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EXHIBIT 10.3.2.d
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of March 26, 1999, by
and among TELXON CORPORATION, a Delaware corporation (the "Borrower"), and BANK
ONE, NA successor by merger to BANK ONE AKRON, NA ("Bank One") (as the same may
be amended, amended and restated, supplemented or otherwise modified from time
to time, this Agreement
RECITALS
1. The Borrower, the Lenders, including Bank One, from time-to-time
party to the Credit Agreement, the Issuer, the Swing Line Lender and Bank of New
York ("BNY"), as the Agent (the "Agent"), on behalf of the Lenders, the Issuer
and the Swing Line Lender entered into that certain Credit Agreement dated as of
March 8, 1996, as amended by that certain Amendment No. 1 to the Credit
Agreement dated as of August 6, 1996 ("Amendment No.1"), Amendment No. 2 to the
Credit Agreement dated as of December 16, 1996 and Amendment No. 3 to the Credit
Agreement dated as of December 12, 1997 (as further amended, modified or
supplemented from time to time, the "Credit Agreement").
2. Pursuant to Amendment No. 1 and the Intercreditor Agreement dated as
of August 6, 1996, by and between Bank One and the Agent , as acknowledged by
the Borrower (as the same may be amended, supplemented or otherwise modified
from time to time, the "Intercreditor Agreement"), Bank One 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 4, 1998 and executed by Borrower (as the same may
be amended, supplemented or otherwise modified from time to time, the "Swing
Line Note") and a Standby Letter of Credit No. 047769 dated April 25, 1996 in
the amount of $75,608.33 ("Bank One Letter of Credit"). The Borrower granted
Bank One a security interest in certain collateral pursuant to the Bank One
Security Agreement dated as of August 6, 1996 ("Original Security Agreement").
3. The Borrower and Bank One have heretofore entered into a Waiver and
Agreement, dated as of December 29, 1998 (the "Original Waiver") and a Waiver
Extension and Agreement, dated as of February 12, 1999 (the "Original Waiver
Extension"), with respect to certain matters relating to the compliance by the
Borrower with certain provisions of the Credit Agreement.
4. The Borrower has requested that Bank One agree to a further waiver
of compliance by the Borrower with certain provisions of the Credit Agreement,
including an extension of the waiver granted in the Original Waiver as extended
by the Original Waiver Extension and to amend certain other provisions of the
Credit Agreement.
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5. Contemporaneously with the execution and delivery of this Agreement,
Bank One and the Borrower are entering into that certain Further Consent and
Agreement by and between Bank One and the Borrower dated as of the date hereof
(the "Second Bank One Waiver").
6. It is a condition to the effectiveness of the Second Bank One Waiver
and the continued extension of credit under the Swing Line that the Borrower
shall have granted to Bank One, the security interests and liens upon the
Borrower's assets and property contemplated by this Agreement.
NOW, THEREFORE, in consideration of the recitals, the covenants and
conditions set forth herein and in the Second Bank One Waiver and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower hereby agrees with Bank One as follows:
1. DEFINED TERMS
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto as follows:
"Collateral": as defined in Section 2.
"Event of Default": as defined in Section 9 hereof.
"Financing Statements": UCC financing statements.
"OUCC or Code": the UCC as in effect in the State of Ohio on the date
hereof.
"Office Location": as defined in Section 4(a) hereof.
"Secured Obligations": as defined in Section 3 hereof.
"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: "PROCEEDS" and
"SECURITY INTEREST".
2. GRANT OF SECURITY INTEREST
To secure the prompt and complete payment, observance and performance
of the Secured Obligations, the Borrower grants to Bank One a perfected Security
Interest in and to all of the
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Borrower's right, title and interest in and to the following (collectively, the
"Collateral") which Security Interest shall be subordinate in all respects to
the Security Interest and Liens granted by the Borrower and certain of its
Subsidiaries to the Agent on behalf of the Lender, Issuer and Swing Line Lender
as security for the obligations of the Borrower and certain of its Subsidiaries
under the Credit Agreement and Loan Documents:
(a) all present and future accounts, accounts receivable and other
rights of the Borrower to payment for goods sold or leased or for services
rendered, whether now existing or hereafter arising and wherever arising, and
whether or not they have been earned by performance (collectively, the
"ACCOUNTS");
(b) all goods and merchandise now owned or hereafter acquired by the
Borrower (wherever located, whether in the possession of the Borrower or of a
bailee or other person for sale, storage, transit, processing, use or otherwise
consisting of whole goods, components, supplies, materials, returned or
repossessed goods or goods consigned by the Borrower to a third party) which are
held for sale or lease or to be furnished (or have been furnished) under any
contract of service or which are raw materials, work-in-process, finished goods
or materials used or consumed in the business of the Borrower or processed by or
on behalf of the Borrower, but expressly excluding inventory consigned to the
Borrower by third parties (collectively, the "INVENTORY");
(c) all machinery, all manufacturing, distribution, selling, data
processing and office equipment, all furniture, furnishings, appliances,
fixtures (other than Fixtures as hereinafter defined) and trade fixtures, tools,
tooling, molds, dies, vessels, aircraft and all other goods of every type and
description (other than Inventory) which are used or bought for use primarily in
business, in each instance whether now owned or hereafter acquired by the
Borrower and wherever located (collectively, the "EQUIPMENT");
(d) all contracts and contract rights of the Borrower, including,
without limitation, all customer and supplier contracts, firm sale orders,
rights under license and franchise agreements; all interest rate swap, cap or
other interest rate protection arrangements, as the same may from time to time
be amended, amended and restated, supplemented or otherwise modified (except any
such contracts, whether oral or written, (x) between the Borrower and any of its
officers, directors and employees, and (y) which individually are either in
amounts less than $50,000 in value or otherwise not material to the business
operations of the Borrower), as to which (i) the Borrower is to receive moneys
due and/or to become due to it thereunder or in connection therewith, (ii) the
Borrower is entitled to damages arising out of, or for, breach or default in
respect thereof or (iii) the Borrower is entitled to perform and to exercise all
remedies thereunder, but excluding any contract, agreement or license which
prohibits the assignment or encumbrance by the Borrower of such contract,
agreement or license (or of its rights thereunder), except to the extent that
such prohibition would be ineffective pursuant to Section 9-318 (O.R.C. 1309.37)
of the Code as from time to time in effect (collectively, the "CONTRACTS");
(e) all rights, interests, choses in action, causes of action, claims
and all other
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intangible property of the Borrower of every kind and nature (other than
Accounts, as defined herein), in each instance whether now owned or hereafter
acquired by the Borrower, including, without limitation, all general
intangibles; all corporate and other business records; all loans, royalties, and
other obligations receivable; all inventions, designs, patents, computer
programs, software, source codes, object codes, printouts and other computer
materials, goodwill, registrations, copyrights, trademarks, trade names, service
marks, trade secrets, licenses, franchises, customer lists, credit files,
correspondence, and advertising materials; all interests in partnerships and
joint ventures; all tax refunds and tax refund claims; all right, title and
interest under leases, subleases, licenses and concessions and other agreements
relating to real or personal property; all payments due or made to the Borrower
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any property by any Governmental Authority or other Person; all
deposit accounts (general or special) with any bank or other financial
institution; all credits with and other claims against carriers and shippers;
all rights to indemnification; all reversionary interests in pension and profit
sharing plans and all reversionary, beneficial and residual interests in trusts
or in which the Borrower otherwise has an interest; all proceeds of insurance of
which the Borrower is beneficiary; and all letters of credit, guaranties, Liens,
security interests and other security held by or granted to the Borrower; and
all other intangible property, whether or not similar to the foregoing; in each
instance, however and wherever arising, but excluding any contract, agreement or
license which prohibits the assignment or encumbrance by the Borrower of such
contract, agreement or license (or of its rights thereunder), except to the
extent that such prohibition would be ineffective pursuant to Section 9-318 of
the Code as from time to time in effect (collectively, the "GENERAL
INTANGIBLES");
(f) all goods which have become so related to particular real estate
that an interest in them arises under real estate law (the "FIXTURES");
(g) all property or interests in property now or hereafter acquired by
the Borrower which may be owned or hereafter may come into the possession,
custody or control of Bank One or any agent or affiliate of Bank One in any way
or for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise), and all rights and interests of the
Borrower, whether now existing or hereafter arising and however and wherever
arising, in respect of any and all (i) notes, drafts, letters of credit, stocks,
bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same (but excluding any of the above such items which the
Borrower is prohibited from assigning or otherwise encumbering) as well as any
portion of equity interests in foreign entities whose pledge would cause the
Borrower to incur a material charge); (ii) money; (iii) proceeds of loans,
including, without limitation, loans made under the Swing Line; and (iv)
insurance proceeds and books and records relating to any of the property covered
by this Agreement; together, in each instance, with all accessions and additions
thereto, substitutions therefor, and replacements, proceeds and products
thereof;
(h) all books, records, ledger cards, computer tapes and diskettes and
other property at any time evidencing or relating to the Accounts, Inventory,
Equipment, Contracts, General Intangibles, Fixtures or any other Collateral;
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(i) all other personal property of the Borrower, whether tangible or
intangible, and whether now owned or hereafter acquired; and
(j) all proceeds and products of any of the foregoing, in any form,
including, without limitation, any claims against third parties for loss or
damage to or destruction of any or all of the foregoing.
3. SECURITY FOR SECURED OBLIGATIONS.
This Agreement and the Collateral secure the prompt and complete
payment and performance when due of all Obligations of the Borrower, now or
hereafter existing, under, or arising out of or in connection with Amendment No.
1, the Swing Line Note or the Bank One Letter of Credit, and any other document
made, delivered or given in connection therewith or herewith, in each case,
whether for principal, interest, fees, expenses or otherwise, including (without
limitation) all obligations of the Borrower now or hereafter existing under or
in respect of this Agreement, including, but not limited to, (a) the due and
punctual payment of principal of and interest on the Swing Line and the
reimbursement of all amounts drawn under the Bank One Letter of Credit
(including, without limitation, all interest accruing or payable at the then
applicable rate after the maturity of the Swing Line Note and interest accruing
or payable at the then applicable rate provided in the Credit Agreement or other
applicable agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower), and (b) the due and punctual payment of the fees, indemnities,
costs, expenses and all other present and future, fixed or contingent, direct or
indirect, monetary obligations, including, without limitation, Bank One's
reasonable attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses that are required to be paid
by the Borrower to or on behalf of Bank One under this Agreement or under the
Loan Documents (as the same may be amended, amended and restated, modified or
supplemented from time to time) (all such obligations of the Borrower being
herein called the "SECURED OBLIGATIONS").
4. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to Bank One as follows:
(a) LOCATIONS OF INVENTORY AND EQUIPMENT; CHIEF EXECUTIVE OFFICE;
LOCATIONS OF ACCOUNTS; TRADENAMES. (i) As of the date hereof, (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
preceding 5 month period, located (the "Office Location") at (x) the address set
forth for notices to the Borrower contained in the Credit Agreement, or (y) such
other location in respect of which (1) the Borrower shall have provided Bank One
with at least 30 days prior written notice thereof, and (2) UCC financing
statements (or amendments thereto), in form and substance reasonably
satisfactory to Bank One, shall have been filed within
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two months after such change, (B) the Borrower has not changed its legal name
during the last 6 years, (C) all of the Inventory and/or Equipment is located at
the places specified in Schedule 1 hereto, (D) the chief places of business and
chief executive offices of the Borrower and the offices where the Borrower keeps
its records concerning any Accounts and all originals of all chattel paper which
evidence any Account are located at the places specified in Schedule 2 hereto
and (E) all trade names under which the Borrower has sold Inventory during the
last 2 years, and will sell Inventory in the future, are listed on Schedule 5
hereto.
(b) NO CONSENT. Except for the filings referred to in Section 4(c)
below, no authorization, approval or other action by, and no notice to or filing
with, any Governmental Authority is required for the grant by the Borrower of
the security interests granted hereby or for the execution, delivery or
performance of this Agreement by the Borrower.
(c) PERFECTED PRIORITY LIENS. Subject to the terms of the Intercreditor
Agreement, except with respect to any money not held by a Secured Party and any
Accounts owing from Governmental Authorities in which a security interest cannot
be perfected under the Code and to the extent perfection can be accomplished by
the filing of Financing Statements, upon the filing in the proper locations of
appropriate financing statements under the UCC and the filing of notices of lien
or other documents, the Liens granted pursuant to this Agreement (i) constitute
perfected Liens on the Collateral in favor of Bank One, which are prior to all
other Liens on the Collateral (except for any Liens granted by the Borrower and
certain of its Subsidiaries to the Agent on behalf of the Lender, Issuer and
Swing Line Lender as security for the obligations of the Borrower and certain of
its Subsidiaries under the Credit Agreement and Loan Documents, permitted by
Section 8.2 of the Credit Agreement and Liens which may be entitled to priority
by operation of law) created or allowed by the Borrower and in existence on the
date hereof and (ii) are enforceable as prior perfected Liens against all
creditors of and purchasers from the Borrower (other than purchasers of
Inventory sold in the ordinary course of the Borrower's business) and against
any owner or purchaser of the real property where any of the Inventory or
Equipment is located and any present or future creditor of the Borrower, or such
owner or purchaser, obtaining a Lien on the Collateral.
(d) ACCOUNTS. Any amount which is at any time represented by the
Borrower to Bank One, as owing by each account debtor in respect of any Account
constituting part of the Collateral will at such time be the correct amount
actually owing by such account debtor thereunder. 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.
(e) 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 1 hereto, or (ii) such other places
located within the United States in respect of which (A) the Borrower shall have
provided Bank One with at least 10 days prior written notice, and
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(B) UCC financing statements (or amendments thereto), in form and substance
satisfactory to Bank One, shall have been filed within two months after such
change.
(f) CONTRACTS. No consent of any party (other than the Borrower) to any
Contract is required, or purports to be required, in connection with the
execution, delivery and performance of this Agreement. To the best of the
Borrower's knowledge after due inquiry, each Contract is in full force and
effect and constitutes a valid and legally enforceable obligation of the parties
thereto, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally, and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). No consent or
authorization of, filing with or other act by or in respect of any Governmental
Authority or, to the best of the Borrower's knowledge after due inquiry, any
other party to such Contract is required in connection with the execution,
delivery, performance, validity or enforceability of any of the Contracts by the
Borrower, other than those which have been duly obtained, made or performed, are
in full force and effect and do not subject the scope of any such Contract to
any material adverse limitation, either specific or general in nature. Neither
the Borrower nor (to the best of the Borrower's knowledge after due inquiry) any
other party to any Contract is in default or is likely to become in default in
the performance or observance of any of the terms thereof. The Borrower has
performed in all material respects all its obligations to date under each
Contract. The right, title and interest of the Borrower in, to and under each
Contract are not, to the best of the Borrower's knowledge after due inquiry,
subject to any defense, offset, counterclaim or claim which would materially
adversely affect the value of all such Contracts as Collateral taken as a whole,
nor have any of the foregoing been asserted or alleged against the Borrower as
to any Contract.
(g) BANK ACCOUNTS. Schedule 4 sets forth the location of each cash
concentration account and all significant operating accounts and demand deposit
accounts used for paying and receiving purposes in the ordinary course of the
Borrower's business.
(h) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made in this Section 4 shall survive the
execution and delivery hereof and the expiration or termination of the Swing
Line regardless of any investigation made by or on behalf of Bank One and shall
be deemed to be repeated and confirmed on the date of the making of any
subsequent loan under the Swing Line and each time any additional Collateral
becomes subject to pledge hereunder.
5. COVENANTS.
The Borrower hereby covenants with Bank One as follows:
(a) GENERALLY.
(i) The Borrower shall maintain its place of business, or if
it has more than one place of business, its chief executive office, at the
Office Location.
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(ii) It shall, at its own expense, promptly after each request
by Bank One, (A) cause to be provided to Bank One, UCC, federal tax, judgment
and other lien search reports with respect to each applicable public office
where Liens are or may be filed disclosing that there are no Liens of record in
such official's office covering any Collateral or showing the Borrower as debtor
thereunder (other than Liens referenced in the Credit Agreement and Section 8.2
of the Credit Agreement), and (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.
(b) COMPLIANCE WITH REQUIREMENTS OF LAW. The Borrower will comply in
all material respects with all laws applicable to the Collateral or any part
thereof or to the operation of the Borrowers business except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings;
provided, that the Borrower must comply with any applicable law if the failure
to do so would adversely affect Bank One's rights in the Collateral or the
priority of its Liens on the Collateral.
(c) FINANCING STATEMENTS. The Borrower agrees that from time to time,
at the expense of the Borrower, it will promptly execute and deliver all further
instruments and documents, and take all further action that Bank One may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Bank One to exercise and
enforce any of its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Borrower will execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices as Bank One may reasonably request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby. A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. The Borrower
will not change its name (or any name under which it does business), identity or
corporate structure to such an extent that any financing statement filed by Bank
One in connection with this Agreement would become seriously misleading and will
not move any of the Collateral to a location which would cause Bank One's Lien
thereon to be adversely affected unless all necessary filings have been timely
made to avoid such result. The Borrower hereby authorizes Bank One to file one
or more financing or continuation statements and amendments thereto, relative to
all or any part of the Collateral without signature of the Borrower where
permitted by law.
(d) INSTRUMENTS AND CHATTEL PAPER. In the event that the Intercreditor
Agreement is no longer in effect and the Obligations of the Borrower under the
Credit Agreement are satisfied in full, if any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
instrument or chattel paper, such instrument or chattel paper shall be
immediately delivered to Bank One, duly endorsed in a manner satisfactory to
Bank One, to be held as Collateral pursuant to this Agreement.
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(e) MAINTENANCE OF RECORDS; IDENTIFICATION OF COLLATERAL. The Borrower
will keep and maintain at its own cost and expense and complete records with
respect to the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Accounts. The
Borrower will furnish to Bank One from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as Bank One may reasonably request, all in
reasonable detail.
(f) ACCESS TO BOOKS AND RECORDS; RIGHT OF INSPECTION. Bank One shall at
all times upon reasonable prior notice have full and free access during normal
business hours to all the books, correspondence and records of the Borrower, and
Bank One and its representatives may examine the same, take extracts therefrom
and make photocopies thereof, and the Borrower agrees to render to Bank One at
the Borrower's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Bank One and its representatives shall
at all times upon reasonable prior notice also have the right to enter into and
upon any premises during normal business hours and without causing undue
disruption of the Borrower's business operations where any of the Equipment or
the Inventory or any other Collateral is located for the purpose of inspecting
the same, observing its use or otherwise protecting their interests therein.
(g) PAYMENT OF OBLIGATIONS. Except as set forth in the Credit
Agreement, the Borrower will pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in respect of its
income or profits therefrom, as well as all claims of any kind (including,
without limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if the
Borrower is permitted not to do so pursuant to the Credit Agreement.
(h) NOTICES. The Borrower will advise Bank One promptly, in reasonable
detail, at Bank One's address set forth in the Credit Agreement, (i) of any Lien
(other than Liens created hereby or Liens permitted by Section 8.2 of the Credit
Agreement) on, or claim asserted against, any of the Collateral and (ii) of the
occurrence of any other event which could reasonably be expected to have an
adverse effect on the value of any material portion of the Collateral or on the
Liens created hereunder.
(i) AS TO EQUIPMENT AND INVENTORY.
(i) LOCATIONS. The Borrower shall keep the Equipment and
Inventory (other than Inventory which has been sold in the ordinary
course of business) at the places specified therefor in Schedule 1
hereto or, upon 30 days prior written notice to Bank One, at other
places in jurisdictions where all action required by Section 5(c) shall
have been taken to assure the continuation of the perfection of the
security interest of Bank One with respect to the Equipment and
Inventory.
(ii) MAINTENANCE. The Borrower shall maintain or cause to be
maintained in good repair, working order and condition, excepting
ordinary wear and tear and damage
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due to casualty, all of the Equipment and, to the extent such Equipment
is not obsolete, make or cause to be made all appropriate repairs,
renewals and replacements thereof consistent with the past practice of
the Borrower, as quickly as practicable after the occurrence of any
loss or damage thereto. The Borrower shall promptly furnish to Bank One
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.
(iii) RECORDS, PHYSICAL COUNT AND OTHER INVENTORY COVENANTS.
With respect to the Inventory: (A) the Borrower shall at all times
maintain records with respect to Inventory reasonably satisfactory to
Bank One, keeping correct and accurate records itemizing and describing
the kind, type, quality and quantity of Inventory, the Borrower's cost
therefor and daily withdrawals therefrom and additions thereto; (B) the
Borrower shall conduct a physical count of the Inventory as often as
the Borrower's auditors deem necessary in the performance of the
Borrower's annual audit, but at any time or times as Bank One may
request on or after an Event of Default occurs and is continuing, and
promptly following each such physical inventory shall supply Bank One
with a report in the form and with such specificity as may be
reasonably satisfactory to Bank One concerning such physical count; (C)
the Borrower shall not remove any Inventory from the locations set
forth or permitted herein, without the prior written consent of Bank
One, except for sales of Inventory and returns of Inventory to vendors,
in each case in the ordinary course of the Borrower's business and
except to move Inventory directly from one location set forth or
permitted herein to another such location; (D) the Borrower shall
produce, use, store and maintain the Inventory, with all reasonable
care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable law (including, but not
limited to, the requirements of the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders related
thereto); (E) the Borrower shall retain all of its responsibility and
liability arising from or relating to the production, use, sale or
other disposition of the Inventory; (F) the Borrower shall not sell
Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate the Borrower to
repurchase such Inventory (other than in the ordinary course of
business consistent with past practices and policies of the Borrower or
then current market practice); and (G) the Borrower shall keep the
Inventory in good and marketable condition.
(j) AS TO ACCOUNTS AND CONTRACTS.
(i) LOCATIONS. The Borrower shall keep its chief place of
business and chief executive office and the office where it keeps its
records concerning the Accounts, and the offices where it keeps all
originals of all chattel paper which evidence Accounts, at the location
therefor specified in Section 4(a) or, upon 30 days prior written
notice to Bank One, at such other locations in a jurisdiction where all
actions required by Section
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5(c) shall have been taken with respect to the Accounts.
(ii) AMENDMENTS; DILIGENCE AS TO RIGHTS; NOTICES. The Borrower
will not (A) amend, modify, terminate or waive any provision of any
Contract or any agreement giving rise to a material Account in any
manner which could reasonably be expected to affect adversely the value
of such Contract or material Account as Collateral, (B) fail to
exercise promptly and diligently each and every material substantive
right which it may have under each Contract or material Account (other
than any right of termination except in the exercise of its reasonable
business judgment) or (C) fail to deliver to Bank One a copy of each
substantive demand, notice or document received by it relating in any
way to any Contract or material Account.
(iii) COLLECTIONS. Except as otherwise provided in this
subsection (iii) and subject to the provisions of the Intercreditor
Agreement, 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 under the 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 Account, or
to release wholly or partly any account debtor or obligor thereon, or
to allow any credit or discount thereon, all in accordance with its
customary practices. Other than in the ordinary course of business, the
Borrower will not grant any extension of the time of payment of any of
the Accounts, compromise or settle the same for less than the full
amount thereof, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon. In
connection with such collections, the Borrower may, upon the occurrence
and during the continuation of an Event of Default, take (and at the
direction of Bank One shall take) such action as the Borrower or Bank
One may reasonably deem necessary or advisable to enforce collection of
the Accounts; provided, that following the occurrence and during the
continuation of an Event of Default, (x) upon the request of Bank One,
the Borrower shall notify account debtors on the Accounts and the
parties to the Contracts or (y) upon written notice by Bank One to the
Borrower of its intention so to do, Bank One shall have the right to
notify the account debtors or obligors under any such Accounts or
Contracts, in each case, that the Accounts and Contracts have been
assigned to Bank One and to direct such account debtors or obligors to
make payment of all amounts due or to become due to the Borrower
thereunder directly to Bank One and, upon such notification and at the
expense of the Borrower, to enforce collection of any such Accounts or
Contracts, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for payment of moneys
due under any Account or Contract, to file any claim or take any other
action or proceeding in any court of law or equity otherwise deemed
appropriate by Bank One for the purpose of collecting any such money
and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as the Borrower might have done.
After receipt by the Borrower of the notice referred to in the PROVISO
to the preceding sentence, (1) all amounts and proceeds (including
instruments) received by the Borrower in respect of the Accounts or
Contracts shall be received in trust for the benefit of Bank One
hereunder, shall be segregated from other funds of the Borrower and
shall be forthwith paid over to Bank One in the same form as so
received (with any necessary endorsement) to be held as cash collateral
and either (A) released to the Borrower if such Event of Default shall
have been cured or waived or (B) if such Event of Default shall be
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continuing, paid by Bank One to the BNY pursuant to the Intercreditor
Agreement or if the Intercreditor Agreement is no longer in effect and
the Obligations of the Borrower under the Credit Agreement have been
satisfied, paid to Bank One and applied to the Swing Line and (2) the
Borrower shall not adjust, settle or compromise the amount or payment
of any Account or under any Contract, or release wholly or partly any
account debtor or obligor thereon, or allow any credit or discount
thereon.
(iv) LIABILITY OF BORROWER. Anything herein to the contrary
notwithstanding, the Borrower shall remain liable under each of the
Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such
Account and in accordance with and pursuant to the terms and provisions
of each such Contract. Bank One shall have no obligation or liability
under any Account (or any agreement giving rise thereto) or under any
Contract by reason of or arising out of this Agreement or the receipt
by Bank One of any payment relating to such Account or Contract
pursuant hereto, nor shall Bank One be obligated in any manner to
perform any of the obligations of the Borrower under or pursuant to any
Account (or any agreement giving rise thereto) or under or pursuant to
any Contract, to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto) or under any Contract, to present or
file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.
(v) COMPLIANCE WITH TERMS OF CONTRACTS, ETC. The Borrower will
perform and comply in all material respects with all its obligations
under the Contracts and all its other contractual obligations relating
to the Collateral.
(k) INSURANCE. The Borrower shall, at its own expense,
maintain insurance with respect to the Inventory, Equipment and any
other customarily insured Collateral in such amounts, against such
risks, in such form and with such insurers as provided for in the
Credit Agreement. Subject to the Intercreditor Agreement, upon the
occurrence and during the continuance of any Event of Default, all
insurance payments in respect of such Inventory and Equipment shall be
held, paid to Bank One.
6. DISPOSITIONS OF COLLATERAL; LIENS; OTHER AGREEMENTS..
(a) DISPOSITION OF COLLATERAL. The Borrower shall not sell,
transfer, lease, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except for dispositions otherwise
permitted by the Credit Agreement.
(b) LIENS. The Borrower shall not create, incur or suffer to
exist, will defend the Collateral against and will take such other
action as is necessary to remove, any Lien, or other claim upon or with
respect to any of the Collateral to secure any obligation of any Person
or entity, except for the security interest created by this Agreement
or by the Credit Agreement and
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as otherwise permitted by the Credit Agreement, and will defend the
right, title and interest of Bank One in and to any of the Collateral
against the claims and demands of all Persons whomsoever.
(c) OTHER AGREEMENTS. The Borrower is not and will not become
a party to or otherwise be bound by any agreement, other than this
Agreement and the other Loan Documents, which restricts in any manner
the rights of any present or future holder of any of the Collateral.
7. BANK ONE'S APPOINTMENT AS ATTORNEY-IN-FACT. The Borrower hereby
irrevocably appoints Bank One and any officer or agent thereof with
full power of substitution, the Borrower's attorney-in-fact (which
appointment shall be irrevocable until the payment in full in cash and
the performance of all of the Secured Obligations and the expiration or
termination of the Swing Line), with full authority in the place and
stead of the Borrower and in the name of the Borrower or otherwise,
from time to time in Bank One's discretion, upon and during the
occurrence and continuation of an Event of Default, to take any action
and to execute any instrument which Bank One may deem necessary or
advisable to accomplish the purposes of this Agreement, including,
without limitation:
(i) to obtain and adjust insurance required to be paid to Bank
One pursuant to Section 5(l);
(ii) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys, claims
and other amounts due and to become due under or in respect of
any of the Collateral and to extend the time of payment of any
or all thereof and to make any allowance and other adjustments
with reference thereto;
(iii) to receive, endorse, and collect any checks, drafts,
notes, acceptances or other instruments, any invoices, freight
or express bills, bills of lading, storage, warehouse
receipts, assignments, verifications, notices or other
documents and chattel paper, in connection with clause (i) or
(ii) above;
(iv) to file any claims or take any action or institute or
defend any suit, action or proceeding at law or in equity
which Bank One may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce
the rights of Bank One with respect to any of the Collateral;
(v) to direct any party liable for any payment in respect of
or arising out of any of the Collateral to make payment of any
and all moneys due or to become due thereunder directly to
Bank One or as Bank One shall direct;
(vi) to settle, compromise or adjust any suit, action or
proceeding described in clause
(v) above and, in connection therewith, to give such
discharges or releases as Bank One may deem appropriate;
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(vii) to set off or cause to be set off amounts in any account
maintained with Bank One or otherwise enforce rights against any of the
Collateral in the possession of Bank One;
(viii) to pay or discharge Taxes and Liens levied or placed on or
threatened against the Collateral (except where the Borrower is not
required to discharge such tax or Lien pursuant to the provisions of
this Agreement or the Credit Agreement), to effect any repairs or any
insurance called for by the terms of this Agreement or the Credit
Agreement, to adjust the same and to pay all or any part of the
premiums therefor and the costs thereof; and
(ix) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Bank One were the absolute owner thereof for all
purposes, and to do, at Bank One's option and the Borrower's expense,
at any time, or from time to time, all acts and things which Bank One
deems necessary to protect, preserve or realize upon the Collateral and
Bank One's Liens thereon and to effect the intent of this Agreement,
all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof.
8. OTHER POWERS; BANK ONE MAY PERFORM.
(a) The Borrower also authorizes Bank One at any time and from time to
time to execute, in connection with any sale pursuant to Section 11 hereof, any
endorsements, assignments or other instruments of conveyance or any transfer
with respect to any Collateral.
(b) If the Borrower fails to perform any agreement contained herein,
Bank One may itself perform, or cause performance of, such agreement, and the
expenses of Bank One incurred in connection therewith shall be payable by the
Borrower under Section 12. If the Borrower fails to perform or comply with any
of its agreements contained herein and Bank One, as provided for by the terms of
this Agreement, the Credit Agreement, the Swing Line Note or the Bank One Letter
of Credit shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the reasonable expenses of Bank One incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum 2% above the Alternate Base Rate at the time of such failure
to perform or comply, shall be payable by the Borrower to Bank One on demand and
shall constitute Secured Obligations secured hereby.
(c) PROCEEDS. Upon demand by Bank One, all Proceeds received by the
Borrower consisting of cash, checks and other near-cash items shall be held by
the Borrower in trust for Bank One and segregated from other funds of the
Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to
Bank One in the exact form received by the Borrower (duly indorsed by the
Borrower to Bank One, if required). All cash or other Proceeds received by Bank
One in respect of any sale of, collection from, or other realization upon all or
any part of
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the Collateral may, in the discretion of Bank One, be held by Bank One as
Collateral for, and then or at any time thereafter applied (after payment of any
amounts payable to Bank One pursuant to Section 12) in whole or in part against,
all or any part of the Secured Obligations. Any surplus of such cash or other
Proceeds held by Bank One and remaining after payment in full in cash and the
performance of all of the Secured Obligations, the expiration or termination of
the Bank One Letter of Credit and the expiration or termination of the Swing
Line shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
(d) ADDITIONAL INVENTORY REMEDIES. Until the payment in full in cash
and the performance of all of the Secured Obligations, the expiration or
cancellation of the Bank One Letter of Credit and the expiration or termination
of the Swing Line, at any time when an Event of Default has occurred and is
continuing and subject to the Intercreditor Agreement: (i) the Borrower will
perform any and all reasonable actions requested by Bank One to enforce Bank
One's security interest in the Inventory and all of Bank One's rights hereunder,
such as leasing warehouses to Bank One or its designee, placing and maintaining
signs, appointing custodians, transferring Inventory to warehouses, and
delivering to Bank One, warehouse receipts, documents of title and such other
documentation as Bank One may reasonably request; (ii) if any Inventory is in
the possession or control of any of the Borrower's agents, contractors or
processors or any other third party, the Borrower will notify Bank One thereof
and will notify such agents, contractors or processors or third party of Bank
One's security interest therein and, upon request, instruct them to hold all
such Inventory for Bank One's and the Borrower's account, as their interests may
appear, and subject to Bank One's instructions; (iii) Bank One shall have the
right to hold all Inventory subject to the security interest granted hereunder;
and (iv) Bank One shall have the right to take possession of the Inventory or
any part thereof and to maintain such possession on the Borrower's premises or
to remove any or all of the Inventory to such other place or places as Bank One
desires in its sole discretion. If Bank One exercises its right to take
possession of the Inventory, the Borrower, upon Bank One's demand, will assemble
the Inventory and make it available to Bank One at the Borrower's premises at
which it is located.
9. EVENTS OF DEFAULT.
Each of the following shall constitute an "Event of Default":
(a) If the Borrower shall fail to observe or perform any term, covenant
or agreement contained in this Agreement;
(b) The occurrence and continuance of an Event of Default under, and as
such term is defined in, the Credit Agreement;
10. RELEASE.
(a) RELEASE. The Borrower releases Bank One, BANK ONE CORPORATION and
each of their respective directors, officers, employees, attorneys, agents,
advisors, attorneys-in-
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fact, experts and Affiliates, from and against any and all penalties, fines,
expenses, losses, settlements, costs, claims, causes of action, debts, dues,
sums of money, accounts, accountings, reckonings, acts, omissions, demands,
liabilities, obligations, damages, actions, judgments, suits, proceedings or
disbursements of any kind or nature whatsoever, known or unknown, contingent or
otherwise which may be imposed on, incurred by or asserted against any of them
in any way relating to or arising out of or with respect to this Agreement, the
Collateral, and/or any actions taken or omitted to be taken by Bank One with
respect thereto (except to the extent that any of the foregoing arises solely
from the gross negligence or willful misconduct of the party which would be so
released as determined by a final order or judgment of a court of competent
jurisdiction), and the Borrower hereby agrees to hold Bank One, BANK ONE
CORPORATION and their respective directors, officers, employees, attorneys,
agents, advisors, attorneys-in-fact, experts and Affiliates harmless from and
against any and all penalties, fines, expenses, losses, settlements, costs,
claims, causes of action, debts, dues, sums of money, accounts, accountings,
reckonings, acts, omissions, demands, liabilities, obligations, damages,
actions, judgments, suits, proceedings or disbursements of any kind or nature
whatsoever, known or unknown, contingent or otherwise which may be imposed on,
incurred by or asserted against any of them (except to the extent that any of
the foregoing arises solely from the gross negligence or willful misconduct of
the party which would be so released as determined by a final order or judgment
of a court of competent jurisdiction).
(b) SURVIVAL OF AGREEMENTS. The agreements of the Borrower contained in
this Section shall survive the payment in full in cash and the performance of
all of the Secured Obligations, the expiration or cancellation of all of the
Bank One Letter of Credit, the expiration or termination of the Swing Line, the
repayment of the Swing Line Note and the termination of the security interests
granted hereby.
11. REMEDIES.
If any Event of Default shall have occurred and be continuing subject
to the Intercreditor Agreement, then:
(a) GENERAL. Bank One may exercise, in addition to all other rights and
remedies granted to it in this Agreement, the Credit Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the Uniform
Commercial Code, as then in effect in the jurisdiction in which such rights are
exercised. Without limiting the generality of the foregoing, Bank One, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or Bank One's
office or elsewhere upon such terms and conditions as it may deem
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advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. In 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 Bank One until the selling price is paid
by the purchaser thereof, but Bank One shall not incur any liability in case of
the failure of such purchaser to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may again be sold upon like notice.
To the extent permitted by applicable law, in no event shall the obligations of
the Borrower to Bank One be credited with any part of the proceeds of sale of
any Collateral until cash payment thereof has actually been received by Bank
One. Bank One shall not be obligated to make any such sale pursuant to any
notice thereof, but 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. Bank One shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, and Bank One shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at such sale, to use and apply any of the Secured
Obligations owed to such Person as a credit on account of the purchase price
payable by such Person at such sale. Each purchaser at any such sale shall
acquire the property sold absolutely free from any claim or right on the part of
the Borrower, and the Borrower hereby waives (to the full extent permitted by
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Borrower further agrees, at Bank One's request, to
assemble the Collateral and make it available to Bank One at places which Bank
One shall reasonably select, whether at the Borrower's premises or elsewhere.
Bank One shall, at such time or times as it determines, apply the net proceeds
of any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights Bank One hereunder, including, without
limitation, reasonable attorneys' or other agents' fees and disbursements, to
the payment in whole or in part of the Secured Obligations, and, only after the
payment by Bank One of any other amounts required by any provision of law to be
paid to third parties, including, without limitation, Section 9-504(1)(c) of the
Code, need Bank One account for the surplus, if any, to the Borrower. To the
extent permitted by applicable law, the Borrower waives all claims, damages and
demands it may acquire against Bank One arising out of the exercise of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition;
PROVIDED, that no demand, advertisement or notice, all of which are hereby
expressly waived, shall be required in connection with any sale or other
disposition of any part of the Collateral which threatens to decline speedily in
value or which is of a type customarily sold on a recognized market. The
Borrower shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to satisfy the Secured
Obligations in full and the fees and disbursements of any attorneys or other
agents employed by Bank One to collect such deficiency.
(b) SUITS. Bank One, instead of exercising the power of sale herein
conferred upon it,
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may proceed by a suit or suits at law or in equity to foreclose the security
interests granted hereby and sell the Collateral, or any portion thereof, under
one or more judgments or decrees of a court or courts of competent jurisdiction.
(c) PROCEEDS. Upon demand by Bank One, all Proceeds received by the
Borrower consisting of cash, checks and other near-cash items shall be held by
the Borrower in trust for Bank One and segregated from other funds of the
Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to
Bank One in the exact form received by the Borrower (duly indorsed by the
Borrower to Bank One, if required). All cash or other Proceeds received by Bank
One in respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of Bank One, be held by Bank
One as Collateral for, and then or at any time thereafter applied (after payment
of any amounts payable to Bank One pursuant to Section 12) in whole or in part
against, all or any part of the Secured Obligations. Any surplus of such cash or
other Proceeds held by Bank One and remaining after payment in full in cash and
the performance of all of the Secured Obligations, shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive such surplus.
(d) ADDITIONAL INVENTORY REMEDIES. Until the payment in full in cash
and the performance of all of the Secured Obligations, at any time when an Event
of Default has occurred and is continuing: (i) the Borrower will perform any and
all reasonable actions requested by Bank One to enforce Bank One's security
interest in the Inventory and all of Bank One' rights hereunder, such as leasing
warehouses to Bank One or its designee, placing and maintaining signs,
appointing custodians, transferring Inventory to warehouses, and delivering to
Bank One, warehouse receipts, documents of title and such other documentation as
Bank One may reasonably request; (ii) if any Inventory is in the possession or
control of any of the Borrower' agents, contractors or processors or any other
third party, the Borrower will notify Bank One thereof and will notify such
agents, contractors or processors or third party of Bank One' security interest
therein and, upon request, instruct them to hold all such Inventory for Bank
One' and the Borrower' account, as their interests may appear, and subject to
Bank One' instructions; (iii) Bank One shall have the right to hold all
Inventory subject to the security interest granted hereunder; and (iv) Bank One
shall have the right to take possession of the Inventory or any part thereof and
to maintain such possession on the Borrower' premises or to remove any or all of
the Inventory to such other place or places as Bank One desires in its sole
discretion. If Bank One exercises its right to take possession of the Inventory
or any part of it , the Borrower upon Bank One's demand, will assemble the
Inventory and make it available to Bank One at the Borrower's premises at which
it is located.
12. INDEMNITY AND EXPENSES. Without duplicating any amounts payable under
Sections 10.7, 11.5 and 11.10 of the Credit Agreement:
(1) The Borrower agrees on demand, to pay, and to save, indemnify and
keep Bank One and its respective directors, officers, employees, attorney,
agents, advisors, attorneys-in-fact, experts and Affiliates (each, an
"INDEMNIFIED PARTY") harmless from and against any and all penalties, fines,
expenses, losses, settlements, costs, claims, causes of action, debts, dues,
sums
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of money, accounts, accountings, reckonings, acts, omissions, demands,
liabilities, obligations, damages, actions, judgments, suits, proceeding or
disbursements of any kind or nature whatsoever, known or unknown, contingent or
otherwise, including, without limitation, attorneys' and consultants' fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses (i) with respect to, or resulting from, any delay by the Borrower in
paying, any and all excise, sales or other Taxes which may be payable or
determined to be payable with respect to any of the Collateral, (ii) with
respect to, or resulting from, any delay by the Borrower in complying with any
Requirement of Law applicable to any of the Collateral or (iii) in connection
with any of the transactions contemplated by this Agreement, including the fees
and disbursements of counsel and of any other experts, which Bank One or its
respective directors, officers, employees, attorneys, consultants, experts or
agents 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 Liens granted
hereunder, (x) the collection, sale or other disposition of any of the
Collateral, (y) the exercise by Bank One of any of the rights conferred upon it
hereunder or (z) any Default or Event of Default, but excluding any such
penalties, fines, expenses, losses, settlements, costs, claims, causes of
action, debts, dues, sums of money, accounts, accountings, reckonings, acts,
omissions, demands, liabilities, obligations, damages, actions, judgments,
suits, proceeding or disbursements of any kind or nature whatsoever, known or
unknown, contingent or otherwise, including, without limitation, attorneys' and
consultants' fees, investigation and laboratory fees, response costs, court
costs and litigation expenses incurred by reason of the gross negligence or
willful misconduct of the Indemnified Party as determined by a final order or
judgment of a court of competent jurisdiction.
(2) In any suit, proceeding or action brought by any Indemnified Party
under any Account or Contract for any sum owing thereunder, or to enforce any
provisions of any Account or Contract, the Borrower agrees to pay, and will
save, indemnify and keep such Indemnified Party harmless from and against any
and all penalties, fines, expenses, losses, settlements, costs, claims, causes
of action, debts, dues, sums of money, accounts, accountings, reckonings, acts,
omissions, demands, liabilities, obligations, damages, actions, judgments,
suits, proceeding or disbursements of any kind or nature whatsoever, known or
unknown, contingent or otherwise, including, without limitation, attorneys' and
consultants' fees, investigation and laboratory fees, response costs, court
costs and litigation expenses suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrower or any of its Subsidiaries, but excluding any
such penalties, fines, expenses, losses, settlements, costs, claims, causes of
action, debts, dues, sums of money, accounts, accountings, reckonings, acts,
omissions, demands, liabilities, obligations, damages, actions, judgments,
suits, proceeding or disbursements of any kind or nature whatsoever, known or
unknown, contingent or otherwise, including, without limitation, attorneys' and
consultants' fees, investigation and laboratory fees, response costs, court
costs and litigation expenses incurred by reason of the gross negligence or
willful misconduct of the Indemnified Party as determined by a final order or
judgment of a court of competent
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jurisdiction.
(3) Any amount due hereunder which is not paid on demand shall bear
interest at a rate equal to the sum of 2% PLUS the Alternate Base Rate in effect
at such time.
(4) The agreements of the Borrower contained in this Section shall
survive the payment in full in cash and the performance of all of the Secured
Obligations. All of the Borrower's obligations to indemnify Bank One and its
directors, officers, employees, attorneys, consultants, experts and agents
hereunder shall (without duplication) be in addition to, and shall not limit in
any way, the Borrower's indemnification obligations contained in the Credit
Agreement.
13. NOTICES. All notices and other communications provided for or otherwise
required hereunder or in connection herewith shall be given in the manner and to
the addresses set forth in Section 11.2 of the Credit Agreement.
14. RELATIONSHIP TO ORIGINAL SECURITY AGREEMENT This Agreement amends and
restates the original Security Agreement.
15. SECURITY INTEREST ABSOLUTE. All rights of Bank One and security interests
hereunder, and all obligations of the Borrower hereunder, shall be absolute and
unconditional, irrespective of any circumstance which might constitute a defense
available to, or a discharge of, any guarantor or other obligor in respect of
the Secured Obligations.
16. RELATIONSHIP TO INTERCREDITOR AGREEMENT. The Borrower is contemporaneously
herewith entering into this Agreement, a Patent and Trademark Security Agreement
and Deed of Trust with Bank One (as the same may be amended, amended and
restated, supplemented or otherwise modified from time to time, the "Bank One
Collateral Documents") pursuant to which the Borrower shall grant to Bank One a
security interest in the Collateral (as defined in the Credit Agreement) in
order to secure all of the Borrower's obligations to Bank One in respect of the
Note and Bank One Letter of Credit (the "Bank One Obligations"). Notwithstanding
the date, manner, or order of attachment or perfection, the description of any
collateral or security interests, liens, claims or encumbrances covered or
granted by the Bank One Loan Documents (as defined in the Credit Agreement ) or
the Bank One Collateral Documents, or any provision of the Uniform Commercial
Code or other applicable law as in effect in any State, Bank One hereby agrees
that its rights under the Bank One Collateral Documents are and shall be
subordinate, to the extent and in the manner set forth in the Intercreditor
Agreement, to all rights of the Agent under the Loan Documents, and that the
Agent shall have at all times a Lien prior and superior to that of Bank One in
all Collateral securing the Obligations under the Credit Agreement until the
indefeasible payment in full, in cash, of all Obligations under the Credit
Agreement. Bank One hereby reaffirms and admits to the validity and
enforceability of the Intercreditor Agreement and its applicability to the Bank
One Collateral Documents.
17. CONTINUING SECURITY INTEREST. This Agreement shall create a continuing
security
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interest in the Collateral and shall (i) remain in full force and effect until
the payment in full in cash and the performance of all of the Secured
Obligations, the expiration or cancellation of the Letter of Credit and the
termination of the Swing Line, (ii) be binding upon the Borrower, its successors
and assigns and (iii) inure, together with the rights and remedies of Bank One
hereunder, and its respective successors, transferees and assigns. Upon the
payment in full in cash and the performance of the Secured Obligations, and the
expiration or termination of the Swing Line, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Borrower subject to any existing Liens, security interests or encumbrances on
such Collateral. Upon any such termination, Bank One will, at the Borrower's
expense, execute and deliver to the Borrower such documents as the Borrower
shall reasonably request to evidence such termination.
18. SEVERABILITY. If any provision of this Agreement is invalid and
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 Bank One 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.
19. NO WAIVER; CUMULATIVE REMEDIES. Bank One shall not by any act (except by a
written instrument executed and delivered in accordance with Section 19 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of Bank One, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by Bank One of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which Bank One would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised alternatively, successively or concurrently and are
not exclusive of any rights or remedies provided by law or at equity.
20. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Borrower and Bank One;
pROVIDED, that any provision of this Agreement may be waived by Bank One in
accordance with the Credit Agreement in a written letter or agreement executed
by Bank One or by facsimile transmission from Bank One. Any amendment,
modification or supplement of or to any provision of this Agreement, any
termination or waiver of any provision of this Agreement and any consent to any
departure by the Borrower from the terms of any provision of this Agreement
shall be effective only in the specific instance and for the specific purpose
for which made or given. No notice to or demand upon the Borrower in any
instance hereunder shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances. This Agreement shall be binding upon
and shall inure to the benefit of the Borrower, and Bank One and their
respective successors,
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transferees and assigns; PROVIDED, that the Borrower may not assign its rights
and obligations hereunder without the prior written consent of Bank One.
21. HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
22. GOVERNING LAW. 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.
23. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. THE BORROWER AND THE AGENT
HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR THE COLLATERAL, OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT HEREOF OR THEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE AGENT. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF OHIO AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OF ANY FEDERAL COURT, IN
EACH CASE LOCATED IN SUMMIT COUNTY AND ANY APPELLATE COURT THEREFROM, IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY DOCUMENT OR INSTRUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR
THE COLLATERAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH OHIO STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE AGENT OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE COLLATERAL AGAINST THE
BORROWER IN THE COURTS OF ANY JURISDICTION. THE BORROWER HEREBY WAIVES THE
DEFENSES OF FORUM NON CONVENIENT AND IMPROPER VENUE.
24. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
one and the same Agreement.
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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/ XXXXXX X. XXXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Sr. Vice President,
Financial Operations
BANK ONE, NA
By: /s/ XXXXXX X. XXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
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