred to in Schedule 1 annexed hereto,
and all of the goodwill of the business connected with the use
of, or symbolized by, each such Trademark; and
(ii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim
by Grantor against third parties for past, present or future
unfair competition with, or violation of intellectual property
rights in connection with or injury to, or infringement or
dilution of, any Trademark, including, without limitation, any
Trademark referred to in Schedule 1 hereto, and all rights and
benefits of Grantor under any Trademark License, including,
without limitation, any Trademark License identified in Schedule
1 hereto, or for injury to the goodwill associated with any of
the foregoing.
Notwithstanding the foregoing, the Collateral shall not include
and no security interest shall be granted or deemed to be granted in any
contracts or agreements, including, without limitation, any Copyright License,
Patent License or Trademark License, to the extent that inclusion thereof or the
granting of a security interest therein would violate a prohibition on
assignment or similar restriction that is effective under applicable law.
Grantor hereby irrevocably constitutes and appoints Grantee and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor or
in its name, from time to time, in Grantee's discretion, so long as any Event of
Default has occurred and is continuing, to take with respect to the Trademark
Collateral any and all appropriate action which Grantor might take with respect
to the Trademark Collateral and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of this Trademark
Security Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited in the Security Agreement,
Grantor agrees not to sell, license, exchange, assign or otherwise transfer or
dispose of, or grant any rights with respect to, or mortgage or otherwise
encumber, any of the foregoing Trademark Collateral.
This security interest is granted in conjunction with the
security interests granted to Grantee pursuant to the Security Agreement.
Grantor does hereby further acknowledge and affirm that the rights and remedies
of Grantee with respect to the security interest in the Trademark Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of July, 1998.
IOMEGA CORPORATION
By: _______________________
Name:
Title:
Acknowledged:
CITICORP USA, INC.,
as Security Agent
By: ________________________
Name:
Title:
Schedule 1
to Trademark
Security Agreement
U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
A. U.S. Trademarks and Trademark Registrations Reg. No. Reg. Date Xxxx
B. U.S. Trademark Applications Serial No. Date Filed Xxxx
ANNEX E
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS AND COPYRIGHT REGISTRATIONS)
WHEREAS, Iomega Corporation, a Delaware corporation (herein
referred to as "Grantor"), owns the Copyrights (as defined in the Security
Agreement referred to below) listed on Schedule 1 annexed hereto;
WHEREAS, the Grantor, 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"); and
WHEREAS, pursuant to the terms of the Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor, Citicorp USA, Inc., as Security Agent
(in such capacity, together with its successors in such capacity pursuant to the
terms of such Security Agreement, the "Grantee") and The Northern Trust Company,
Grantor has granted to Grantee for the ratable benefit of such secured parties a
security interest in substantially all the assets of the Grantor including all
right, title and interest of Grantor in, to and under the Copyright Collateral
(as defined herein), whether now owned or existing or hereafter acquired or
arising, to secure the Secured Obligations (as defined in the Security
Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Copyright Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Copyright registered in the United States, including,
without limitation, each Copyright registered in the United
States referred to in Schedule 1 annexed hereto; and
(ii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim
by Grantor against third parties for past, present or future
infringement of any Copyright, including, without limitation,
any Copyright registered in the United States referred to in
Schedule 1 annexed hereto, and all rights and benefits of
Grantor under any Copyright License.
Notwithstanding the foregoing, the Collateral shall not include
and no security interest shall be granted or deemed to be granted in any
contracts or agreements, including, without limitation, any Copyright License,
Patent License or Trademark License, to the extent that inclusion thereof or the
granting of a security interest therein would violate a prohibition on
assignment or similar restriction that is effective under applicable law.
Grantor hereby irrevocably constitutes and appoints Grantee and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor or
in its name, from time to time, in Grantee's discretion, so long as any Event of
Default has occurred and is continuing, to take with respect to the Copyright
Collateral any and all appropriate action which Grantor might take with respect
to the Copyright Collateral and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of this Copyright
Security Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited in the Security Agreement,
Grantor agrees not to sell, license, exchange, assign or otherwise transfer or
dispose of, or grant any rights with respect to, or mortgage or otherwise
encumber, any of the foregoing Copyright Collateral.
This security interest is granted in conjunction with the
security interests granted to Grantee pursuant to the Security Agreement.
Grantor does hereby further acknowledge and affirm that the rights and remedies
of Grantee with respect to the security interest in the Copyright Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of July, 1998.
IOMEGA CORPORATION
By: ______________________
Name:
Title:
Acknowledged:
CITICORP USA, INC.,
as Security Agent
By: ________________________
Name:
Title:
Schedule 1
to Copyright
Security Agreement
COPYRIGHTS AND COPYRIGHT REGISTRATIONS
Registration No. Reg. Date Title
EXHIBIT F
PLEDGE AGREEMENT
AGREEMENT dated as of July 15, 1998 between IOMEGA CORPORATION (with
its successors, the "Borrower", and, together with any other Person which
becomes a Grantor pursuant to Section 3(B), the "Grantors" and each a
"Grantor"), and CITICORP USA, INC., as Security Agent (with its successors in
such capacity, the "Security Agent").
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, each Grantor has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure the
obligations of the Borrower 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 assigned to such term in Section 3(A).
"Declaration of Pledge" means Declaration xx Xxxx de Compte
d'Instrument Financiers Soumise Aux Dispositions de la Loi du 3 Janvier 1983 as
signed by the Borrower and the Security Agent on the date hereof.
"Domestic Subsidiary" means any Subsidiary which is either incorporated
under the laws of, or has a principal place of business in, the United States or
any State, the District of Columbia or any territory or possession of the United
States.
"Foreign Subsidiary" means any Subsidiary which is not a Domestic
Subsidiary.
"Issuer" means Iomega International S.A., Nomai, Iomega Japan and any
other Subsidiary of the Borrower; provided that the Borrower may, by notice to
the Security Agent, exclude from this definition any Subsidiary other than those
named herein so long as such Subsidiary, together with all other Subsidiaries so
excluded, at no time accounts for more than 5% of the consolidated revenues,
Consolidated EBITDA, consolidated assets or consolidated trade receivables, less
allowance for doubtful accounts, of the Borrower and its Consolidated
Subsidiaries.
"Pledged Stock" means (i) the Subsidiary Shares and (ii) any other
capital stock required to be pledged to the Security Agent pursuant to Section
3(B).
"Secured Obligations" means the obligations secured under this
Agreement including (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, (c) all Letter of Credit
Exposure relating to letters of credit issued by one or more Banks aggregating
not more than $20,000,000 which have been designated as "Secured Obligations"
under this Agreement by the Borrower by written notice to the Security Agent and
(d) 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 13 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 Bank Agents and the
Banks.
"Security Interests" means the security interests in the Collateral
granted hereunder securing the Secured Obligations.
"Special Account" means the special account in the shareholder registry
of Nomai established by Credit Agricole following receipt by it of the
Declaration of Pledge.
"Subsidiary Shares" means the capital stock of the Issuers listed in
Schedule I.
Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code as in effect on the date hereof shall have the meanings therein
stated.
SECTION 2. Representations and Warranties.
Each Grantor represents and warrants as follows:
(A) Title to Pledged Stock. The Grantors own all of the Pledged Stock,
free and clear of any Liens other than the Security Interests. The Pledged Stock
includes all of the issued and outstanding capital stock of each Issuer which is
a Domestic Subsidiary and at least 65% of the issued and outstanding capital
stock of each Issuer which is a Foreign Subsidiary (provided that the Pledged
Stock shall include the lesser of all issued and outstanding capital stock of
Nomai owned by the Grantors or 65% of all issued and outstanding stock of
Nomai). All of the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no options to purchase
or similar rights of any Person. No Grantor is or will become a party to or
otherwise bound by any agreement, other than this Agreement, which restricts in
any manner the rights of any present or future holder of any of the Pledged
Stock with respect thereto.
(B) Validity, Perfection and Priority of Security Interests. Subject to
any applicable foreign laws, (i) upon the delivery of the certificates
representing the Pledged Stock to the Security Agent in accordance with Section
4 hereof, the Security Agent will have valid and perfected security interests in
the Collateral subject to no prior Lien and (ii) no registration, recordation or
filing with any governmental body, agency or official is required in connection
with the execution or delivery of this Agreement or necessary for the validity
or enforceability hereof or for the perfection or enforcement of the Security
Interests. Neither the Borrower nor any of its Subsidiaries has performed or
will perform any acts which might prevent the Security Agent from enforcing any
of the terms and conditions of this Agreement or which would limit the Security
Agent in any such enforcement.
(C) UCC Filing Locations. The chief executive office of the Borrower is
located at its address set forth on the signature pages of the Credit Agreement.
Under the Uniform Commercial Code as in effect in the State in which such office
is located, no local filing is required to perfect a security interest in
collateral consisting of general intangibles.
SECTION 3. The Security Interests.
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 the obligations of the Grantors hereunder:
(A) Each Grantor hereby assigns and pledges to and with the Security
Agent for the benefit of the Secured Parties and grants to the Security Agent
for the benefit of the Secured Parties security interests in the Pledged Stock,
and all of its rights and privileges with respect to the Pledged Stock, and all
dividends and other payments and distributions with respect thereto, and all
proceeds of the foregoing (the "Collateral"). Contemporaneously with the
execution and delivery hereof, the Borrower is delivering the certificates
representing the Iomega International S.A. Subsidiary Shares in pledge hereunder
and the Declaration of Pledge. As promptly as practicable after the date hereof,
the Borrower shall deliver (i) the certificates representing the Iomega Japan
Subsidiary Shares and (ii) a certificate of Credit Agricole that it has created
the Special Account, and as promptly as practicable after the acquisition of any
additional shares of Nomai, the Borrower shall deliver a certificate of Credit
Agricole that the balance of the capital shares of Nomai (up to a total of 65%
of the issued and outstanding shares of the capital stock of Nomai) are
reflected in the Special Account.
(B) Subject, in the case of Nomai, to Section 3(A), in the event that
any Subsidiary becomes an Issuer, or any Issuer at any time issues any shares of
capital stock of any class to a Grantor or any other Subsidiary, including,
without limitation, any additional or substitute shares, such Grantor will, or
will cause such Subsidiary to take appropriate steps to become a Grantor
hereunder (including, in connection therewith, the delivery by such Subsidiary
Grantor of appropriate limited recourse guaranties of the Borrower's obligations
under the Credit Agreement and legal opinions and the making of appropriate
representations and warranties) and to, immediately pledge and deposit with the
Security Agent certificates representing all (or, if such Issuer is a Foreign
Subsidiary, at least 65% of) such shares as additional security for the Secured
Obligations. All such shares constitute Pledged Stock and are subject to all
provisions of this Agreement.
(C) The Security Interests are granted as security only and shall not
subject any Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of the Borrower or any of its Subsidiaries with respect
to any of the Collateral or any transaction in connection therewith.
SECTION 4. Delivery of Pledged Stock.
All certificates representing Pledged Stock delivered to the Security
Agent by the Grantors pursuant hereto shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank and accompanied by any required transfer tax stamps, all in
form and substance satisfactory to the Security Agent.
SECTION 5. Further Assurances.
(A) Each Grantor agrees that it will, at its expense and in such manner
and form as the Security Agent may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take any other
action that may be necessary or desirable, or that the Security Agent may
request, in order to create, preserve, perfect or validate any Security Interest
or to enable the Security Agent to exercise and enforce its rights hereunder
with respect to any of the Collateral. To the extent permitted by applicable
law, each Grantor hereby authorizes the Security Agent to execute and file, in
the name of the Borrower or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic, photostatic or other
reproductions of this Agreement or of a financing statement relating to this
Agreement) which the Security Agent in its sole discretion may deem necessary or
appropriate to further perfect the Security Interests.
(B) Each Grantor agrees that it will not change (i) its name,
identity or corporate structure in any manner or (ii) the location of its chief
executive office unless it shall have given the Security Agent not less than 30
days' prior notice thereof.
SECTION 6. Record Ownership of Pledged Stock.
The Security Agent may at any time during the continuance of a Default,
in its sole discretion, cause any or all of the Pledged Stock to be transferred
of record into the name of the Security Agent or its nominee. Each Grantor will
promptly give to the Security Agent copies of any notices or other
communications received by it with respect to Pledged Stock registered in its
name and the Security Agent will promptly give to the Borrower copies of any
notices and communications received by the Security Agent with respect to
Pledged Stock registered in the name of the Security Agent or its nominee.
SECTION 7. Right to Receive Distributions on Collateral.
The Security Agent shall have the right to receive and, during the
continuance of any Default, to retain as Collateral hereunder all dividends and
other payments and distributions made upon or with respect to the Collateral,
and each Grantor shall take all such action as the Security Agent may deem
necessary or appropriate to give effect to such right. All such dividends and
other payments and distributions which are received by a Grantor shall be
received in trust for the benefit of the Secured Parties and, if the Security
Agent so directs during the continuance of a Default, shall be segregated from
other funds of such Grantor and shall, forthwith upon demand by the Security
Agent during the continuance of a Default, be paid over to the Security Agent as
Collateral in the same form as received (with any necessary endorsement). After
all Defaults have been cured, the Security Agent's right to retain dividends and
other payments and distributions under this Section 7 shall cease and the
Security Agent shall pay over to such Grantor any such Collateral retained by it
during the continuance of a Default. It is understood that prior to the
occurrence of a Default, all dividends and other payments and distributions made
upon or with respect to the Collateral shall be distributable to the Grantors.
SECTION 8. Right to Vote Pledged Stock.
Unless a Default shall have occurred and be continuing, each Grantor
shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to its Pledged Stock, and the Security
Agent shall, upon receiving a written request from such Grantor accompanied by a
certificate signed by the principal financial officer of the Borrower stating
that no Default has occurred and is continuing, deliver to such Grantor or as
specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of the Pledged Stock which is
registered in the name of the Security Agent or its nominee as shall be
specified in such request and be in form and substance satisfactory to the
Security Agent.
If a Default shall have occurred and be continuing, the Security Agent
shall have the right to the extent permitted by law and each Grantor shall take
all such action as may be necessary or appropriate to give effect to such right,
to vote and to give consents, ratifications and waivers, and take any other
action with respect to any or all of the Pledged Stock with the same force and
effect as if the Security Agent were the absolute and sole owner thereof.
SECTION 9. General Authority.
Each Grantor hereby irrevocably appoints the Security Agent its true
and lawful attorney, with full power of substitution, in the name of the
Grantors, the Security Agent, the Bank Agents, the Banks or otherwise, for the
sole use and benefit of the Secured Parties, but at the expense of such Grantor,
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 upon 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 relevant Grantor 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 Grantors agree that such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the Uniform
Commercial Code.
SECTION 10. Remedies upon Event of Default.
If any Event of Default shall have occurred and be continuing, the
Security Agent may exercise on behalf of the Secured Parties all the rights of a
secured party under the Uniform Commercial Code (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) apply the cash, if
any, then held by it as Collateral as specified in Section 13 and (ii) if there
shall be no such cash or if such cash shall be insufficient to pay all the
Secured Obligations in full, sell the Collateral or any part thereof at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery, and at such price or prices as the
Security Agent may deem satisfactory. Any Bank may be the purchaser of any or
all of the Collateral so sold at any public sale (or, if the Collateral is of a
type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations, at any private sale).
The Security Agent is authorized, in connection with any such sale, if it deems
it advisable so to do, (i) to restrict the prospective bidders on or purchasers
of any of the Pledged Stock to a limited number of sophisticated investors who
will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Pledged Stock, (ii) to cause to be placed on certificates for any or all of the
Pledged Stock or on any other securities pledged hereunder a legend to the
effect that such security has not been registered under the Securities Act of
1933 and may not be disposed of in violation of the provision of said Act, and
(iii) to impose such other limitations or conditions in connection with any such
sale as the Security Agent deems necessary or advisable in order to comply with
said Act or any other law. Each Grantor 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 absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Grantors
which may be waived, and each Grantor, 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 9 shall (1) in the case of a public sale, state
the time and place fixed for such sale, (2) in the case of a sale at a broker's
board or on a securities exchange, state the board or exchange at which such
sale is to be made and the day on which the Collateral, or the portion thereof
so being sold, will first be offered for sale at such board or exchange, and (3)
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.
SECTION 11. Expenses.
The Grantors jointly and severally agree that they will forthwith upon
demand pay to the Security Agent:
(i) the amount of any taxes which the Security Agent may have been
required to pay by reason of the Security Interests or to free any of
the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses, including
the fees and disbursements of counsel and of any other experts, which
the Security Agent may incur in connection with (w) the administration
or enforcement of this Agreement, including such expenses as are
incurred to preserve the value of the Collateral and the validity,
perfection, rank and value of any Security Interest, (x) the
collection, sale or other disposition of any of the Collateral, (y) the
exercise by the Security Agent of any of the rights conferred upon it
hereunder or (z) any Default or Event of Default.
Any such amount not paid on demand shall bear interest at the rate applicable to
Base Rate Borrowings plus 2% and shall be an additional Secured Obligation
hereunder.
SECTION 12. Limitation on Duty of Security Agent in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the
Security Agent all have no duty as to any Collateral in its possession or
control or in the possession or control of any agent 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 selected by the Security Agent in good faith.
SECTION 13. 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 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 and counsel
for the Security Agent, and all expenses, liabilities and advances
incurred or made by the Security Agent in connection therewith, and
any other unreimbursed expenses for which any Secured Party is to be
reimbursed pursuant to Section 9.03 of the Credit Agreement or Section
11 hereof and unpaid fees owing to the Bank Agents under the Credit
Agreement;
second, to the ratable payment of unpaid principal of the Secured
Obligations;
third, to the ratable payment of accrued but unpaid interest on
the Secured Obligations in accordance with the provisions of the
Credit Agreement;
fourth, 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 Grantors or their 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 14. Concerning the Security Agent.
(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 Grantors,
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 Grantors.
(F) Each Bank shall, ratably in accordance with the amount of its
Secured Obligations, indemnify the Security Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Grantors) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees 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.
SECTION 15. Appointment of Co-Agents.
At any time or times, in order to comply with any legal requirement in
any jurisdiction, the Security Agent may 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 Section 14).
SECTION 16. 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
Grantors. 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 Grantors, execute and
deliver to the Grantors such documents as the Grantors shall reasonably request
to evidence the termination of the Security Interests or the release of such
Collateral, as the case may be.
SECTION 17. 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 18. 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 the Credit Agreement or this Agreement
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 19. 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 Grantors and their successors and assigns.
SECTION 20. 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 Grantors and
the Security Agent with the consent of the Required Banks.
SECTION 21. 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 22. 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.
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: Vice President and Treasurer
Address: 0000 Xxxx Xxxxxx Xxx
Xxx, Xxxx 00000
Facsimile:
CITICORP USA, INC., as Security Agent
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
GRB/IRM Dept.
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile:
Schedule I
Subsidiary Shares
Issuer Shares of Capital Stock
------ -----------------------
Iomega International S.A. 1,181,400
Nomai S.A. 679,967
Iomega Japan 132*
*to be delivered as promptly as practicable after the Effective Date.
EXHIBIT G
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT IS AVAILABLE.
IOMEGA CORPORATION
Senior Subordinated Promissory Note
$20,000,000 Roy, Utah
July 1, 1998
---------------------
Iomega Corporation, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to Idanta Partners, or assigns, the principal
sum of $20,000,000 (Twenty Million Dollars), together with interest (computed on
the basis of a 365-day year) from the date hereof on the unpaid balance of such
principal amount from time to time outstanding at the following rates:
1. from the date hereof through September 30, 1998, the greater
of (i) the weighted-average interest rate charged under the
Credit Agreement (as defined below) at the beginning of such
period plus 2% per annum and (ii) 8.6875%;
2. from October 1, 1998 through December 31, 1998, the greater of
(i) the weighted-average interest rate charged under the
Credit Agreement at the beginning of such period plus 2% per
annum and (ii) 10.6875%; and
3. from January 1, 1999 until paid in full the greater of (i) the
weighted-average interest rate charged under the Credit
Agreement at the beginning of such period plus 2% per annum
and (ii) 12.6875%.
All principal and interest shall be due and payable on March 31, 1999.
1. Subordination.
(a) Subordination to Senior Indebtedness. The indebtedness evidenced by
this Note, and the payment of the principal hereof, and any interest hereon, is
wholly subordinated, junior and subject in right of payment, to the extent and
in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred but is
senior to the Company's 6-3/4% Convertible Subordinated Notes due 2001. "Senior
Indebtedness" means all principal, premium (if any), interest (including,
without limitation, interest accruing on or after, or which would accrue but
for, the filing of any petition in bankruptcy or for reorganization relating to
the Company, whether or not a claim for post-petition interest is allowed in
such proceeding), bank fees and other amounts (including attorneys' fees and
other costs of collection) owed by the Company with respect to the Amended and
Restated Credit Agreement And Collateral Release dated as of January 23, 1998
among the Company, the Banks named therein, Citibank, N.A., as Administrative
Agent, and Xxxxxx Guaranty Trust Company of New York, as Documentation Agent
(the "Credit Agreement"), as the Credit Agreement may be amended or extended
from time to time, and any related documents.
(b) (b1) No Payment if Default in Senior Indebtedness. No payment on
account of principal of or interest on this Note shall be made, and this Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries), if at the time of such payment or purchase or immediately
after giving effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default (other than a default in the payment of amounts due thereon) with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the maturity
thereof, and such event of default shall not have been cured or waived or shall
not have ceased to exist.
(b2) No Payment if Loans Outstanding Under Senior Indebtedness. Except for
payments permitted by Section 2 of this Note, no payment on account of principal
of or interest on this Note shall be made, and this Note shall not be redeemed
or purchased directly or indirectly by the Company (or any of its subsidiaries),
if at the time of such payment or purchase or immediately after giving effect
thereto loans would be outstanding under the Credit Agreement.
(c) Payment upon Dissolution, Etc.
(i)In the event of any bankruptcy, insolvency, reorganization,
receivership, composition, assignment for benefit of creditors or other similar
proceeding initiated by or against the Company or any dissolution or winding up
or total or partial liquidation or reorganization of the Company (being
hereinafter referred to as a "Proceeding"), all claims of the holder of this
Note with respect to this Note in such Proceeding shall be deemed assigned, pro
rata, to the then holders of the Senior Indebtedness on the basis of the
respective amounts of such Senior Indebtedness held by such holder, and the
holder of this Note hereby agrees to execute all documents that such holders
request in order to evidence such assignment, provided, however, that such
assignment shall terminate upon receipt by such holders of payment in full of
all of the Senior Indebtedness. While such assignment is in effect, the then
holders of the Senior Indebtedness shall have the exclusive right to exercise
all rights of the holder of this Note arising from their claims with respect to
this Note in the Proceeding, including but not limited to the right to vote for
a trustee and to accept or reject a proposed plan of reorganization or
composition, and the holder of this Note hereby agrees to execute all documents
reasonably requested by the then holders of the Senior Indebtedness in order to
exercise any such rights whether (at the sole discretion of such holders) in the
holder's own name or in the name of the holder of this Note. While such
assignment is in effect, the holder of this Note also agrees that it shall, upon
request of a holder of Senior Indebtedness, and at its own expense take all
reasonable actions (including but not limited to the execution and filing of
documents and the giving of testimony in any Proceeding, whether or not such
testimony could have been compelled by process) necessary to prove the full
amount of all its claims in any Proceeding, and the holder of this Note shall
not expressly, by implication or by inaction waive any claim in any Proceeding
with respect to this Note without the written consent of such holder.
(ii)Upon payment or distribution to creditors in a Proceeding
of assets of the Company of any kind or character, whether in cash, property or
securities, all principal and interest due upon any Senior Indebtedness shall
first be paid in full, or payment thereof in full duly provided for, before the
holder of this Note shall be entitled to receive or, if received, to retain any
payment or distribution on account of this Note; and upon any such Proceeding,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holder of this Note would
be entitled except for the provisions of this Section 1 shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment or distribution, or by the holder of this Note
who shall have received such payment or distribution, directly to the holders of
the Senior Indebtedness (pro rata to each such holder on the basis of the
respective amounts of such Senior Indebtedness held by such holder) or their
representatives to the extent necessary to pay all such Senior Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the holder of this Note. In the event of any Proceeding, the holder of this
Notes shall be entitled to be paid one hundred percent (100%) of the principal
amount thereof and accrued interest thereon before any distribution of assets
shall be made among the holders of any class of shares of the capital stock of
the Company in their capacities as holders of such shares.
(iii)For purposes of this Section 1(c), the words "assets" and
"cash, property or securities" shall not be deemed to include shares of Common
Stock of the Company as reorganized or readjusted, or securities of the Company
or any other person provided for by a plan of reorganization or readjustment,
the payment of which is subordinated at least to the extent provided in this
Section 1 with respect to this Note to the payment of all Senior Indebtedness
which may at the time be outstanding, if (x) the Senior Indebtedness is assumed
by the new person, if any, resulting from any such reorganization or
readjustment, and (y) the rights of the holders of Senior Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment.
(d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
holder of this Note shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of the assets of the Company
made on such Senior Indebtedness until all principal and interest on this Note
shall be paid in full; and for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which any holder of this Note would be entitled except for the
subordination provisions of this Section 1 shall, as between the holder of this
Note and the Company and/or its creditors other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.
(e) Rights of Holders Unimpaired. The provisions of this Section 1 are and
are intended solely for the purposes of defining the relative rights of the
holder of this Note and the holders of Senior Indebtedness and nothing in this
Section 1 shall impair, as between the Company and the holder of this Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
holder of this Note the principal thereof and interest thereon, in accordance
with the terms of this Note, nor shall anything herein prevent the holder of
this Note from exercising all remedies otherwise permitted by applicable law or
hereunder upon default, subject to the rights set forth above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holder of this Note.
(f) Payments on Subordinated Notes. Subject to Section 1(c), the Company
may make payments of the principal of, and any interest or premium on, this
Note, if at the time of payment, and immediately after giving effect thereto,
(i) there exists no default in any payment with respect to any Senior
Indebtedness and (ii) there shall not have occurred an event of default (other
than a default in the payment of amounts due thereon) with respect to any Senior
Indebtedness, as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, other than an
event of default which shall have been cured or waived or shall have ceased to
exist.
2. Repayment and Prepayment of Principal. Subject to the subordination
provisions of Sections 1(a), 1(b1) and 1(c) (but, for purposes of clarity, not
Section 1(b2)) and the following sentence, all amounts due under this Note may
be prepaid in whole or in part, without the prior written consent of the holder
of this Note. This Note may not be repaid at any time that there are loans
outstanding under the Credit Agreement or prepaid at any time without the
written consent of the holders of Senior Indebtedness unless such repayment or
prepayment is made solely out of the proceeds from the issuance of equity
interests in the Company or notes containing subordination provisions
subordinating the notes to the Senior Indebtedness at least to the extent
provided in Section 1 (other than Section 1(b2)). Notwithstanding any other
provision hereof, the Company shall repay or prepay to the holder promptly
following the expiration of the tender offer to be conducted by the Company for
shares of Nomai S.A. any amount not used to acquire shares of capital stock of
Nomai S.A. in such tender offer.]
3. Default. Subject to the subordination provisions of Section 1, the entire
unpaid principal of this Note and the interest then accrued on this Note shall
become and be immediately due and payable upon written demand of the holder of
this Note, without any other notice or demand of any kind or any presentment or
protest, and the holder shall have all of the rights and remedies afforded by
applicable law, if any one of the following events shall occur and be continuing
at the time of such demand, whether voluntarily or involuntarily, or, without
limitation, occurring or brought about by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any governmental body:
(a) If default shall be made in the payment of principal or interest on
this Note, and such default shall remain unremedied for thirty (30) days; or
(b) If the Company (i) makes a composition or an assignment for the benefit
of creditors or trust mortgage, (ii) applies for, consents to, acquiesces in,
files a petition seeking or admits (by answer, default or otherwise) the
material allegations of a petition filed against it seeking the appointment of a
trustee, receiver or liquidator, in bankruptcy or otherwise, of itself or of all
or a substantial portion of its assets, or a reorganization, arrangement with
creditors or other remedy, relief or adjudication available to or against a
bankrupt, insolvent or debtor under any bankruptcy or insolvency law or any law
affecting the rights of creditors generally, or (iii) admits in writing its
inability to pay its debts generally as they become due; or
(c) If the Company shall not have granted to the holder hereof a valid and
enforceable security interest in all of the Company's now owned or hereafter
acquired material intellectual property and a perfected security interest in the
Company's issued and pending United States patents, United States registered
trademarks and intellectual property constituting general intangibles (within
the meaning of the Uniform Commercial Code, as adopted in the State of Utah)
which is deemed located in the United States, which is junior and subordinate to
a security interest in the same property in favor of the holders of the Senior
Indebtedness within the earlier of forty-five (45) days from the date that
written demand for the security interest described herein is made in writing and
ten (10) days of the granting and perfecting of a security interest in any of
the property described herein to secure payment of amounts owing under the
Credit Agreement; or
(d) If the indebtedness represented by the Credit Agreement becomes due and
payable prior to the stated maturity thereof; or
(e) If an order for relief shall have been entered by a bankruptcy court or
if a decree, order or judgment shall have been entered adjudging the Company
insolvent, or appointing a receiver, liquidator, custodian or trustee, in
bankruptcy or otherwise, for it or for all or a substantial portion of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief, decree, order
or judgment shall remain undischarged or unstayed for a period of sixty (60)
days; or if any substantial part of the property of the Company is sequestered
or attached and shall not be returned to the possession of the Company or such
subsidiary or released from such attachment within sixty (60) days.
4. General.
(a) Successors and Assigns. This Note, and the obligations and rights of
the Company hereunder, shall be binding upon and inure to the benefit of the
Company, the holder of this Note, and their respective heirs, successors and
assigns; provided however, that the original holder of this Note shall not
transfer or assign any interest herein to any other person or entity prior to
the time, if any, that a default has occurred hereunder, except for
distributions by the holder to its partners or by its partners to their estates,
heirs or partners.
(b) Recourse. Recourse under this Note shall be to the general unsecured
assets of the Company only and in no event to the officers, directors or
stockholders of the Company.
(c) Changes. Changes in or additions to this Note may be made or compliance
with any term, covenant, agreement, condition or provision set forth herein may
be omitted or waived (either generally or in a particular instance and either
retroactively or prospectively), upon written consent of the Company and the
holder of this Note.
(d) Currency. All payments shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.
(e) Set-off. All payments by the Company under this Note shall be made
without set-off or counterclaim and be free and clear and without any deduction
or withholding for any taxes or fees of any nature whatever, unless the
obligation to make such deduction or withholding is imposed by law.
(f) Costs of Collection. The Company agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, incurred by the holder of this
Note in enforcing the obligations of the Company under this Note.
(g) Waivers. No delay or omission on the part of the holder of this Note in
exercising any right under this Note shall operate as a waiver of such right or
of any other right of such holder, nor shall any delay, omission or waiver on
any one occasion be deemed a bar to or waiver of the same or any other right on
any future occasion.
(h) Notices. All notices, requests, consents and demands shall be made in
writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:
If to the holder:
Idanta Partners
0000 Xx Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Controller
If to the Company:
Iomega Corporation
0000 Xxxx Xxxxxx Xxx
Xxx, XX 00000
Attention: General Counsel
(i) Saturdays, Sundays, Holidays. If any date that may at any time be
specified in this Note as a date for the making of any payment of principal or
interest under this Note shall fall on Saturday, Sunday or on a day which in
Roy, Utah shall be a legal holiday, then the date for the making of that payment
shall be the next subsequent day which is not a Saturday, Sunday or legal
holiday.
(j) Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware.
IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument on the date first above written by the duly authorized
representative of the Company.
IOMEGA CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Vice President and Treasurer
/s/ Xxxxxx X. Xxxxxxx
ATTEST:________________________
Secretary
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO
REGISTERED OR AN EXEMPTIONFROM REGISTRATION UNDER SAID ACT IS
AVAILABLE.
IOMEGA CORPORATION
Senior Subordinated Promissory Note
$7,500,000 Roy, Utah
July 8, 1998
---------------------
Iomega Corporation, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to Idanta Partners, or assigns, the principal
sum of $7,500,000 (Seven Million Five Hundred Thousand Dollars), together with
interest (computed on the basis of a 365-day year) from the date hereof on the
unpaid balance of such principal amount from time to time outstanding at the
following rates:
a. from the date hereof through September 30, 1998, the greater
of (i) the weighted-average interest rate charged under the
Credit Agreement (as defined below) at the beginning of such
period plus 2% per annum and (ii) 8.6875%;
b. from October 1, 1998 through December 31, 1998, the greater of
(i) the weighted-average interest rate charged under the
Credit Agreement at the beginning of such period plus 2% per
annum and (ii) 10.6875%; and
c. from January 1, 1999 until paid in full the greater of (i) the
weighted-average interest rate charged under the Credit
Agreement at the beginning of such period plus 2% per annum
and (ii) 12.6875%.
All principal and interest shall be due and payable on March 31, 1999.
1. Subordination.
(a) Subordination to Senior Indebtedness. The indebtedness evidenced by
this Note, and the payment of the principal hereof, and any interest hereon, is
wholly subordinated, junior and subject in right of payment, to the extent and
in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred but is
senior to the Company's 6-3/4% Convertible Subordinated Notes due 2001. "Senior
Indebtedness" means all principal, premium (if any), interest (including,
without limitation, interest accruing on or after, or which would accrue but
for, the filing of any petition in bankruptcy or for reorganization relating to
the Company, whether or not a claim for post-petition interest is allowed in
such proceeding), bank fees and other amounts (including attorneys' fees and
other costs of collection) owed by the Company with respect to the Amended and
Restated Credit Agreement And Collateral Release dated as of January 23, 1998
among the Company, the Banks named therein, Citibank, N.A., as Administrative
Agent, and Xxxxxx Guaranty Trust Company of New York, as Documentation Agent
(the "Credit Agreement"), as the Credit Agreement may be amended or extended
from time to time, and any related documents.
(b) (b1) No Payment if Default in Senior Indebtedness. No payment on
account of principal of or interest on this Note shall be made, and this Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries), if at the time of such payment or purchase or immediately
after giving effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default (other than a default in the payment of amounts due thereon) with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the maturity
thereof, and such event of default shall not have been cured or waived or shall
not have ceased to exist.
(b2) No Payment if Loans Outstanding Under Senior Indebtedness. Except for
payments permitted by Section 2 of this Note, no payment on account of principal
of or interest on this Note shall be made, and this Note shall not be redeemed
or purchased directly or indirectly by the Company (or any of its subsidiaries),
if at the time of such payment or purchase or immediately after giving effect
thereto loans would be outstanding under the Credit Agreement.
(c) Payment upon Dissolution, Etc.
(i)In the event of any bankruptcy, insolvency, reorganization,
receivership, composition, assignment for benefit of creditors or other similar
proceeding initiated by or against the Company or any dissolution or winding up
or total or partial liquidation or reorganization of the Company (being
hereinafter referred to as a "Proceeding"), all claims of the holder of this
Note with respect to this Note in such Proceeding shall be deemed assigned, pro
rata, to the then holders of the Senior Indebtedness on the basis of the
respective amounts of such Senior Indebtedness held by such holder, and the
holder of this Note hereby agrees to execute all documents that such holders
request in order to evidence such assignment, provided, however, that such
assignment shall terminate upon receipt by such holders of payment in full of
all of the Senior Indebtedness. While such assignment is in effect, the then
holders of the Senior Indebtedness shall have the exclusive right to exercise
all rights of the holder of this Note arising from their claims with respect to
this Note in the Proceeding, including but not limited to the right to vote for
a trustee and to accept or reject a proposed plan of reorganization or
composition, and the holder of this Note hereby agrees to execute all documents
reasonably requested by the then holders of the Senior Indebtedness in order to
exercise any such rights whether (at the sole discretion of such holders) in the
holder's own name or in the name of the holder of this Note. While such
assignment is in effect, the holder of this Note also agrees that it shall, upon
request of a holder of Senior Indebtedness, and at its own expense take all
reasonable actions (including but not limited to the execution and filing of
documents and the giving of testimony in any Proceeding, whether or not such
testimony could have been compelled by process) necessary to prove the full
amount of all its claims in any Proceeding, and the holder of this Note shall
not expressly, by implication or by inaction waive any claim in any Proceeding
with respect to this Note without the written consent of such holder.
(ii)Upon payment or distribution to creditors in a Proceeding of assets of
the Company of any kind or character, whether in cash, property or securities,
all principal and interest due upon any Senior Indebtedness shall first be paid
in full, or payment thereof in full duly provided for, before the holder of this
Note shall be entitled to receive or, if received, to retain any payment or
distribution on account of this Note; and upon any such Proceeding, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to which the holder of this Note would be entitled
except for the provisions of this Section 1 shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the holder of this Note who shall
have received such payment or distribution, directly to the holders of the
Senior Indebtedness (pro rata to each such holder on the basis of the respective
amounts of such Senior Indebtedness held by such holder) or their
representatives to the extent necessary to pay all such Senior Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the holder of this Note. In the event of any Proceeding, the holder of this
Notes shall be entitled to be paid one hundred percent (100%) of the principal
amount thereof and accrued interest thereon before any distribution of assets
shall be made among the holders of any class of shares of the capital stock of
the Company in their capacities as holders of such shares.
(iii) For purposes of this Section 1(c), the words "assets" and "cash,
property or securities" shall not be deemed to include shares of Common Stock of
the Company as reorganized or readjusted, or securities of the Company or any
other person provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Section
1 with respect to this Note to the payment of all Senior Indebtedness which may
at the time be outstanding, if (x) the Senior Indebtedness is assumed by the new
person, if any, resulting from any such reorganization or readjustment, and (y)
the rights of the holders of Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment.
(d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
holder of this Note shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of the assets of the Company
made on such Senior Indebtedness until all principal and interest on this Note
shall be paid in full; and for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which any holder of this Note would be entitled except for the
subordination provisions of this Section 1 shall, as between the holder of this
Note and the Company and/or its creditors other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.
(e) Rights of Holders Unimpaired. The provisions of this Section 1 are and
are intended solely for the purposes of defining the relative rights of the
holder of this Note and the holders of Senior Indebtedness and nothing in this
Section 1 shall impair, as between the Company and the holder of this Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
holder of this Note the principal thereof and interest thereon, in accordance
with the terms of this Note, nor shall anything herein prevent the holder of
this Note from exercising all remedies otherwise permitted by applicable law or
hereunder upon default, subject to the rights set forth above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holder of this Note.
(f) Payments on Subordinated Notes. Subject to Section 1(c), the Company
may make payments of the principal of, and any interest or premium on, this
Note, if at the time of payment, and immediately after giving effect thereto,
(i) there exists no default in any payment with respect to any Senior
Indebtedness and (ii) there shall not have occurred an event of default (other
than a default in the payment of amounts due thereon) with respect to any Senior
Indebtedness, as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, other than an
event of default which shall have been cured or waived or shall have ceased to
exist.
2. Repayment and Prepayment of Principal. Subject to the subordination
provisions of Sections 1(a), 1(b1) and 1(c) (but, for purposes of clarity, not
Section 1(b2)) and the following sentence, all amounts due under this Note may
be prepaid in whole or in part, without the prior written consent of the holder
of this Note. This Note may not be repaid at any time that there are loans
outstanding under the Credit Agreement or prepaid at any time without the
written consent of the holders of Senior Indebtedness unless such repayment or
prepayment is made solely out of the proceeds from the issuance of equity
interests in the Company or notes containing subordination provisions
subordinating the notes to the Senior Indebtedness at least to the extent
provided in Section 1 (other than Section 1(b2)). Notwithstanding any other
provision hereof, the Company shall repay or prepay to the holder promptly
following the expiration of the tender offer to be conducted by the Company for
shares of Nomai S.A. any amount not used to acquire shares of capital stock of
Nomai S.A. in such tender offer.]
3. Default. Subject to the subordination provisions of Section 1, the entire
unpaid principal of this Note and the interest then accrued on this Note shall
become and be immediately due and payable upon written demand of the holder of
this Note, without any other notice or demand of any kind or any presentment or
protest, and the holder shall have all of the rights and remedies afforded by
applicable law, if any one of the following events shall occur and be continuing
at the time of such demand, whether voluntarily or involuntarily, or, without
limitation, occurring or brought about by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any governmental body:
(a) If default shall be made in the payment of principal or interest on
this Note, and such default shall remain unremedied for thirty (30) days; or
(b) If the Company (i) makes a composition or an assignment for the benefit
of creditors or trust mortgage, (ii) applies for, consents to, acquiesces in,
files a petition seeking or admits (by answer, default or otherwise) the
material allegations of a petition filed against it seeking the appointment of a
trustee, receiver or liquidator, in bankruptcy or otherwise, of itself or of all
or a substantial portion of its assets, or a reorganization, arrangement with
creditors or other remedy, relief or adjudication available to or against a
bankrupt, insolvent or debtor under any bankruptcy or insolvency law or any law
affecting the rights of creditors generally, or (iii) admits in writing its
inability to pay its debts generally as they become due; or
(c) If the Company shall not have granted to the holder hereof a valid and
enforceable security interest in all of the Company's now owned or hereafter
acquired material intellectual property and a perfected security interest in the
Company's issued and pending United States patents, United States registered
trademarks and intellectual property constituting general intangibles (within
the meaning of the Uniform Commercial Code, as adopted in the State of Utah)
which is deemed located in the United States, which is junior and subordinate to
a security interest in the same property in favor of the holders of the Senior
Indebtedness within the earlier of forty-five (45) days from the date that
written demand for the security interest described herein is made in writing and
ten (10) days of the granting and perfecting of a security interest in any of
the property described herein to secure payment of amounts owing under the
Credit Agreement; or
(d) If the indebtedness represented by the Credit Agreement becomes due and
payable prior to the stated maturity thereof; or
(e) If an order for relief shall have been entered by a bankruptcy court or
if a decree, order or judgment shall have been entered adjudging the Company
insolvent, or appointing a receiver, liquidator, custodian or trustee, in
bankruptcy or otherwise, for it or for all or a substantial portion of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief, decree, order
or judgment shall remain undischarged or unstayed for a period of sixty (60)
days; or if any substantial part of the property of the Company is sequestered
or attached and shall not be returned to the possession of the Company or such
subsidiary or released from such attachment within sixty (60) days.
4. General.
(a) Successors and Assigns. This Note, and the obligations and rights of
the Company hereunder, shall be binding upon and inure to the benefit of the
Company, the holder of this Note, and their respective heirs, successors and
assigns; provided however, that the original holder of this Note shall not
transfer or assign any interest herein to any other person or entity prior to
the time, if any, that a default has occurred hereunder, except for
distributions by the holder to its partners or by its partners to their estates,
heirs or partners.
(b) Recourse. Recourse under this Note shall be to the general unsecured
assets of the Company only and in no event to the officers, directors or
stockholders of the Company.
(c) Changes. Changes in or additions to this Note may be made or compliance
with any term, covenant, agreement, condition or provision set forth herein may
be omitted or waived (either generally or in a particular instance and either
retroactively or prospectively), upon written consent of the Company and the
holder of this Note.
(d) Currency. All payments shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.
(e) Set-off. All payments by the Company under this Note shall be made
without set-off or counterclaim and be free and clear and without any deduction
or withholding for any taxes or fees of any nature whatever, unless the
obligation to make such deduction or withholding is imposed by law.
(f) Costs of Collection. The Company agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, incurred by the holder of this
Note in enforcing the obligations of the Company under this Note.
(g) Waivers. No delay or omission on the part of the holder of this Note in
exercising any right under this Note shall operate as a waiver of such right or
of any other right of such holder, nor shall any delay, omission or waiver on
any one occasion be deemed a bar to or waiver of the same or any other right on
any future occasion.
(h) Notices. All notices, requests, consents and demands shall be made in
writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:
If to the holder:
Idanta Partners
0000 Xx Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Controller
If to the Company:
Iomega Corporation
0000 Xxxx Xxxxxx Xxx
Xxx, XX 00000
Attention: General Counsel
(i) Saturdays, Sundays, Holidays. If any date that may at any time be
specified in this Note as a date for the making of any payment of principal or
interest under this Note shall fall on Saturday, Sunday or on a day which in
Roy, Utah shall be a legal holiday, then the date for the making of that payment
shall be the next subsequent day which is not a Saturday, Sunday or legal
holiday.
(j) Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware.
IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument on the date first above written by the duly authorized
representative of the Company.
IOMEGA CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Vice President and Treasurer
ATTEST: /s/ Xxxxxx X. Xxxxxxx
Secretary
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO
REGISTERED OR AN EXEMPTIONFROM REGISTRATION UNDER SAID ACT IS
AVAILABLE.
IOMEGA CORPORATION
Senior Subordinated Promissory Note
$12,500,000 Roy, Utah
July 8, 1998
---------------------
Iomega Corporation, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to Idanta Partners, or assigns, the principal
sum of $12,500,000 (Twelve Million Five Hundred Thousand Dollars), together with
interest (computed on the basis of a 365-day year) from the date hereof on the
unpaid balance of such principal amount from time to time outstanding at the
following rates:
a. from the date hereof through September 30, 1998, the greater
of (i) the weighted-average interest rate charged under the
Credit Agreement (as defined below) at the beginning of such
period plus 2% per annum and (ii) 8.6875%;
b. from October 1, 1998 through December 31, 1998, the greater of
(i) the weighted-average interest rate charged under the
Credit Agreement at the beginning of such period plus 2% per
annum and (ii) 10.6875%; and
c. from January 1, 1999 until paid in full the greater of (i) the
weighted-average interest rate charged under the Credit
Agreement at the beginning of such period plus 2% per annum
and (ii) 12.6875%.
All principal and interest shall be due and payable on March 31, 1999.
1. Subordination.
(a) Subordination to Senior Indebtedness. The indebtedness evidenced by
this Note, and the payment of the principal hereof, and any interest hereon, is
wholly subordinated, junior and subject in right of payment, to the extent and
in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred but is
senior to the Company's 6-3/4% Convertible Subordinated Notes due 2001. "Senior
Indebtedness" means all principal, premium (if any), interest (including,
without limitation, interest accruing on or after, or which would accrue but
for, the filing of any petition in bankruptcy or for reorganization relating to
the Company, whether or not a claim for post-petition interest is allowed in
such proceeding), bank fees and other amounts (including attorneys' fees and
other costs of collection) owed by the Company with respect to the Amended and
Restated Credit Agreement And Collateral Release dated as of January 23, 1998
among the Company, the Banks named therein, Citibank, N.A., as Administrative
Agent, and Xxxxxx Guaranty Trust Company of New York, as Documentation Agent
(the "Credit Agreement"), as the Credit Agreement may be amended or extended
from time to time, and any related documents.
(b) (b1) No Payment if Default in Senior Indebtedness. No payment on
account of principal of or interest on this Note shall be made, and this Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries), if at the time of such payment or purchase or immediately
after giving effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default (other than a default in the payment of amounts due thereon) with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the maturity
thereof, and such event of default shall not have been cured or waived or shall
not have ceased to exist.
(b2) No Payment if Loans Outstanding Under Senior Indebtedness. Except for
payments permitted by Section 2 of this Note, no payment on account of principal
of or interest on this Note shall be made, and this Note shall not be redeemed
or purchased directly or indirectly by the Company (or any of its subsidiaries),
if at the time of such payment or purchase or immediately after giving effect
thereto loans would be outstanding under the Credit Agreement.
(c) Payment upon Dissolution, Etc.
(i)In the event of any bankruptcy, insolvency, reorganization,
receivership, composition, assignment for benefit of creditors or other similar
proceeding initiated by or against the Company or any dissolution or winding up
or total or partial liquidation or reorganization of the Company (being
hereinafter referred to as a "Proceeding"), all claims of the holder of this
Note with respect to this Note in such Proceeding shall be deemed assigned, pro
rata, to the then holders of the Senior Indebtedness on the basis of the
respective amounts of such Senior Indebtedness held by such holder, and the
holder of this Note hereby agrees to execute all documents that such holders
request in order to evidence such assignment, provided, however, that such
assignment shall terminate upon receipt by such holders of payment in full of
all of the Senior Indebtedness. While such assignment is in effect, the then
holders of the Senior Indebtedness shall have the exclusive right to exercise
all rights of the holder of this Note arising from their claims with respect to
this Note in the Proceeding, including but not limited to the right to vote for
a trustee and to accept or reject a proposed plan of reorganization or
composition, and the holder of this Note hereby agrees to execute all documents
reasonably requested by the then holders of the Senior Indebtedness in order to
exercise any such rights whether (at the sole discretion of such holders) in the
holder's own name or in the name of the holder of this Note. While such
assignment is in effect, the holder of this Note also agrees that it shall, upon
request of a holder of Senior Indebtedness, and at its own expense take all
reasonable actions (including but not limited to the execution and filing of
documents and the giving of testimony in any Proceeding, whether or not such
testimony could have been compelled by process) necessary to prove the full
amount of all its claims in any Proceeding, and the holder of this Note shall
not expressly, by implication or by inaction waive any claim in any Proceeding
with respect to this Note without the written consent of such holder.
(ii)Upon payment or distribution to creditors in a Proceeding of assets of
the Company of any kind or character, whether in cash, property or securities,
all principal and interest due upon any Senior Indebtedness shall first be paid
in full, or payment thereof in full duly provided for, before the holder of this
Note shall be entitled to receive or, if received, to retain any payment or
distribution on account of this Note; and upon any such Proceeding, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to which the holder of this Note would be entitled
except for the provisions of this Section 1 shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the holder of this Note who shall
have received such payment or distribution, directly to the holders of the
Senior Indebtedness (pro rata to each such holder on the basis of the respective
amounts of such Senior Indebtedness held by such holder) or their
representatives to the extent necessary to pay all such Senior Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the holder of this Note. In the event of any Proceeding, the holder of this
Notes shall be entitled to be paid one hundred percent (100%) of the principal
amount thereof and accrued interest thereon before any distribution of assets
shall be made among the holders of any class of shares of the capital stock of
the Company in their capacities as holders of such shares.
(iii) For purposes of this Section 1(c), the words "assets" and "cash,
property or securities" shall not be deemed to include shares of Common Stock of
the Company as reorganized or readjusted, or securities of the Company or any
other person provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Section
1 with respect to this Note to the payment of all Senior Indebtedness which may
at the time be outstanding, if (x) the Senior Indebtedness is assumed by the new
person, if any, resulting from any such reorganization or readjustment, and (y)
the rights of the holders of Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment.
(d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
holder of this Note shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of the assets of the Company
made on such Senior Indebtedness until all principal and interest on this Note
shall be paid in full; and for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which any holder of this Note would be entitled except for the
subordination provisions of this Section 1 shall, as between the holder of this
Note and the Company and/or its creditors other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.
(e) Rights of Holders Unimpaired. The provisions of this Section 1 are and
are intended solely for the purposes of defining the relative rights of the
holder of this Note and the holders of Senior Indebtedness and nothing in this
Section 1 shall impair, as between the Company and the holder of this Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
holder of this Note the principal thereof and interest thereon, in accordance
with the terms of this Note, nor shall anything herein prevent the holder of
this Note from exercising all remedies otherwise permitted by applicable law or
hereunder upon default, subject to the rights set forth above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holder of this Note.
(f) Payments on Subordinated Notes. Subject to Section 1(c), the Company
may make payments of the principal of, and any interest or premium on, this
Note, if at the time of payment, and immediately after giving effect thereto,
(i) there exists no default in any payment with respect to any Senior
Indebtedness and (ii) there shall not have occurred an event of default (other
than a default in the payment of amounts due thereon) with respect to any Senior
Indebtedness, as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, other than an
event of default which shall have been cured or waived or shall have ceased to
exist.
2. Repayment and Prepayment of Principal. Subject to the subordination
provisions of Sections 1(a), 1(b1) and 1(c) (but, for purposes of clarity, not
Section 1(b2)) and the following sentence, all amounts due under this Note may
be prepaid in whole or in part, without the prior written consent of the holder
of this Note. This Note may not be repaid at any time that there are loans
outstanding under the Credit Agreement or prepaid at any time without the
written consent of the holders of Senior Indebtedness unless such repayment or
prepayment is made solely out of the proceeds from the issuance of equity
interests in the Company or notes containing subordination provisions
subordinating the notes to the Senior Indebtedness at least to the extent
provided in Section 1 (other than Section 1(b2)). Notwithstanding any other
provision hereof, the Company shall repay or prepay to the holder promptly
following the expiration of the tender offer to be conducted by the Company for
shares of Nomai S.A. any amount not used to acquire shares of capital stock of
Nomai S.A. in such tender offer.]
3. Default. Subject to the subordination provisions of Section 1, the entire
unpaid principal of this Note and the interest then accrued on this Note shall
become and be immediately due and payable upon written demand of the holder of
this Note, without any other notice or demand of any kind or any presentment or
protest, and the holder shall have all of the rights and remedies afforded by
applicable law, if any one of the following events shall occur and be continuing
at the time of such demand, whether voluntarily or involuntarily, or, without
limitation, occurring or brought about by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any governmental body:
(a) If default shall be made in the payment of principal or interest on
this Note, and such default shall remain unremedied for thirty (30) days; or
(b) If the Company (i) makes a composition or an assignment for the benefit
of creditors or trust mortgage, (ii) applies for, consents to, acquiesces in,
files a petition seeking or admits (by answer, default or otherwise) the
material allegations of a petition filed against it seeking the appointment of a
trustee, receiver or liquidator, in bankruptcy or otherwise, of itself or of all
or a substantial portion of its assets, or a reorganization, arrangement with
creditors or other remedy, relief or adjudication available to or against a
bankrupt, insolvent or debtor under any bankruptcy or insolvency law or any law
affecting the rights of creditors generally, or (iii) admits in writing its
inability to pay its debts generally as they become due; or
(c) If the Company shall not have granted to the holder hereof a valid and
enforceable security interest in all of the Company's now owned or hereafter
acquired material intellectual property and a perfected security interest in the
Company's issued and pending United States patents, United States registered
trademarks and intellectual property constituting general intangibles (within
the meaning of the Uniform Commercial Code, as adopted in the State of Utah)
which is deemed located in the United States, which is junior and subordinate to
a security interest in the same property in favor of the holders of the Senior
Indebtedness within the earlier of forty-five (45) days from the date that
written demand for the security interest described herein is made in writing and
ten (10) days of the granting and perfecting of a security interest in any of
the property described herein to secure payment of amounts owing under the
Credit Agreement; or
(d) If the indebtedness represented by the Credit Agreement becomes due and
payable prior to the stated maturity thereof; or
(e) If an order for relief shall have been entered by a bankruptcy court or
if a decree, order or judgment shall have been entered adjudging the Company
insolvent, or appointing a receiver, liquidator, custodian or trustee, in
bankruptcy or otherwise, for it or for all or a substantial portion of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief, decree, order
or judgment shall remain undischarged or unstayed for a period of sixty (60)
days; or if any substantial part of the property of the Company is sequestered
or attached and shall not be returned to the possession of the Company or such
subsidiary or released from such attachment within sixty (60) days.
4. General.
(a) Successors and Assigns. This Note, and the obligations and rights of
the Company hereunder, shall be binding upon and inure to the benefit of the
Company, the holder of this Note, and their respective heirs, successors and
assigns; provided however, that the original holder of this Note shall not
transfer or assign any interest herein to any other person or entity prior to
the time, if any, that a default has occurred hereunder, except for
distributions by the holder to its partners or by its partners to their estates,
heirs or partners.
(b) Recourse. Recourse under this Note shall be to the general unsecured
assets of the Company only and in no event to the officers, directors or
stockholders of the Company.
(c) Changes. Changes in or additions to this Note may be made or compliance
with any term, covenant, agreement, condition or provision set forth herein may
be omitted or waived (either generally or in a particular instance and either
retroactively or prospectively), upon written consent of the Company and the
holder of this Note.
(d) Currency. All payments shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.
(e) Set-off. All payments by the Company under this Note shall be made
without set-off or counterclaim and be free and clear and without any deduction
or withholding for any taxes or fees of any nature whatever, unless the
obligation to make such deduction or withholding is imposed by law.
(f) Costs of Collection. The Company agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, incurred by the holder of this
Note in enforcing the obligations of the Company under this Note.
(g) Waivers. No delay or omission on the part of the holder of this Note in
exercising any right under this Note shall operate as a waiver of such right or
of any other right of such holder, nor shall any delay, omission or waiver on
any one occasion be deemed a bar to or waiver of the same or any other right on
any future occasion.
(h) Notices. All notices, requests, consents and demands shall be made in
writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:
If to the holder:
Idanta Partners
0000 Xx Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Controller
If to the Company:
Iomega Corporation
0000 Xxxx Xxxxxx Xxx
Xxx, XX 00000
Attention: General Counsel
(i) Saturdays, Sundays, Holidays. If any date that may at any time be
specified in this Note as a date for the making of any payment of principal or
interest under this Note shall fall on Saturday, Sunday or on a day which in
Roy, Utah shall be a legal holiday, then the date for the making of that payment
shall be the next subsequent day which is not a Saturday, Sunday or legal
holiday.
(j) Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware.
IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument on the date first above written by the duly authorized
representative of the Company.
IOMEGA CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Vice President and Treasurer
ATTEST: /s/ Xxxxxx X. Xxxxxxx
Secretary
--------
* Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum. If this Agreement is prepared in connection with a
substitution pursuant to Section 8.06 of the Credit Agreement, amount must
combine principal, accrued interest and fees and breakage compensation, if any,
and the administrative fee referred to in Section 9.06(c) of the Credit
Agreement must be paid to the Administrative Agent.
1Changes 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.
2Indicate lapse date, if other than fifth anniversary.
