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Exhibit 10.3.8.a
BANK ONE SECURITY AGREEMENT
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Security Agreement, dated as of August 6, 1996, by and among Telxon
Corporation, a Delaware corporation (the "BORROWER"), and Bank One, Akron, NA
("BANK"), (as the same may be amended, supplemented or otherwise modified from
time to time, this "AGREEMENT").
RECITALS
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I. Reference is made to the Credit Agreement, dated as March 8, 1996, by
and among the Borrower, the Lenders party thereto (one of which is the Bank),
and The Bank of New York ("BNY"), as Issuer, Swing Line Lender and Agent, as
amended by Amendment Xx. 0 ("XXXXXXXXX XX. 0"), dated as of the date hereof, by
and among the Borrower and BNY (as the same may be amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT").
II. Reference is further made to the Intercreditor Agreement, dated as of
August 6, 1996, by and between Bank and BNY, as Agent, as acknowledged by
Borrower (as the same may be amended, supplemented or otherwise modified from
time to time, the "INTERCREDITOR AGREEMENT").
III. As of the date hereof, Bank has extended to Borrower a certain Twenty
Million Dollar ($20,000,000.00) revolving line of credit (as the same may be
amended, supplemented or otherwise modified from time to time, the "SWING
LINE"), which is evidenced by a certain Business Purpose Revolving Promissory
Note dated August 6, 1996 and executed by Borrower (as the same may be amended,
supplemented or otherwise modified from time to time, the "SWING LINE NOTE").
Therefore, in consideration of the Recitals, the terms and conditions
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Bank hereby
agree as follows:
A. DEFINED TERMS
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(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement, Intercreditor Agreement, and/or Swing Line Note, as appropriate.
(b) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto as follows:
"APPLICABLE COLLATERAL": (a) as of the Perfection Date, any Equipment
and Inventory located in the States of Ohio and Texas, and (b) as of any date
thereafter, (i) any Equipment or
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Inventory located in Ohio and Texas, and (ii) any Equipment or Inventory located
in Ohio or Texas on or after the Perfection Date.
"COLLATERAL": as defined in Section B.
"EVENT OF DEFAULT": as defined in Section E hereof.
"FINANCING STATEMENTS": the UCC financing statements, copies of which
are annexed hereto as Annex A.
"OUCC": the UCC as in effect in the State of Ohio on the date hereof.
"OBLIGATIONS": all of the obligations and liabilities of the Borrower
under the Swing Line Note, whether fixed, contingent, now existing or hereafter
arising, created, assumed, incurred or acquired.
"OFFICE LOCATION": as defined in Section C(1)(a) hereof.
"PERMITTED LIEN": a Lien permitted by Section 8.2 of the Credit
Agreement.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the OUCC: "ACCOUNT",
"EQUIPMENT", "INVENTORY", "PROCEEDS", "SECURED PARTY" and "SECURITY INTEREST".
X. XXXXX OF SECURITY INTEREST
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Subject to Section G of this Agreement, to secure the prompt and
complete payment, observance and performance of the Obligations, the Borrower
grants to the Bank a Security Interest in and to all of the Borrower's right,
title and interest in and to all Accounts, Equipment, Inventory and all of the
Proceeds (which shall include all dividends, distributions, accessions and
income on and in respect of all of the foregoing and all other rights and
benefits in respect thereof) of all of the foregoing, whether now owned or
existing or hereafter arising or acquired (collectively, the "COLLATERAL").
C. REPRESENTATIONS AND WARRANTIES
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The Borrower hereby represents and warrants to Bank as follows:
1. GENERALLY. a. The Borrower's place of business or, if the Borrower
has more than one place of business, its chief executive office, is, and has
been continuously for the immediately
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preceding 5 month period, located (the "OFFICE LOCATION") at (A) the address set
forth for notices to the Borrower contained in the Credit Agreement, or (B) such
other location in respect of which (1) the Borrower shall have provided the Bank
with at least 30 days' prior written notice thereof, and (2) UCC financing
statements (or amendments thereto), in form and substance reasonably
satisfactory to the Bank, shall have been filed within two months after the
later of (x) the Perfection Date, or (y) such change. The Borrower has not
changed its legal name during the last 6 years.
b. All of the information set forth on each of the Schedules
hereto is true, complete and correct.
c. On and after the Perfection Date, this Agreement shall create
a continuing "enforceable" Security Interest in the Collateral in favor of the
Bank. There are no Liens upon the Collateral other than Permitted Liens, if any.
Upon the presentation for filing of the Financing Statements at the respective
offices listed thereon together with the appropriate filing fee therefor, such
Security Interest shall be perfected.
2. ACCOUNTS. All records concerning any Account constituting
Collateral are located at the Office Location, and no such Account (other than
with respect to one or more Accounts which are over 90 days past due and which,
in the aggregate, are not in excess of $500,000) is evidenced by a promissory
note or other instrument.
3. EQUIPMENT AND INVENTORY. The Borrower has exclusive possession and
control of all Equipment and Inventory constituting the Collateral, all of which
is and has been continuously for the last 5 month period, located at (i) one or
more of the places listed on Schedule I hereto, or (ii) such other places
located within the United States in respect of which (A) the Borrower shall have
provided the Agent with at least 10 days' prior written notice, and (B) UCC
financing statements (or amendments thereto), in form and substance satisfactory
to the Bank, shall have been filed within two months after the later of (1) the
Perfection Date, or (2) such change.
D. COVENANTS
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The Borrower hereby covenants with the Bank as follows:
1. GENERALLY. a. The Borrower shall maintain its place of business, or
if it has more than one place of business, its chief executive office, at the
Office Location.
b. It shall, at its own expense, (A) promptly after each request
by the Bank cause to be provided to the Bank UCC, federal tax, judgment and
other lien search reports with respect to each applicable public office where
Liens are or may be
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filed disclosing that there are no Liens of record in such official's office
covering any Collateral or showing the Borrower as debtor thereunder (other than
Permitted Liens), (B) promptly execute and deliver all certificates, documents,
instruments (other than instruments which represent Accounts which are over 90
days past due and which, in the aggregate, are not in excess of $500,000),
financing and continuation statements and amendments thereto, notices and other
agreements, and (C) take all further action, in each case that the Bank may
reasonably request from time to time, in order to perfect and protect the
Security Interest granted hereby in the Collateral (other than Equipment and
Inventory which is not Applicable Collateral) or to enable the Bank to exercise
and enforce its rights and remedies hereunder with respect to the Collateral
(other than Equipment and Inventory which is not Applicable Collateral). The
Borrower hereby irrevocably appoints the Bank as the Borrower's true and lawful
attorney-in-fact, in the name, place and stead of the Borrower, to perform on
behalf of the Borrower any and all obligations of the Borrower under this
Agreement, and the Borrower agrees that the power of attorney herein granted
constitutes a power coupled with an interest, provided, however, that the Bank
shall have no obligation to perform any such obligation and such performance
shall be at the sole cost and expense of the Borrower. If the Borrower fails to
comply with any of its obligations hereunder, the Bank may do so in the
Borrower's name or in the Bank's name, but at the Borrower's expense, and the
Borrower hereby agrees to reimburse the Bank in full for all reasonable
expenses, including reasonable attorney's fees, incurred by the Bank in
connection therewith.
c. The Borrower shall, at its own expense, furnish to the Bank
such information, reports, statements and schedules with respect to the
Collateral as the Bank may reasonably request from time to time.
d. The Borrower shall, at its own expense, defend the Collateral
against all claims of any kind or nature (other than Permitted Liens, if any) of
all Persons at any time claiming the same or any interest therein adverse to the
interests of the Bank, and it shall not cause, permit or suffer to exist any
Lien upon the Collateral other than (A) the Lien granted hereby, and (B)
Permitted Liens, if any.
e. Except as otherwise required by law, the Borrower agrees that,
with respect to the Collateral, the Bank has no obligation to preserve rights
against prior or third parties.
f. The Bank's only duty with respect to the Collateral delivered
to it shall be to use reasonable care in the custody and preservation of the
Collateral, and the Borrower agrees that if the Bank accords the Collateral
substantially the same kind of care as the Bank accords its own Property, such
care shall conclusively be deemed reasonable.
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g. Anything herein to the contrary notwithstanding, (A) the
Borrower shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (B) the exercise by the Bank of any of its rights hereunder shall not
release the Borrower from any of its duties or obligations under any such
contract or agreement, (C) the Bank shall not have any obligation or liability,
including indemnification obligations, under any such contract or agreement by
reason of this Agreement, nor shall the Bank be obligated to perform any of the
obligations or duties of the Borrower thereunder, to make any payment, to make
any inquiry as to the nature or sufficiency of any payment received by the
Borrower or the sufficiency of any performance by any party under any such
contract or agreement or to take any action to collect or enforce any claim for
payment assigned hereunder, and (D) the Bank shall not be under any duty to send
notices, perform services, exercise any rights of collection, enforcement,
conversion or exchange, vote, pay for insurance, taxes or other charges or take
any action of any kind in connection with the management of the Collateral.
2. ACCOUNTS. Except as otherwise provided in this Section D(2), the
Borrower shall continue to collect in accordance with its customary practice, at
its own expense, all amounts due or to become due to the Borrower in respect of
the Borrower's Accounts and, prior to the occurrence of an Event of Default, the
Borrower shall have the right to adjust, settle or compromise the amount or
payment of any such Account, all in accordance with its customary practices. In
connection with such collections, the Borrower may take and, at the direction of
the Bank at any time that an Event of Default shall have occurred and be
continuing shall take, such action as the Borrower or the Bank may reasonably
deem necessary or advisable to enforce collection of such Accounts.
3. EQUIPMENT AND INVENTORY. (i) The Borrower shall keep the Equipment
and Inventory constituting the Collateral at the places listed on Schedule I
hereto, and such other places located within the United States in respect of
which (A) the Borrower shall have provided the Bank with at least 10 days' prior
written notice, and (B) UCC financing statements (or amendments thereto), in
form and substance satisfactory to the Bank, shall have been filed within two
months after the later of (1) the Perfection Date, or (2) such change.
(ii) The Borrower shall promptly furnish to the Bank a statement
respecting any material loss or damage to any of the Equipment or Inventory
constituting the Collateral with an aggregate fair market value exceeding
$500,000 as a result of a single occurrence except to the extent that such loss
or damage shall be insured pursuant to policies required to be maintained
pursuant to the Credit Agreement.
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E. EVENTS OF DEFAULT
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Each of the following shall constitute an "EVENT OF DEFAULT":
1. If the Borrower shall fail to observe or perform any term, covenant
or agreement contained in this Agreement; or
2. If the Borrower shall fail to pay any amount when due under the
Swing Line Note; or
3. The occurrence and continuance of an Event of Default under, and as
such term is defined in, the Credit Agreement.
F. REMEDIES
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1. Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Bank may:
a. exercise any and all rights and remedies (A) granted to a
Secured Party by the UCC in effect in the State of Ohio or otherwise
allowed at law, and (B) otherwise provided by this Agreement, and
b. dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and the Borrower agrees that, without
limitation, the following are each commercially reasonable: (A) the Bank
shall not in any event be required to give more than 14 days' prior notice
to the Borrower of any such disposition, (B) any place within the City of
Akron, Ohio or the counties of Summit and/or Cuyahoga in Ohio may be
designated by the Bank for disposition, and (C) the Bank may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
2. To the extent permitted by law, the Borrower hereby expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
G. EFFECTIVENESS OF SECURITY INTEREST
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Notwithstanding anything herein to the contrary, Section B of this
Agreement shall not be effective until the Perfection Date.
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H. NOTICES
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All notices, requests and other communications required under this
Security Agreement, or required by law, shall be in writing and shall be deemed
given when and if (a) personally delivered, (b) delivered by overnight private
courier service which in the ordinary course of its business maintains a record
of receipt of each of its deliveries, or (c) when delivered by United States
mail, postage prepaid, certified or registered, return receipt requested,
addressed to the parties hereto and other persons listed below, at their
respective addresses set forth below or as they may hereafter specify by written
notice delivered in accordance herewith:
if to Bank: Bank One, Akron, NA
00 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxx 00000-0000
Attn: Xxxxx Xxxxxxx
if to Borrower: Telxon Corporation
0000 Xxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx, Xxxx 00000-0000
Attn: Legal Department
I. RELATIONSHIP TO INTERCREDITOR AGREEMENT
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This Agreement is the Bank One Security Agreement under, and as such
term is defined in, the Intercreditor Agreement, and is subject to, and should
be construed in conjunction with, the provisions thereof.
J. FINANCING STATEMENTS
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The Bank shall not file the Financing Statements prior to the
Perfection Date.
K. GOVERNING LAW
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This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and interpreted in accordance with,
the laws of the State of Ohio, without regard to principles of conflict of laws.
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IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
TELXON CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: Senior Vice President, Chief
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Financial Officer and Treasurer
BANK ONE, AKRON, NA
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Vice President
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