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EXHIBIT 10.3.3.a
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of August 26, 1999 (together
with all amendments, if any, from time to time hereto, this "Agreement") between
TELXON CORPORATION, a Delaware corporation (the "Pledgor") and FOOTHILL CAPITAL
CORPORATION in its capacity as Agent for Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan and Security Agreement
dated as of the date hereof by and among Pledgor, Agent and the Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
and schedules thereto, and as from time to time amended, restated, supplemented
or otherwise modified (the "Loan Agreement") the Lenders have agreed to make the
loans and other extensions of credit to Pledgor;
WHEREAS, Pledgor is the record and beneficial owner of the
shares of Stock listed in Part A of Schedule I hereto and the owner of the
promissory notes and instruments listed in Part B of Schedule I hereto;
WHEREAS, in order to induce Agent and Lenders to make loans
and other extensions of credit as provided for in the Loan Agreement, Pledgor
has agreed to pledge the Pledged Collateral to Agent in accordance herewith;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained and to induce Lenders to make the loans and
other extensions of credit under the Loan Agreement, it is agreed as follows:
1. DEFINITIONS. Unless otherwise defined herein, terms defined
in the Loan Agreement are used herein as therein defined, and the following
shall have (unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Lock-Up Agreement" means the Lock-Up Agreement dated as of
April 13, 1999 executed by Pledgor in favor of Aironet Wireless
Communications, Inc. ("Aironet"), XX Xxxxx Securities Corporation, Xxxx
Xxxxxxxx Xxxxxxx and Prudential Securities, Inc.
"Pledged Collateral" has the meaning assigned to such term in
Section 2 hereof.
"Pledged Entity" means an issuer of Pledged Stock or Pledged
Indebtedness.
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"Pledged Indebtedness" means the Indebtedness evidenced by
promissory notes and instruments listed on Part B of Schedule I hereto;
"Pledged Shares" means those shares listed on Part A of
Schedule I hereto and, if Stock Certificate No. CS 0145 is delivered to
Agent pursuant to the terms of the letter attached hereto as Schedule
III, those shares evidenced by such Stock Certificate No. CS 0145
"Registration Rights Agreement" means the Registration Rights
Agreement dated March 31, 1998 by and among Aironet and each of the
security holders that is a party thereto.
"Secured Obligations" has the meaning assigned to such term in
Section 3 hereof.
"Termination Date" has the meaning assigned to such term in
Section 6 hereof.
2. PLEDGE. Pledgor hereby pledges to Agent, and grants to
Agent for itself and the benefit of Lenders, a first priority security interest
in all of the following (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, distributions, cash, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the Pledged Shares; and
(ii) such portion, as determined by Agent as provided in
Section 6(d) below, of any additional shares of stock of a Pledged
Entity from time to time acquired by Pledgor in any manner (which
shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Stock; and
(iii) the Pledged Indebtedness and the promissory notes or
instruments evidencing the Pledged Indebtedness, and all interest,
cash, instruments and other property and assets from time to time
received, receivable or otherwise distributed in respect of the Pledged
Indebtedness; and
(iv) all additional Indebtedness arising after the date hereof
and owing to Pledgor and evidenced by promissory notes or other
instruments, together with such promissory notes and instruments, and
all interest, cash, instruments and other property and assets from time
to time received, receivable or otherwise distributed in respect of
that Pledged Indebtedness.
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3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of all
Obligations of any kind under or in connection with the Loan Agreement and the
other Loan Documents and all obligations of Pledgor now or hereafter existing
under this Agreement including, without limitation, all fees, costs and expenses
whether in connection with collection actions hereunder or otherwise
(collectively, the "Secured Obligations").
4. DELIVERY OF PLEDGED COLLATERAL. All certificates and all
promissory notes and instruments evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of Agent, for itself and the benefit of
Lenders, pursuant hereto. All Pledged Shares shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Agent and all promissory notes or other instruments
evidencing the Pledged Indebtedness shall be endorsed by Pledgor.
5. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants to Agent that:
(a) Pledgor is, and at the time of delivery of the Pledged
Shares to Agent will be, the sole holder of record and the sole beneficial owner
of such Pledged Collateral pledged by Pledgor free and clear of any Lien thereon
or affecting the title thereto, except for any Lien created by this Agreement
and except as provided in the Lock-Up Agreement; Pledgor is and at the time of
delivery of the Pledged Indebtedness to Agent will be, the sole owner of such
Pledged Collateral free and clear of any Lien thereon or affecting title
thereto, except for any Lien created by this Agreement and except as provided in
the Lock-Up Agreement;
(b) All of the Pledged Shares have been duly authorized,
validly issued and are fully paid and non-assessable; the Pledged Indebtedness
has been duly authorized, authenticated or issued and delivered by, and is the
legal, valid and binding obligations of, the Pledged Entities, and no such
Pledged Entity is in default thereunder;
(c) Except as provided in the Lock-Up Agreement (with respect
to which a consent allowing Pledgor to enter into this Agreement has been
obtained), Pledgor has the right and requisite authority to pledge, assign,
transfer, deliver, deposit and set over the Pledged Collateral pledged by
Pledgor to Agent as provided herein;
(d) None of the Pledged Shares or Pledged Indebtedness has
been issued or transferred in, and neither the pledge to the Pledgor of the
Pledged Collateral or any transfer of the Pledged Collateral upon any exercise
of any remedies pursuant to this Agreement will result in a violation of (i) the
constituent documents or by-laws of the Pledgor or the Pledged Entity, (ii) any
laws, statutes, regulations, orders, judgment or declarations binding on the
Pledgor or the Pledged Entity, or (iii) the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or
transfer may be subject;
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(e) All of the Pledged Shares are presently owned by Pledgor,
and are presently represented by the certificates listed on Part A of Schedule I
hereto. As of the date hereof, there are no existing options, warrants, calls or
commitments of any character whatsoever relating to the Pledged Shares. As of
the date hereof, except for the Lock-Up Agreement and the Loan Documents,
neither Borrower nor any of the Pledged Shares is subject (including any
shareholders' agreement or declaration having like effect) to any agreement
restricting or limiting the disposition of any of the Pledged Shares;
(f) No consent, approval, authorization or other order or
other action by, and no notice to or filing with, any directors or shareholders
of the Pledgor or the Pledged Entity or any Governmental Authority or any other
Person is required (i) for the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of this
Agreement by Pledgor, or (ii) for the exercise by Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of securities
generally and except for an authorization of the board of directors of Telxon
Canada Corporation Ltd., evidence of which authorization has been provided to
Agent, and except as provided in the Lock-Up Agreement;
(g) The pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement will create a valid first priority Lien on
and a first priority perfected security interest in favor of the Agent for the
benefit of Agent and Lenders in the Pledged Collateral and the proceeds thereof,
securing the payment of the Secured Obligations, subject to no other Lien;
(h) This Agreement has been duly authorized, executed and
delivered by Pledgor and, to the extent required, the Pledged Entity and
constitutes a legal, valid and binding obligation of Pledgor and the Pledged
Entity enforceable against Pledgor and the Pledged Entity in accordance with its
terms;
(i) The Pledged Shares constitute the percentage of each
Pledged Entity set forth on Part A of Schedule I; and
(j) Except as disclosed on Part B of Schedule I, none of the
Pledged Indebtedness is subordinated in right of payment to other Indebtedness
or subject to the terms of an indenture.
(k) The representations and warranties set forth in this
Section 5 shall survive the execution and delivery of this Agreement.
6. COVENANTS. Pledgor covenants and agrees that until the all
Secured Obligations have been paid and each commitment under the Loan Agreement
has terminated:
(a) Without the prior written consent of Agent, Pledgor will
not sell, assign, transfer, pledge, or otherwise encumber any of its rights in
or to the Pledged Collateral, or any unpaid dividends, interest or other
distributions or payments with respect to the Pledged Collateral or xxxxx x Xxxx
in the Pledged
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Collateral, unless otherwise expressly permitted by the Loan Agreement;
(b) Pledgor will, at its expense, promptly execute,
acknowledge and deliver all such instruments and take all such actions as Agent
from time to time may request in order to ensure to Agent and Lenders the
benefits of the Liens in and to the Pledged Collateral intended to be created by
this Agreement, including the filing of any necessary Code financing statements,
which may be filed by Agent with or (to the extent permitted by law) without the
signature of Pledgor, and will cooperate with Agent, at Pledgor's expense, in
obtaining all necessary approvals and making all necessary filings under
federal, state, local or foreign law in connection with such Liens or any sale
or transfer of the Pledged Collateral;
(c) Pledgor has and will defend the title to the Pledged
Collateral and the Liens of Agent in the Pledged Collateral against the claim of
any Person and will maintain and preserve such Liens; and
(d) Pledgor will, upon obtaining ownership of any additional
Stock or promissory notes or instruments of a Pledged Entity or Stock or
promissory notes or instruments otherwise required to be pledged to Agent
pursuant to any of the Loan Documents, which Stock, notes or instruments are not
already Pledged Collateral, promptly (and in any event within three (3) Business
Days) deliver to Agent a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule II hereto (a "Pledge Amendment") in respect
of any such additional Stock, notes or instruments, pursuant to which Pledgor
shall pledge to Agent all of such additional Stock, notes and instruments.
Pledgor hereby authorizes Agent to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares and Pledged Indebtedness listed on
any Pledge Amendment delivered to Agent shall for all purposes hereunder be
considered Pledged Collateral.
(e) Pledgor shall not permit the Registration Rights Agreement
or the Lock-Up Agreement to be amended, modified or terminated without the prior
written consent of Agent.
7. PLEDGOR'S RIGHTS. As long as no Default or Event of Default
shall have occurred and be continuing and until written notice shall be given to
Pledgor in accordance with Section 8(a) hereof:
(a) Pledgor shall have the right, from time to time, to vote
and give consents with respect to the Pledged Collateral, or any part thereof
for all purposes not inconsistent with the provisions of this Agreement, the
Loan Agreement or any other Loan Document; provided, however, that no vote shall
be cast, and no consent shall be given or action taken, which would have the
effect of impairing the position or interest of Agent in respect of the Pledged
Collateral or which would authorize, effect or consent to (unless and to the
extent expressly permitted by the Loan Agreement):
(i) the dissolution or liquidation, in whole or in part, of a
Pledged Entity;
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(ii) the consolidation, amalgamation or merger of a Pledged
Entity with any other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity;
(iv) any change in the authorized number of shares, the stated
capital or the authorized share capital of a Pledged Entity or the
issuance of any additional shares of its Stock; or
(v) the alteration of the voting rights with respect to the
Stock of a Pledged Entity; and
(b) (i) Pledgor shall be entitled, from time to time, to
collect and receive for its own use all cash dividends and interest paid in
respect of the Pledged Shares and Pledged Indebtedness other than any and all:
(A) dividends and interest paid or payable other than in cash in respect of any
Pledged Collateral, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable in cash in respect of any
Pledged Shares in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in capital
of a Pledged Entity; and (C) cash paid, payable or otherwise distributed, in
respect of principal of, or in redemption of, or in exchange for, any Pledged
Collateral; provided, however, that until actually paid all rights to such
distributions shall remain subject to the Lien created by this Agreement;
provided, further, notwithstanding the foregoing, Pledgor shall not be entitled
to collect or receive any cash dividends or interest paid in respect of the
Pledged Shares and Pledged Indebtedness if Pledgor is prohibited from doing so
under the Loan Agreement; and
(ii) all dividends and interest (other than such cash
dividends and interest as are permitted to be paid to Pledgor in accordance with
clause (i) above) and all other distributions in respect of any of the Pledged
Shares or Pledged Indebtedness, whenever paid or made, shall be delivered to
Agent to hold as Pledged Collateral and shall, if received by Pledgor, be
received in trust for the benefit of Agent, be segregated from the other
property or funds of Pledgor, and be forthwith delivered to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement).
8. DEFAULTS AND REMEDIES.
(a) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, and concurrently with written notice to
Pledgor, Agent (personally or through an agent) is hereby authorized and
empowered to transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the voting and all
other rights as a holder with respect thereto, to collect and receive all cash
dividends, interest, principal and other distributions made thereon, to sell in
one or more sales after ten (10) days' notice of the
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time and place of any public sale or of the time at which a private sale is to
take place (which notice Pledgor agrees is commercially reasonable) the whole or
any part of the Pledged Collateral and to otherwise act with respect to the
Pledged Collateral as though Agent was the outright owner thereof, Pledgor
hereby irrevocably constituting and appointing Agent as the proxy and
attorney-in-fact of Pledgor, with full power of substitution to do so, and which
appointment shall remain in effect until the Termination Date; provided,
however, Agent shall not have any duty to exercise any such right or to preserve
the same and shall not be liable for any failure to do so or for any delay in
doing so. Any sale shall be made at a public or private sale at Agent's place of
business, or at any place to be named in the notice of sale, either for cash or
upon credit or for future delivery at such price as Agent may deem fair, and
Agent may be the purchaser of the whole or any part of the Pledged Collateral so
sold and hold the same thereafter in its own right free from any claim of
Pledgor or any right of redemption. Each sale shall be made to the highest
bidder, but Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of
Agent.
(b) If, at the original time or times appointed for the sale
of the whole or any part of the Pledged Collateral, the highest bid, if there be
but one sale, shall be inadequate to discharge in full all the Secured
Obligations, or if the Pledged Collateral be offered for sale in lots, if at any
of such sales, the highest bid for the lot offered for sale would indicate to
Agent, in its discretion, that the proceeds of the sales of the whole of the
Pledged Collateral would be unlikely to be sufficient to discharge all the
Secured Obligations, Agent may, on one or more occasions and in its discretion,
postpone any of said sales by public announcement at the time of sale or the
time of previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby waived;
provided, however, that any sale or sales made after such postponement shall be
after ten (10) days' notice to Pledgor.
(c) If, at any time when Agent in its sole discretion
determines, following the occurrence and during the continuance of an Event of
Default, that, in connection with any actual or contemplated exercise of its
rights (when permitted under this Section 8) to sell the whole or any part of
the Pledged Shares hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the "Act"),
Pledgor shall, to the extent it has a right to do so under the Registration
Rights Agreement or otherwise, in an expeditious manner cause the Pledged
Entities to:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to
the Pledged Shares and in good faith use commercially reasonable
efforts to cause such registration statement to become and remain
effective;
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(ii) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of the Pledged Shares covered
by such registration statement whenever Agent shall desire to sell or
otherwise dispose of the Pledged Shares;
(iii) Furnish to Agent such numbers of copies of a prospectus
and a preliminary prospectus, in conformity with the requirements of
the Act, and such other documents as Agent may request in order to
facilitate the public sale or other disposition of the Pledged Shares
by Agent;
(iv) Use commercially reasonable efforts to register or
qualify the Pledged Shares covered by such registration statement under
such other securities or blue sky laws of such jurisdictions within the
United States and Puerto Rico as Agent shall request, and do such other
reasonable acts and things as may be required of it to enable Agent to
consummate the public sale or other disposition in such jurisdictions
of the Pledged Shares by Agent;
(v) Furnish, at the request of Agent, on the date that shares
of the Pledged Collateral are delivered to the underwriters for sale
pursuant to such registration or, if the security is not being sold
through underwriters, on the date that the registration statement with
respect to such Pledged Shares becomes effective, (A) an opinion, dated
such date, of the independent counsel representing such registrant for
the purposes of such registration, addressed to the underwriters, if
any, and in the event the Pledged Shares are not being sold through
underwriters, then to Agent, in customary form and covering matters of
the type customarily covered in such legal opinions; and (B) a comfort
letter, dated such date, from the independent certified public
accountants of such registrant, addressed to the underwriters, if any,
and in the event the Pledged Shares are not being sold through
underwriters, then to Agent, in a customary form and covering matters
of the type customarily covered by such comfort letters and as the
underwriters or Agent shall reasonably request. The opinion of counsel
referred to above shall additionally cover such other legal matters
with respect to the registration in respect of which such opinion is
being given as Agent may reasonably request. The letter referred to
above from the independent certified public accountants shall
additionally cover such other financial matters (including information
as to the period ending not more than five (5) Business Days prior to
the date of such letter) with respect to the registration in respect of
which such letter is being given as Agent may reasonably request; and
(vi) Otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
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available to its security holders, as soon as reasonably practicable
but not later than 18 months after the effective date of the
registration statement, an earnings statement covering the period of at
least 12 months beginning with the first full month after the effective
date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(d) All expenses reasonably incurred in complying with Section
8(c) hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel
for the registrant, the reasonable fees and expenses of counsel for Agent,
expenses of the independent certified public accountants (including any special
audits incident to or required by any such registration) and expenses of
complying with the securities or blue sky laws or any jurisdictions, shall be
paid by Pledgor.
(e) If, at any time when Agent shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Act, Agent may, in its
discretion (subject only to applicable requirements of law), sell such Pledged
Collateral or part thereof by private sale in such manner and under such
circumstances as Agent may deem necessary or advisable, but subject to the other
requirements of this Section 8, and shall not be required to effect such
registration or to cause the same to be effected. Without limiting the
generality of the foregoing, in any such event, Agent in its discretion (x) may,
in accordance with applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Collateral or part thereof could be or shall have been filed under
said Act (or similar statute), (y) may approach and negotiate with a single
possible purchaser to effect such sale, and (z) may restrict such sale to a
purchaser who is an accredited investor under the Act and who will represent and
agree that such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such Pledged Collateral or any
part thereof. In addition to a private sale as provided above in this Section 8,
if any of the Pledged Collateral shall not be freely distributable to the public
without registration under the Act (or similar statute) at the time of any
proposed sale pursuant to this Section 8, then Agent shall not be required to
effect such registration or cause the same to be effected but, in its discretion
(subject only to applicable requirements of law), may require that any sale
hereunder (including a sale at auction) be conducted subject to restrictions:
(i) as to the financial sophistication and ability of any
Person permitted to bid or purchase at any such sale;
(ii) as to the content of legends to be placed upon any
certificates representing the Pledged Collateral sold in such sale,
including restrictions on future transfer thereof;
(iii) as to the representations required to be made by each
Person bidding or purchasing at such sale relating to that Person's
access to
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financial information about Pledgor and such Person's intentions as to
the holding of the Pledged Collateral so sold for investment for its
own account and not with a view to the distribution thereof; and
(iv) as to such other matters as Agent may, in its discretion,
deem necessary or appropriate in order that such sale (notwithstanding
any failure so to register) may be effected in compliance with the
Bankruptcy Code and other laws affecting the enforcement of creditors'
rights and the Act and all applicable state securities laws.
(f) PLEDGOR RECOGNIZES THAT AGENT MAY BE UNABLE TO EFFECT A
PUBLIC SALE OF ANY OR ALL THE PLEDGED COLLATERAL AND MAY BE COMPELLED TO RESORT
TO ONE OR MORE PRIVATE SALES THEREOF IN ACCORDANCE WITH CLAUSE (E) ABOVE.
PLEDGOR ALSO ACKNOWLEDGES THAT ANY SUCH PRIVATE SALE MAY RESULT IN PRICES AND
OTHER TERMS LESS FAVORABLE TO THE SELLER THAN IF SUCH SALE WERE A PUBLIC SALE
AND, NOTWITHSTANDING SUCH CIRCUMSTANCES, AGREES THAT ANY SUCH PRIVATE SALE SHALL
NOT BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY UNREASONABLE MANNER SOLELY BY
VIRTUE OF SUCH SALE BEING PRIVATE. AGENT SHALL BE UNDER NO OBLIGATION TO DELAY A
SALE OF ANY OF THE PLEDGED COLLATERAL FOR THE PERIOD OF TIME NECESSARY TO PERMIT
THE PLEDGED ENTITY TO REGISTER SUCH SECURITIES FOR PUBLIC SALE UNDER THE ACT, OR
UNDER APPLICABLE STATE SECURITIES LAWS, EVEN IF PLEDGOR AND THE PLEDGED ENTITY
WOULD AGREE TO DO SO.
(g) Pledgor agrees to the maximum extent permitted by
applicable law that following the occurrence and during the continuance of an
Event of Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
Pledgor waives the benefit of all such laws to the extent it lawfully may do so.
Pledgor agrees that it will not interfere with any right, power and remedy of
Agent provided for in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise, or the exercise or beginning of the exercise
by Agent of any one or more of such rights, powers or remedies. No failure or
delay on the part of Agent to exercise any such right, power or remedy and no
notice or demand which may be given to or made upon Pledgor by Agent with
respect to any such remedies shall operate as a waiver thereof, or limit or
impair Agent's right to take any action or to exercise any power or remedy
hereunder, without notice or demand, or prejudice its rights as against Pledgor
in any respect.
(h) Pledgor further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to Agent,
that Agent shall have no adequate
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remedy at law in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this Section 8 shall be specifically enforceable
against Pledgor, and Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that the Secured Obligations are not then due and payable in accordance
with the agreements and instruments governing and evidencing such obligations.
9. WAIVER. No delay on Agent's part in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Pledgor by Agent with respect to any power of sale,
Lien, option or other right hereunder, shall constitute a waiver thereof, or
limit or impair Agent's right to take any action or to exercise any power of
sale, Lien, option, or any other right hereunder, without notice or demand, or
prejudice Agent's rights as against Pledgor in any respect.
10. ASSIGNMENT. Agent may assign, endorse or transfer any
instrument evidencing all or any part of the Secured Obligations as provided in,
and in accordance with, the Loan Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
11. TERMINATION. Immediately following the Termination Date,
Agent shall deliver to Pledgor the Pledged Collateral pledged by Pledgor at the
time subject to this Agreement and all instruments of assignment executed in
connection therewith, free and clear of the Liens hereof and, except as
otherwise provided herein, all of Pledgor's obligations hereunder shall at such
time terminate.
12. LIEN ABSOLUTE. All rights of Agent hereunder, and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Loan
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan Agreement,
any other Loan Document or any other agreement or instrument governing or
evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other
Collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Secured Obligations;
(d) the insolvency of Borrower or any guarantor of the
Obligations; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
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13. RELEASE. Pledgor consents and agrees that Agent may at any
time, or from time to time, in its discretion:
(a) renew, extend or change the time of payment, and/or the
manner, place or terms of payment of all or any part of the Secured Obligations;
and
(b) exchange, release and/or surrender all or any of the
Collateral (including the Pledged Collateral), or any part thereof, by
whomsoever deposited, which is now or may hereafter be held by Agent in
connection with all or any of the Secured Obligations; all in such manner and
upon such terms as Agent may deem proper, and without notice to or further
assent from Pledgor, it being hereby agreed that Pledgor shall be and remain
bound upon this Agreement, irrespective of the value or condition of any of the
Collateral, and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, renewal or extension, and notwithstanding also
that the Secured Obligations may, at any time, exceed the aggregate principal
amount thereof set forth in the Loan Agreement, or any other agreement governing
any Secured Obligations. Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor of any
and all of the Secured Obligations, and promptness in commencing suit against
any party hereto or liable hereon, and in giving any notice to or of making any
claim or demand hereunder upon Pledgor. No act or omission of any kind on
Agent's part shall in any event affect or impair this Agreement.
14. REINSTATEMENT. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Pledgor or any Pledged Entity for liquidation or reorganization, should
Pledgor or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should Pledgor or any Pledged Entity seek any other
relief under any bankruptcy, insolvency or similar laws or laws relating to the
relief of debtors or should a receiver or trustee be appointed for all or any
significant part of Pledgor's or a Pledged Entity's assets, and shall continue
to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
15. MISCELLANEOUS.
(a) Agent may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
(b) Pledgor agrees to promptly reimburse Agent for actual
out-of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred by Agent in connection with the administration and enforcement of this
Agreement.
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(c) Neither Agent, nor any of its respective officers,
directors, employees, agents or counsel shall be liable for any action lawfully
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(D) THIS AGREEMENT SHALL BE BINDING UPON PLEDGOR AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF PLEDGOR),
AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, AGENT AND ITS
SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR PROVISIONS OF THIS
AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY
SIGNED FOR AND ON BEHALF OF AGENT AND PLEDGOR.
16. SEVERABILITY. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or effect those
portions of this Agreement which are valid.
17. NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person or
sent by registered or certified mail, return receipt requested, with proper
postage prepaid, or by facsimile transmission and confirmed by delivery of a
copy by personal delivery or United States Mail as otherwise provided herein:
(a) If to Agent, at:
Foothill Capital Corporation
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Business Finance Division Manager
Fax No.: (000) 000-0000
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With copies to:
Goldberg, Kohn, Bell, Black, Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Fax No.: (000) 000-0000
(b) If to Pledgor, at:
Telxon Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: Xxxxx XxXxx
Fax No.: (000) 000-0000
With copies to:
Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. All notices delivered hereunder
shall be delivered in the manner provided in the Loan Agreement. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
18. SECTION TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
19. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
agreement.
20. BENEFIT OF LENDERS. All security interests granted or
contemplated hereby shall be for the benefit of Agent and Lenders, and all
proceeds or payments realized from the Pledged Collateral in accordance herewith
shall be applied to the Obligations in accordance with the terms of the Loan
Agreement.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
TELXON CORPORATION
By /s/ Xxxxx X. XxXxx
----------------------
Title VP/CFO
--------------------
FOOTHILL CAPITAL CORPORATION,
as Agent
By /s/ Xxxxx Xxxxxx
----------------------
Title VP
-------------------
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