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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): April 1, 1999
TELXON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11402 74-1666060
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3330 WEST MARKET STREET, AKRON, OHIO 44333
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (330) 664-1000
Not applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On April 1, 1999, Telxon Corporation (the "Company" or the
"Registrant") issued a press release announcing extension of waivers under its
revolving credit facility and separate business purpose revolving promissory
note, effective through June 29, 1999, and certain related amendments to the
underlying credit agreements broadening of the lenders' collateral and allowing
the Company, subject to borrowing base requirements and the further approval of
the banks, to borrow $5 million in addition to the $55 million currently
outstanding under the revolving credit agreement. Under the reported amendments,
the Company is also subject to mandatory prepayments and credit commitment
reductions relating to dispositions of assets approved by the banks. The press
release also reported an approximately 4% reduction in the Company's
workforce, principally involving white-collar, managerial-level and salaried
positions.
A copy of the press release discussing the above and certain related
matters, as well as of the waiver and amendment agreement and amended and
restated security agreement relating to the revolving credit facility discussed
in the press release and the consent and agreement relating to the separate
business purpose revolving promissory note also there discussed, are included
as exhibits to this Current Report on Form 8-K and incorporated herein by
reference. The lender under the business purpose revolving promissory note is
being secured on substantially the same terms as described in the documents
filed herewith relating to the revolving credit facility, subject to a
pre-existing intercreditor agreement made by that lender subordinating its
rights in favor of the lenders under the revolving credit facility.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
10.3.1.a Second Waiver Extension Agreement and
Amendment No. 4, dated as of March 26, 1999,
to the Credit Agreement, dated as of March
8, 1996, by and among the Registrant, the
Lenders party thereto, and The Bank of New
York, as Issuer, Swing Line Lender and
Agent, filed herewith.
10.3.1.b Amended and Restated Security Agreement,
dated as of March 26, 1999, by and among the
Registrant, and The Bank of New York, as
Agent for the Lenders from time to time
party to the Credit Agreement referenced in
the description of Exhibit 10.3.1.a above,
filed herewith.
10.3.4.c Second Further Consent and Agreement, dated
as of March 26, 1999, by the Registrant in
favor of Bank One, NA with respect to the
Business Purpose Revolving Promissory Note
(Swing Line) made by the Registrant in favor
of Bank One, NA, dated August 4, 1998, filed
herewith.
99 Press Release issued by the registrant on
March 1, 1999, filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELXON CORPORATION
Date: April 1, 1999 By: /s/ Glenn S. Hansen
--------------------------
Glenn S. Hansen
Vice President, Legal Administration
and Corporate Counsel
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INDEX TO EXHIBITS
10.3.1.a Second Waiver Extension Agreement and
Amendment No. 4, dated as of March 26, 1999,
to the Credit Agreement, dated as of March
8, 1996, by and among the Registrant, the
Lenders party thereto, and The Bank of New
York, as Issuer, Swing Line Lender and
Agent, filed herewith.
10.3.1.b Amended and Restated Security Agreement,
dated as of March 26, 1999, by and among the
Registrant, and The Bank of New York, as
Agent for the Lenders from time to time
party to the Credit Agreement referenced in
the description of Exhibit 10.3.1.a above,
filed herewith.
10.3.4.c Second Further Consent and Agreement, dated
as of March 26, 1999, by the Registrant in
favor of Bank One, NA with respect to the
Business Purpose Revolving Promissory Note
(Swing Line) made by the Registrant in favor
of Bank One, NA, dated August 4, 1998, filed
herewith.
99 Press Release issued by the registrant on
March 1, 1999, filed herewith.
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EXHIBIT 10.3.1.a
----------------
SECOND WAIVER EXTENSION AGREEMENT AND AMENDMENT NO. 4
SECOND WAIVER EXTENSION AGREEMENT AND AMENDMENT NO. 4 (this "WAIVER AND
AMENDMENT"), dated as of March 26, 1999, to the Credit Agreement, dated as of
March 8, 1996, by and among Telxon Corporation (the "BORROWER"), the Lenders
party thereto, and The Bank of New York, as Issuer, Swing Line Lender and Agent
(as heretofore amended, the "AGREEMENT").
RECITALS
--------
I. italized terms used herein which are not otherwise defined herein shall have
the respective meanings ascribed thereto in the Agreement.
II. The Borrower, the Agent and the Lenders 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 Agreement.
III. The Borrower has requested that the Agent and the Lenders agree to a
further waiver of compliance by the Borrower with certain provisions of the
Agreement, including an extension of the waiver granted in the Original Waiver
as extended by the Original Waiver Extension, upon the terms and conditions
contained herein.
IV. In addition, the Borrower has requested that the Agent, the Lenders, the
Issuer and the Swing Line Lender agree to amend the Agreement upon the terms and
conditions contained herein, and the Agent, the Lenders, the Issuer and the
Swing Line Lender are willing so to agree.
Accordingly, in consideration of the Recitals and the covenants and
conditions hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Borrower, the
Agent, the Issuer and the Swing Line Lender hereby agree as follows:
1. WAIVERS. Subject to satisfaction of the conditions to effectiveness
set forth in Section 4 below:
(i) The Required Lenders hereby agree that the Waiver Period
(as defined in Section 1 of the Original Waiver) shall not expire as of
the time provided in the Original Waiver Extension but shall be
extended and remain in effect for the period (the "EXTENDED WAIVER
PERIOD") from the Effective Date (as defined in Section 4 hereof)
through June 29, 1999.
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(ii) The Required Lenders hereby waive, for and during the
Extended Waiver Period, compliance by the Borrower with the provisions
of Sections 7.11 (Leverage Ratio), 7.12 (Tangible Net Worth), 7.13
(Fixed Charge Coverage Ratio) and 7.15 (Current Ratio) of the Agreement
and any Defaults or Events of Default under any of said Sections 7.11,
7.12, 7.13 and 7.15 currently existing in respect of the fiscal
quarters of the Borrower ended September 30, 1998 and December 31, 1998
and as may exist for the fiscal quarter of the Borrower ended March 31,
1999 and any other Defaults or Events of Default existing as of the
Effective Date or arising during the Extended Waiver Period and which
arose solely by reason of (a) the restatement of the Borrower's
financial statements for any period prior to the September 30, 1998
quarter (any Defaults or Events of Defaults relating to the restatement
of the Borrower's financial statements for the September 30, 1998
quarter, including the effects thereof on the Borrower's financial
statements for the December 31, 1998 quarter and the March 31, 1999
quarter, being waived as provided in the Original Waiver, as extended
by the Original Waiver Extension and this Waiver and Amendment), (b)
the Borrower's financial results for the December 31, 1998 quarter and
the March 31, 1999 quarter as reflected in the Borrower's financial
statement for such periods, and/or (c) any ratios or other computations
or certifications required to be made, maintained or provided under the
Agreement or any other Loan Document (as used in this Waiver and
Amendment, such term shall include, in addition to the documents
specified in the definition thereof in the Agreement, the Original
Waiver and the Original Waiver Extension) based upon or in respect of
any of the financial statements referenced in the immediately foregoing
clauses (a) and (b).
(iii) The Required Lenders hereby waive, for and during the
Extended Waiver Period, compliance by the Borrower with the due dates
established in Sections 7.7(c) and 7.7(d) for the delivery of quarterly
financial statements and the associated Compliance Certificate and any
Defaults or Events of Default under Section 7.7 currently existing in
respect of the fiscal quarters of the Borrower ended September 30, 1998
and December 31, 1998 and any other Defaults or Events of Default
existing as of the Effective Date or arising during the Extended Waiver
Period and which arose solely with respect to any financial statements
and/or certifications or other similar documents based thereon or
relating thereto required to be provided by the Borrower under the
Agreement or any other Loan
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Document in respect of the fiscal quarter ended December 31, 1998 or
any prior period.
Unless otherwise agreed to by the Required Lenders in writing, upon the
expiration of the Extended Waiver Period, the waivers provided for herein shall
be of no further force or effect, and unless as of that time the Borrower is
then in compliance with all of the provisions of the Agreement compliance with
which is waived in the Original Waiver, the Original Waiver Extension and in
this Waiver and Amendment, an Event of Default shall exist, and the Lenders may
exercise any and all rights and remedies available to any of them under
Agreement, the other Loan Documents of applicable law.
2. AMENDMENTS TO AGREEMENT. Subject to satisfaction of the conditions
to effectiveness set forth in Section 4 below, the Agreement is hereby amended
as follows:
(a) The definition of the term "Collateral" set forth in
Section 1.1 is hereby amended in its entirety to read as follows:
"COLLATERAL": the assets and property in which a
security interest is granted under the Security
Agreement, the Subsidiary Security Agreement, the Pledge
Agreements, the Patent and Trademark Security Agreement
and the Deed of Trust.
(b) The definition of the term "Disposition" set forth in
Section 1.1 is hereby amended by inserting the following sentence at the end
thereof:
"As used herein, the term "Disposition" shall be deemed
to include the transactions described on Schedules
8.3(j)(i), (ii) and (iii) hereto."
(c) The definition of the term "Loan Documents" set forth in
Section 1.1 is hereby amended by inserting the following words immediately
following the words "the Security Agreement" appearing therein:
", the Subsidiary Security Agreement, the Pledge
Agreements, the Patent and Trademark Security Agreement,
the Deed of Trust"
(d) The definition of the term "Texas PP&E" set forth in
Section 1.1 is hereby amended in its entirety to read as follows:
"TEXAS PP&E": all property, plant and equipment of the
Borrower located at its manufacturing facility and
national service center in Houston, Texas.
(e) Section 1.1 is hereby amended by inserting the following
new defined terms in appropriate alphabetical order:
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"DEED OF TRUST": as defined in Section 4(vii) of the
Second Waiver.
"NET CASH PROCEEDS": means, with respect to any
Disposition, the aggregate amount of cash received by or
on behalf of the Person making the Disposition in
connection with such transaction after deducting
therefrom only (a) reasonable and customary brokerage
commissions, legal fees, and other similar fees and
commissions, (b) the amount of taxes payable in
connection with or as a result of such transaction and
(c) the amount of any Indebtedness (other than the
Obligations) secured by a Lien on such asset that, by
the terms of such transaction, is required to be repaid
upon such disposition, in each case to the extent, but
only to the extent, that the amounts so deducted are, at
the time of receipt of such cash, actually paid to a
Person that is not an Affiliate and are properly
attributable to such transaction or to the asset that is
the subject thereof.
"PATENT AND TRADEMARK SECURITY AGREEMENT": as defined in
Section 4(v) of the Second Waiver.
"PLEDGE AGREEMENTS": as defined in Section 4(iv) of the
Second Waiver.
"SECOND WAIVER": shall mean the Second Waiver Extension
Agreement and Amendment No. 4, dated as of March 26,
1999, to this Agreement.
"SECURITY DOCUMENTS": shall mean the Security Agreement,
the Subsidiary Security Agreement, the Pledge
Agreements, the Patent and Trademark Security Agreement
and the Deed of Trust.
"SUBSIDIARY SECURITY AGREEMENT": as defined in Section
4(iii) of the Second Waiver.
(f) Section 2.9 is hereby amended by redesignating subsection (e)
thereof as subsection (f), and by inserting the following new subsection (e)
immediately following subsection (d):
"(e) MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS
RELATING TO DISPOSITIONS. Notwithstanding anything
contained herein to the contrary, the Aggregate
Revolving Commitment Amount shall be permanently
reduced and the Borrower shall prepay the aggregate
unpaid principal amount of the Revolving Loans upon
its receipt by the Borrower or any Guarantor of the
proceeds of any Disposition listed on Schedule
8.3(j)(i), (ii) or (iii), by an amount equal to (x)
25% of up to $10,000,000 of the Net Cash Proceeds
with respect to a Disposition relating to the asset
set forth on Schedule 8.3(j)(i), (y) 50% of the Net
Cash Proceeds in excess of $10,000,000 with respect
to a
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Disposition relating to the asset set forth on
Schedule 8.3(j)(i) and (z) 50% of the Net Cash
Proceeds with respect to any other Disposition listed
on Schedule 8.3(j)(ii) or (iii), it being understood
and agreed that the Borrower shall be permitted to
retain the balance thereof for working capital
purposes.
(g) Article 3 is hereby amended by inserting the following new
Section 3.14 at the end thereof:
"3.14 CONSENT FEE. Upon the occurrence of the
Effective Date of the Second Waiver, the Borrower
agrees to pay to the Agent for the pro rata account
of each Lender that has executed a counterpart of the
Second Waiver on or prior to its Effective Date, a
consent fee equal to .50% of such Lender's Revolving
Commitment Amount (after giving effect only to the
reduction in the Aggregate Revolving Commitment
Amount referred to in Section 4(x) of the Second
Waiver), which fee shall be due and payable (x) on
the Effective Date of the Second Waiver in an amount
equal to .35% of each such Lender's Revolving
Commitment Amount (as of the Effective Date of the
Second Waiver) and (y) on June 1, 1999 in an amount
equal to .15% of each such Lender's Revolving
Commitment Amount (as of the Effective Date of the
Second Waiver) if the Borrower shall not have
delivered to the Agent, on or before such date, a
binding written commitment letter for the refinancing
in whole of the Obligations, on terms reasonably
acceptable to the Agent and the Required Lenders,
PROVIDED, that should such commitment letter be
terminated, the balance of the consent fee shall be
payable at the time of such termination."
(h) Article 4 is hereby amended by inserting the following new
Section 4.18 and 4.19 at the end thereof:
"4.18 DESIGNATED SENIOR INDEBTEDNESS. The Obligations
constitute "Designated Senior Indebtedness" under,
and as such term is defined and used in that certain
Indenture, dated as of December 1, 1995 pursuant to
which the Existing Subordinated Notes were issued.
4.19 COPYRIGHTS. Neither the Borrower nor any of its
Subsidiaries own any material copyrights of the
United States, or any other country (including,
without limitation, applications or registrations)
which have been recorded in the United States
Copyright Office or in any similar office or agency
of the United States, any State thereof, or any other
country or political subdivision thereof."
(i) Article 7 is hereby amended by inserting the following new
Section 7.17 at the end thereof:
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"7.17 PHASE I REPORT. Cooperate fully with the
consultant retained by the Agent to provide it with a
Phase I environmental report with respect to the
Texas PP&E (the cost of which shall be borne by the
Borrower).
(j) Subsection (p) of Section 8.2 is hereby amended by
deleting the word "Agreement" appearing therein and inserting in lieu thereof
the words "Documents".
(k) Section 8.3 is hereby amended by deleting the word "and"
immediately prior to clause (i) thereof, and by inserting the following new
clause (j) at the end thereof:
"and (j) notwithstanding anything to the contrary set
forth above, Dispositions set forth on Schedules
8.3(j)(i), (ii) and (iii) on terms acceptable to the
Agent and the Required Lenders (other than the
Disposition listed on Schedule 8.3(j)(iii) as to
which the Borrower shall provide the Agent and the
Lenders reasonable notice of any such Disposition),
provided that the Net Cash Proceeds thereof that are
payable to the Borrower or any Guarantor are
simultaneously therewith applied to the Revolving
Loans as required pursuant to Section 2.9(e)."
(l) The Schedules to the Agreement are hereby amended by
adding new Schedules 8.3(j)(i), 8.3(j)(ii) and 8.3(j)(iii) in the form annexed
hereto as Schedules 8.3(j)(i), 8.3(j)(ii) and 8.3(j)(iii).
(m) Section 9.1(o) is hereby amended in its entirety to read
as follows:
"(o) Any Security Document shall cease to be valid
and enforceable (except as otherwise specifically
provided therein), an "Event of Default" shall have
occurred under, and as defined in, any Security
Document or any Lien granted to the Agent thereunder
shall cease to be a first priority, perfected
security interest; or"
3. AGREEMENTS BY THE BORROWER. Anything in the Agreement to the
contrary notwithstanding, in consideration of the waivers and amendments set
forth above, the Borrower hereby agrees as follows during the Extended Waiver
Period:
(i) The obligations of the Borrower under Section 2 of the
Original Waiver, except as the same has been modified by Original
Waiver Extension and as may be modified by the terms of this Waiver and
Amendment, shall not be limited to the Waiver Period but shall, as so
modified, continue to be performed and observed by the Borrower for and
during the Extended Waiver Period.
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(ii) Notwithstanding that on the Effective Date of the Second
Waiver the Aggregate Revolving Commitment Amount (after giving
effect to its reduction pursuant to Section 4(x) of the Second
Waiver) is $60,000,000, unless otherwise agreed to by the
Required Lenders (in the exercise of their respective sole
discretion) in writing, the Borrower agrees that the Aggregate
Revolving Credit Exposure shall not at any time exceed the
lesser of (x) $55,000,000 and (y) the sum of (I) the Eligible
Accounts Receivable MINUS $8,000,000, multiplied by 85% PLUS
(II) 25% of the Eligible Inventory, PROVIDED that the
$55,000,000 amount set forth in clause (x) above shall be
reduced at the time of and on a dollar-for-dollar basis by the
amount of any prepayment of the Revolving Loans and reduction
of the Aggregate Revolving Commitment Amount required pursuant
to Section 2.9(e) of the Agreement and that the Borrower will
not request any new Loans or the issuance of any new Letters
of Credit under the Agreement in violation hereof.
The Borrower agrees that any violation of its agreements set
forth above shall constitute a Default under the Agreement.
4. EFFECTIVE DATE. Paragraph 1, 2 and 3 of this Waiver and Amendment
shall not be effective until such date (the "EFFECTIVE DATE") as each of the
following conditions shall have been satisfied:
(i) COUNTERPARTS. The Agent shall have received counterparts
of this Waiver and Amendment executed by the Borrower, the Issuer, the
Swing Line Lender, the Required Lenders and the Guarantors.
(ii) AMENDMENT AND RESTATEMENT OF THE SECURITY AGREEMENT. The
Borrower shall have executed and delivered to the Agent an Amendment
and Restatement of the Security Agreement, in form and substance
satisfactory to the Agent, pursuant to which the Borrower shall have
granted to the Agent additional liens and security interests on
substantially all of the Borrower's assets.
(iii) SUBSIDIARY SECURITY AGREEMENT. TLXITX Corporation,
Teletransaction, Inc., PTC Airco, Inc., Meta Holding Corporation,
PenRight! Corporation, The Retail Technology Group, Inc., Telxon
Trading Co., Inc., Telxon Products, Inc., and Telxon International
Procurement Services, Inc. shall have executed and delivered to the
Agent a Subsidiary Security Agreement, in form and substance
satisfactory to the Agent (as the same may be amended,
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modified or otherwise supplemented from time to time, the "SUBSIDIARY
SECURITY AGREEMENT").
(iv) PLEDGE AGREEMENTS. The Borrower and Meta Holding
Corporation shall have executed and delivered to the Agent Pledge
Agreements, in form and substance satisfactory to the Agent (as the
same may be amended, modified or otherwise supplemented from time to
time, the "PLEDGE AGREEMENTS").
(v) PATENT AND TRADEMARK SECURITY AGREEMENT. The Borrower,
TLXITX Corporation, and PenRight! Corporation and any other Domestic
Subsidiary owning Intellectual Property shall have executed and
delivered to the Agent a Patent and Trademark Security Agreement, in
form and substance satisfactory to the Agent (as the same may be
amended, modified or otherwise supplemented from time to time, the
"PATENT AND TRADEMARK SECURITY AGREEMENT").
(vi) SUBSIDIARY GUARANTEE SUPPLEMENT. TLXITX Corporation,
PenRight! Corporation, The Retail Technology Group, Inc., Telxon
Trading Co., Inc., Telxon Products, Inc., and Telxon International
Procurement Services, Inc. shall have executed and delivered to the
Agent a Supplement to the Subsidiary Guarantee in form and substance
satisfactory to the Agent.
(vii) DEED OF TRUST. The Borrower shall have executed and
delivered to the Agent a Deed of Trust, in form and substance
satisfactory to the Agent (as the same may be amended, modified or
otherwise supplemented from time to time, the "DEED OF TRUST") on the
Texas PP&E.
(viii) OPINION OF COUNSEL. The Agent shall have received an
opinion of special counsel to the Borrower and the Subsidiaries, in
form and substance satisfactory to the Agent.
(ix) UCCS; PLEDGED SHARES. The Borrower, TLXITX Corporation,
Teletransaction, Inc., PTC Airco, Inc., Meta Holding Corporation,
PenRight! Corporation, The Retail Technology Group, Inc., Telxon
Trading Co., Inc., Telxon Products, Inc., and Telxon International
Procurement Services, Inc. shall have delivered to the Agent such UCC
Financing Statements, share certificates and blank stock powers
executed by the Borrower and Meta Holding Corporation and all other
documents and certificates which may be required to be filed in any
public office in order to perfect the security
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interest in the Collateral, and such other documents and instruments as
shall be reasonably requested by the Agent in order to perfect the
security interest in the Collateral.
(x) COMMITMENT REDUCTION. The Borrower shall have reduced
the Aggregate Revolving Commitment Amount to $60,000,000 pursuant to
Section 2.7 of the Agreement.
(xi) FEES AND DISBURSEMENTS. The Borrower shall have paid the
reasonable fees and disbursements of Morgan, Lewis & Bockius LLP,
Special Counsel to the Agent, which shall have accrued up to, and
properly invoiced to the Borrower no later than, the Effective Date.
(xii) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. On and as of
the Effective Date after giving effect to the Original Waiver, the
Original Waiver Extension and this Waiver and Amendment, there shall
exist no Default or Event of Default, and all of the representations
and warranties of the Loan Parties contained in the Loan Documents (in
the case of the affirmation of representations and warranties in
Section 4(c) of each of the Original Waiver and the Original Waiver
Extension, after giving effect to this Waiver and Amendment in addition
to the Original Waiver and the Original Waiver Extension as there
recited) shall be true and correct with the same effect as though such
representations and warranties had been made on the Effective Date.
(xiii) BANK ONE CONSENT. Bank One shall have consented to the
waivers, amendments and agreements contemplated hereby with respect to
the Bank One Credit Line.
(xiv) CONSENT FEE. The Borrower shall have paid to the Agent
for the pro rata account of each Lender entitled thereto that portion
of the consent fee that is required to be paid to such Lenders on the
Effective Date pursuant to Section 3.14 of the Agreement.
5. AFFIRMATION; RELEASE. (i) On each of the date hereof and the
Effective Date, the Borrower hereby (a) reaffirms and admits the validity and
(subject to the terms of the Original Waiver, the Original Waiver Extension and
this Waiver and Amendment) enforceability of the Loan Documents and all of its
obligations thereunder, (b) agrees and admits that it has no defenses to or
offsets or counterclaims against any such obligations, and (c) represents and
warrants that after giving effect hereto and to the Original Waiver and the
Original Waiver Extension (as modified hereby), no Default or Event of Default
has occurred and is continuing, and that each of the
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representations and warranties made by it in the Agreement is true and
correct with the same effect as though such representation and warranty
had been made on such date.
(ii) The Borrower and each Guarantor hereby release the Agent,
the Lenders, the Issuer and the Swing Line Lender and each of their respective
directors, officers, employees, attorneys, agents, advisors, attorneys-in-fact,
experts and Affiliates (collectively the "LENDER GROUP"), from and against any
and all costs and expenses, losses, settlements, claims, causes of action,
debts, liabilities, obligations, damages, actions, judgments, proceedings 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 Waiver and Amendment, the Agreement
or the other Loan Documents, and/or any actions taken or omitted to be taken by
the Lender Group on or prior to the Effective Date 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
and each Guarantor hereby agree to hold the Lender Group harmless from and
against any and all costs and expenses, losses, settlements, claims, causes of
action, debts, liabilities, obligations, damages, actions, judgments,
proceedings 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
with respect thereto.
6. WAIVERS AND AMENDMENTS LIMITED. In all other respects, the Loan
Documents shall remain in full force and effect, and no waiver or amendment in
respect of any term or condition of any Loan Document contained herein shall be
deemed to be a waiver or amendment in respect of any other term or condition
contained in any Loan Document.
7. COUNTERPARTS. This Waiver and Amendment may be executed in any
number of counterparts all of which, taken together shall constitute one waiver.
In making proof of this Waiver and Amendment, it shall only be necessary to
produce the counterpart executed and delivered by the party to be charged.
8. GOVERNING LAW. THIS WAIVER AND AMENDMENT IS BEING EXECUTED AND
DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND
SHALL BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS.
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AS EVIDENCE of the agreement by the parties hereto to the
terms and conditions herein contained, each such party has caused this Waiver
and Amendment to be executed on its behalf.
TELXON CORPORATION
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
THE BANK OF NEW YORK, in its capacity as a
Lender, as the Issuer, as the Swing Line
Lender and as the Agent
By: /s/ Robert J. Joyce
Name: Robert J. Joyce
Title: Vice President
Each of the following Lenders consents to
the execution and delivery of this Waiver
and Amendment by the Agent, hereby
directs the Agent to so execute and
deliver this Waiver and Amendment and
agrees to all of the terms and conditions
hereof:
BANK ONE, N.A.
By: /s/ Joseph E. Manley
Name: Joseph E. Manley
Title: Vice President
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COMERICA BANK
By: /s/ Jeffrey J. Judge
Name: Jeffrey J. Judge
Title: Vice President
THE HUNTINGTON NATIONAL BANK
By: /s/ Timothy M. Ward
Name: Timothy M. Ward
Title: Vice President
PNC BANK, N.A.
By: /s/ Bryon A. Pike
Name: Bryon A. Pike
Title: Vice President
SOCIETE GENERALE
By: /s/ Joseph A. Philbin
Name: Joseph A. Philbin
Title: Director
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Jack L. Quitmeyer
Name: Jack L. Quitmeyer
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Walter R. Wolff
Name: Walter R. Wolff
Title: Joint General Manager
12
<PAGE> 13
Each of the Guarantors acknowledges the execution and delivery of this Waiver
and Amendment by the Borrower and the Agent and by signing below, indicates its
reaffirmation of the Guarantor Obligations (as such term is defined in the
Subsidiary Guaranty) and its joinder in the release contained in Section 5(ii)
of this Waiver and Amendment.
PTC AIRCO, INC.
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
META HOLDING CORPORATION
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
TELETRANSACTION, INC.
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
TLXITX CORPORATION
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
PENRIGHT! CORPORATION
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
13
<PAGE> 14
THE RETAIL TECHNOLOGY GROUP, INC.
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
TELXON TRADING CO., INC.
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
TELXON PRODUCTS, INC.
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
TELXON INTERNATIONAL PROCUREMENT SERVICES, INC.
By: /s/ Gerald J. Gabriel
Name: Gerald J. Gabriel
Title: Senior Vice President
14
<PAGE> 1
EXHIBIT 10.3.1.b
----------------
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 THE
BANK OF NEW YORK ("BNY"), as Agent for the Lenders from time-to-time party to
the Credit Agreement (as herein defined), the Issuer and the Swing Line Lender
(as the same may be amended, amended and restated, supplemented or otherwise
modified from time to time, this "AGREEMENT").
RECITALS
--------
I. The Borrower, the Lenders from time-to-time party to the Credit
Agreement, the Issuer, the Swing Line Lender and 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. 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, amended and
restated, modified or supplemented from time to time, the "CREDIT AGREEMENT").
II. The Borrower, the Agent, the Lenders, the Issuer and the Swing Line
Lender 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 Agreement.
III. The Borrower has requested that the Agent, the Issuer, the Swing
Line Lender and the Lenders 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.
IV. Contemporaneously with the execution and delivery of this
Agreement, the Agent, the Lenders, the Issuer, the Swing Line Lender and the
Borrower are entering into that certain Second Waiver Extension Agreement and
Amendment No. 4 to the Credit Agreement dated as of the date hereof (the "SECOND
WAIVER").
V. It is a condition precedent to the effectiveness of the Second
Waiver and the making Loans and the issuance of Letters of Credit under the
Credit Agreement that the Borrower shall have granted to the Agent, on behalf of
the Lenders, the Issuer and the Swing Line Lender, 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 Waiver, and for other good and
<PAGE> 2
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower hereby agrees with the Agent 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.
"NYUCC" or "CODE": the UCC as in effect in the State of New York on the
date hereof.
"OFFICE LOCATION": as defined in Section 4(a) hereof.
"SECURED OBLIGATIONS": as defined in Section 3 hereof.
"SECURED PARTIES": the Lenders, the Agent, the Issuer and the Swing
Line Lender.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the NYUCC: "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 the Agent, for
its benefit and the ratable benefit of the Issuer, the Swing Line Lender and the
Lenders, a perfected Security Interest in and to all of the Borrower's right,
title and interest in and to the following (collectively, the "COLLATERAL"):
(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
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<PAGE> 3
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(4) of the
Uniform Commercial Code of the State of New York (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 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
3
<PAGE> 4
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(4) 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 the Agent or any of the other Secured Parties or any agent
or Affiliate of the Agent or any of the other Secured Parties 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 Credit Agreement; 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;
(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.
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<PAGE> 5
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 the Credit Agreement, the Notes, the Letters of Credit,
and the other Loan Documents, 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 Loans, the Notes and the reimbursement of all amounts drawn
under Letters of Credit (including, without limitation, all interest accruing or
payable at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans 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, any of the Secured Parties'
reasonable attorneys' and consultants' 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 the Lenders, the Issuer and the Swing Line
Lender and the Agent 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 the Agent as follows:
(a) LOCATIONS OF INVENTORY AND EQUIPMENT; CHIEF EXECUTIVE; LOCATIONS OF
ACCOUNT; TRADE NAMES. (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 the Agent with
at least 30 days' prior written notice thereof, and (2) UCC financing statements
(or amendments thereto), in form and substance reasonably satisfactory to the
Agent, shall have been filed within two months after 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 4 hereto.
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<PAGE> 6
(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 FIRST PRIOTITY LIENS. 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 the Agent, for its benefit and the benefit of the other
Secured Parties, which are prior to all other Liens on the Collateral (except
for any Liens 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 the Lenders, the Issuer or the Swing Line Lenders 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 the Agent with at least 10 days' prior written notice, and (B) UCC
financing statements (or amendments thereto), in form and substance satisfactory
to the Agent, shall have been filed within two months after 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
creditors' rights generally, and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). No consent or
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<PAGE> 7
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 3 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) SURVIVIAL REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made in this Section 4 shall survive the
execution and delivery hereof, the making of Loans, the issuance of Letters of
Credit, and the expiration or termination of the Revolving Commitments
regardless of any investigation made by or on behalf of any Secured Party and
shall be deemed to be repeated and confirmed on the date of the making of each
Loan or the issuance of each Letter of Credit and each time any additional
Collateral becomes subject to pledge hereunder.
5. COVENANTS
---------
The Borrower hereby covenants with the Agent as follows:
(a) Generally.
----------
(i) The Borrower shall maintain its place of business, or if it has
more than one place of business, its chief executive office, at the Office
Location.
(ii) It shall, at its own expense, promptly after each request by the
Agent, (A) cause to be provided to the Agent, UCC, federal tax, judgment
and other lien search reports with respect to each applicable public office
where Liens are or may be filed disclosing that there are no Liens of
record in such official's office covering any Collateral or showing the
Borrower as debtor thereunder (other than Liens permitted by 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.
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<PAGE> 8
(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 Borrower's 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 the Secured Parties' rights in the
Collateral or the priority of their Liens on the Collateral.
(c) FINANCING STATEMENTS, ETC. 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 the Agent
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Agent 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 the Agent 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 the
Agent in connection with this Agreement would become seriously misleading and
will not move any of the Collateral to a location which would cause the Agent's
Lien thereon to be adversely affected unless all necessary filings have been
timely made to avoid such result. The Borrower hereby authorizes the Agent 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. 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 the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Agreement.
(e) MAINTENANCE OF RECORDS; IDENTIFICATION OF COLLATERAL. The Borrower
will keep and maintain, at its own cost and expense, 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 the Agent from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Agent may reasonably request, all in
reasonable detail.
(f) ACCESS TO BOOKS AND RECORDS; RIGHT OF INSPECTION. The Secured
Parties 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 the Secured Parties and their representatives may examine
the same, take extracts therefrom and make photocopies thereof, and the Borrower
agrees to render to the Secured Parties at the Borrower's cost and expense, such
8
<PAGE> 9
clerical and other assistance as may be reasonably requested with regard
thereto. The Secured Parties and their 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 the Agent promptly, in reasonable
detail, at the Agent'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 the Agent, 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 the Agent (for its benefit and the benefit of the
other Secured Parties) 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 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 the Agent a statement respecting
any material loss or damage to any of the Equipment or Inventory
constituting the Collateral with an aggregate fair market value
exceeding $500,000 as a result of a single occurrence except to the
extent that such loss or damage shall be insured pursuant to policies
required to be maintained pursuant to the Credit Agreement.
(iii) RECORDS, PHYSICAL COUNT AND OTHER INVENTORY COVENANTS.
With respect to the Inventory: (A) the Borrower shall at all times
maintain records with respect
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<PAGE> 10
to Inventory reasonably satisfactory to the Agent, 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 and in the manner
as the Borrower's auditors deem necessary in the performance of the
Borrower's annual audit, but at any time or times as the Agent may
request on or after an Event of Default occurs and is continuing, and
promptly following each such physical inventory shall supply the Agent
with a report in the form and with such specificity as may be
reasonably satisfactory to the Agent 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 the
Agent, 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 the Agent, at such other locations in a jurisdiction where
all actions required by Section 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 materially 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 the Agent a
copy of each substantive demand, notice or document received by it
relating in any way to any Contract or material Account.
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(iii) COLLECTIONS. Except as otherwise provided in this
subsection (iii), 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 the Agent shall take) such action as the Borrower or the
Agent 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 the Agent,
the Borrower shall notify account debtors on the Accounts and the
parties to the Contracts or (y) upon written notice by the Agent to the
Borrower of its intention so to do, the Agent 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 the Agent 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 the Agent 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 the Agent 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 the Agent (for
its benefit and the benefit of the other Secured Parties) hereunder,
shall be segregated from other funds of the Borrower and shall be
forthwith paid over to the Agent 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 continuing, paid to
the Agent and applied to the Secured Obligations 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
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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. None of the Secured Parties
shall have any 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 such Secured Party of
any payment relating to such Account or Contract pursuant hereto, nor
shall any Secured Party 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, Vehicles 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. 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 the
Agent.
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 and as otherwise permitted by the
Credit Agreement, and will defend the right, title and interest of the Agent and
the other Secured Parties in and to any of the Collateral against the claims and
demands of all Persons whomsoever.
(c) OTHER AGREEMENTS. The Grantor 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. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. The Borrower hereby
irrevocably appoints the Agent and any officer or agent thereof with full power
of substitution, the Borrower's
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attorney-in-fact (which appointment shall be irrevocable until the payment in
full in cash and the performance of all of the Secured Obligations, the
expiration or cancellation of all of the Letters of Credit, the repayment of all
Loans, and the expiration or termination of the Revolving Commitments and deemed
coupled with an interest), 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 the
Agent's discretion, upon and during the occurrence and continuation of an Event
of Default, to take any action and to execute any instrument which the Agent 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 the
Agent pursuant to Section 5(l);
(ii) to ask, demand, collect, sue 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 the
Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Agent 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 the Agent or as the
Agent 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 the Agent may deem appropriate;
(vii) to set off or cause to be set off amounts in any account
maintained with any Secured Party or otherwise enforce rights against
any of the Collateral in the possession of any Secured Party;
(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,
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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 the Agent were the absolute owner
thereof for all purposes, and to do, at the Agent's option and the
Borrower's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve or realize
upon the Collateral and the Agent'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; AGENT MAY PERFORM.
(a) The Borrower also authorizes the Agent 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,
the Agent may itself perform, or cause performance of, such agreement, and the
expenses of the Agent 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 the Agent, as provided for by the terms
of this Agreement, the Credit Agreement or any other Loan Document, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the reasonable expenses of the Agent 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 Grantor to the Agent on demand and shall constitute
Secured Obligations secured hereby.
(c) PROCEEDS. Upon demand by the Agent, all Proceeds received by the
Borrower consisting of cash, checks and other near-cash items shall be held by
the Grantor in trust for the Agent and the other Secured Parties and segregated
from other funds of the Borrower, and shall, forthwith upon receipt by the
Borrower, be turned over to the Agent in the exact form received by the Borrower
(duly indorsed by the Borrower to the Agent, if required). All cash or other
Proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, in the discretion
of the Agent, be held by the Agent as Collateral for, and then or at any time
thereafter applied (after payment of any amounts payable to the Agent 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 the Agent and
remaining after payment in full in cash and the performance of all of the
Secured Obligations, the expiration or cancellation of all of the Letters of
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<PAGE> 15
Credit and the expiration or termination of the Revolving Commitments 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 all of the Letters of Credit and the expiration or termination
of the Revolving Commitments, 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 the Agent to enforce the Agent's security interest in the Inventory
and all of the Agent's rights hereunder, such as leasing warehouses to the Agent
or its designee, placing and maintaining signs, appointing custodians,
transferring Inventory to warehouses, and delivering to the Agent, warehouse
receipts, documents of title and such other documentation as the Agent 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 the Agent thereof and will notify such agents,
contractors or processors or third party of the Agent's security interest
therein and, upon request, instruct them to hold all such Inventory for the
Agent's and the Borrower's account, as their interests may appear, and subject
to the Agent's instructions; (iii) the Agent shall have the right to hold all
Inventory subject to the security interest granted hereunder; and (iv) the Agent
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 the Agent desires in its sole
discretion. If the Agent exercises its right to take possession of the
Inventory, the Borrower, upon the Agent's demand, will assemble the Inventory
and make it available to the Agent 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. LIMITATION OF DUTY ON THE PART OF AGENT OR OTHER SECURED PARTIES;
RELEASE
(a) DUTIES. The powers conferred on the Agent hereunder are solely to
protect its interest and the interests of the other Secured Parties in the
Collateral and shall not impose any duty upon it or them to exercise any such
powers. Except for the safe custody of any Collateral in the possession of any
of them and the accounting for moneys actually received by any of them
hereunder, neither the Agent nor any of the other Secured Parties shall have any
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral,
whether or not the Agent has or is deemed to have knowledge of such matters.
Neither the Agent, nor any of the other Secured Parties, nor any of their
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respective directors, officers, employees, attorneys, agents, advisors,
attorneys-in-fact, experts and Affiliates shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or otherwise.
(b) RELEASE. The Borrower releases the Agent and the other
Secured Parties and each of their respective directors, officers, employees,
attorneys, agents, advisors, attorneys-in-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 the Agent or any of the other Secured Parties
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 the Secured
Parties 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).
(c) 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 Letters of Credit, the expiration or termination of the Revolving
Commitments, the repayment of all Loans and the termination of the security
interests granted hereby.
11. REMEDIES.
If any Event of Default shall have occurred and be continuing, then:
(a) GENERAL. The Agent, on behalf of the Secured Parties 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, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or
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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 office of
any of the Secured Parties or elsewhere upon such terms and conditions as it may
deem 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 the Agent until the selling price is paid
by the purchaser thereof, but none of the Secured Parties shall 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 any of the Secured Parties be credited
with any part of the proceeds of sale of any Collateral until cash payment
thereof has actually been received by the Agent. The Agent 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. Any of the Secured Parties 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
each Secured Party 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 (or, in the case of the Agent, any or all of the Secured
Obligations owed to the Secured Parties) 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 the Agent's request, to
assemble the Collateral and make it available to the Agent at places which the
Agent shall reasonably select, whether at the Borrower's premises or elsewhere.
The Agent 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 of the Secured Parties 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 the Agent 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 the Agent 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 any of the Secured
Parties arising out of the exercise by any of them 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;
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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 any of the Secured Parties to collect such deficiency.
(b) SUITS. The Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the security interests 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 the Agent, all Proceeds received
by the Borrower consisting of cash, checks and other near-cash items shall be
held by the Borrower in trust for the Agent and the other Secured Parties and
segregated from other funds of the Borrower, and shall, forthwith upon receipt
by the Borrower, be turned over to the Agent in the exact form received by the
Borrower (duly indorsed by the Borrower to the Agent, if required). All cash or
other Proceeds received by the Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Agent, be held by the Agent as Collateral for, and then or at
any time thereafter applied (after payment of any amounts payable to the Agent
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 the
Agent 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 the Agent to enforce the
Agent's security interest in the Inventory and all of the Agent's rights
hereunder, such as leasing warehouses to the Agent or its designee, placing and
maintaining signs, appointing custodians, transferring Inventory to warehouses,
and delivering to the Agent, warehouse receipts, documents of title and such
other documentation as the Agent 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 the Agent thereof
and will notify such agents, contractors or processors or third party of the
Agent's security interest therein and, upon request, instruct them to hold all
such Inventory for the Agent's and the Borrower's account, as their interests
may appear, and subject to the Agent's instructions; (iii) the Agent shall have
the right to hold all Inventory subject to the security interest granted
hereunder; and (iv) the Agent 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 the Agent desires in its sole discretion. If the Agent exercises its right
to take possession of the
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Inventory, the Borrower, upon the Agent's demand, will assemble the Inventory
and make it available to the Agent 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:
(a) The Borrower agrees on demand, to pay, and to save,
indemnify and keep the Secured Parties and their 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 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
any of the Secured Parties or their 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 the Agent 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.
(b) 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
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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 jurisdiction.
(c) 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.
(d) 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 each Secured
Party 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 CREDIT AGREEMENT This Agreement is the Security
Agreement under, and as such term is defined in, the Credit Agreement, and is
subject to, and should be construed in accordance with, the provisions thereof.
15. SECURITY INTEREST ABSOLUTE. All rights of the Agent 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. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security 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 all Letters of Credit
and the termination of the Revolving Commitments, (ii) be binding upon the
Borrower, its successors and assigns and (iii) inure, together with the rights
and remedies of the Agent hereunder, to the benefit of the Agent and each of the
other Secured Parties and their 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 Revolving Commitments, 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,
20
<PAGE> 21
the Agent will, at the Borrower's expense, execute and deliver to the Borrower
such documents as the Borrower shall reasonably request to evidence such
termination.
17. 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 the Agent and the
other Secured Parties in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
18. NO WAIVER; CUMULATIVE REMEDIES. None of the Secured Parties shall
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 any Secured
Party, 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 any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party 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.
19. 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
the Agent; PROVIDED, that any provision of this Agreement may be waived by the
Agent in accordance with the Credit Agreement in a written letter or agreement
executed by the Agent or by facsimile transmission from the Agent. 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, the Agent and the other Secured
Parties and their respective successors, transferees and assigns; PROVIDED, that
the Borrower may not assign its rights and obligations hereunder without the
prior written consent of the Agent and each Lender, the Issuer and the Swing
Line Lender.
20. 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.
21. GOVERNING LAW THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND
21
<PAGE> 22
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. 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 NEW YORK AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OF ANY
FEDERAL COURT, IN EACH CASE LOCATED IN NEW YORK 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 NEW YORK 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.
20. 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.
22
<PAGE> 23
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/ Gerald J. Gabriel
--------------------------
Name: Gerald J. Gabriel
Title: Senior Vice President
THE BANK OF NEW YORK,
AS AGENT FOR THE SECURED PARTIES
By: /s/ Robert Joyce
-------------------------
Name: Robert Joyce
Title: Vice President
23
<PAGE> 1
EXHIBIT 10.3.4.c
SECOND FURTHER CONSENT AND AGREEMENT
------------------------------------
SECOND FURTHER CONSENT AND AGREEMENT (this "Consent"), dated
as of March 26, 1999, given under the Business Purpose Revolving Promissory Note
("Swing Line"), dated August 4, 1998 (the "Note"), by Telxon Corporation (the
"Borrower") in favor of Bank One, NA ("Bank One").
RECITALS
--------
1. Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Note.
2. Pursuant to Amendment No. 1 to the Credit Agreement which Amendment was
dated as of August 6, 1996 by and between the Borrower, the lenders thereto and
The Bank of New York, as Issuer, Swing Line Lender and Agent (the "Agent") and
the Intercreditor Agreement dated as of August 6, 1996, by and between Bank One
and the Agent, as acknowledged by the Borrower (the "Intercreditor Agreement"),
Bank One extended to Borrower a certain Twenty Million Dollar ($20,000,000.00)
revolving line of credit (the "Swing Line") which is evidenced by the 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.
3. The outstanding balance on the Note as of December 29, 1998 was $3,990,000.
4. The Borrower and Bank One are parties to a Consent, dated as of December
29, 1998 (the "Original Consent") pursuant to which Bank One has consented to
the Waiver and Agreement, dated as of even date with the Original Consent (the
"Amendment"), under the Credit Agreement, dated as of March 8, 1996, by and
among the Borrower, the lenders party thereto, and the Agent (as supplemented or
otherwise modified from time to time, the "Credit Agreement").
5. The Borrower and Bank One are also parties to that certain Further Consent
dated as of February 12, 1999 (the "Further Consent") pursuant to which the Bank
has consented to the Waiver Extension and Agreement dated as of even date with
the Further Consent (the "Further Amendment"), under the Credit Agreement.
6. The Borrower has requested that the parties to the Credit Agreement grant a
further waiver to the Borrower under the Credit Agreement, including an
extension of the waiver granted under the Amendment and Further Amendment, such
further waiver being substantially in the form of the Second Waiver Extension
Agreement and Amendment No. 4 attached as Exhibit A hereto (the "Second Waiver
and Extension"), and accordingly, has requested that Bank One consent to the
Second Waiver and Extension.
Page 1 of 5
<PAGE> 2
7. Certain defaults have occurred or may occur under the Credit Agreement and
the Note, which defaults are being waived in the manner, and for the period,
provided in the Second Waiver and Extension and hereunder.
Accordingly, in consideration of the Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Borrower and Bank One do hereby agree as follows:
1. BANK ONE'S CONSENT. Bank One does hereby consent to the execution
and delivery by the Borrower of the Second Waiver and Extension, provided
that this Consent shall not become effective unless and until the Borrower
shall have provided Bank One with written certification that the Borrower's
Eligible Accounts Receivable and Eligible Inventory (as such terms are
defined in the Credit Agreement) as of February 28, 1999, are sufficient
under the formula set forth in Section 2(i) of the Amendment, as modified
by the Further Amendment and the Second Waiver and Extension, to support
the Borrower's currently outstanding borrowings under the Credit Agreement.
Subject to Bank One's receipt of the foregoing certification, this Consent
will be effective for the Extended Waiver Period (as defined in and
determined in accordance with the Second Waiver and Extension). Bank One
further agrees that the effectiveness of the Original Consent and the
Further Consent shall not expire as of the time provided therein but shall
be extended and remain in effect for and until the end of the Extended
Waiver Period.
2. As consideration for Bank One's consent to waiver of defaults under
the Note, Borrower agrees as follows:
(a) Upon the occurrence of the Effective Date of the Second
Waiver and Extension, Borrower agrees to pay a consent fee to Bank One
equal to 50 basis points of the outstanding principal balances of the
Note and the Bank One Letter of Credit, which fee shall be payable (x)
on the Effective Date of the Second Waiver and Extension in an amount
equal to 35 basis points of the outstanding principal balances of the
Note and the Bank One Letter of Credit, as of the Effective Date and
(y) on June 1, 1999 in an amount equal to 15 basis points of the
outstanding principal balances of the Note and the Bank One Letter of
Credit, as of June 1, 1999, if Borrower has not delivered to the Agent
or Bank One, on or before such date, a binding written commitment
letter for the refinancing of the Swing Line, on terms reasonably
acceptable to Bank One, PROVIDED, that should such commitment letter
be terminated, the balance of the consent fee shall be payable at the
time of such termination.
(b) From and after December 29, 1998, any indebtedness
outstanding under the Note shall bear interest on the unpaid balance
thereof at a rate per annum equal to 200 basis points plus Bank One's
Prime Rate (which may vary from time to
Page 2 of 5
<PAGE> 3
time). Interest shall be calculated on the basis of a 360-day year for
actual days elapsed. Any change in the interest rate due to a change
in Bank One's Prime rate shall take effect without notice to the
Borrower on the date the change in Bank One's Prime Rate occurs. Bank
One's Prime Rate is the rate announced by Bank One as its Prime Rate
and is not necessarily the lowest rate charged by Bank One.
(c) The Borrower shall within thirty (30) days execute an Amended
and Restated Security Agreement, Patent and Trademark Security
Agreement and Deed of Trust in favor of Bank One in forms acceptable
to Bank One as well as UCC Financing Statements which may be required
to be filed in any public office in order to perfect Bank One's
interest in the Collateral to secure repayment of the Borrower's
obligations under the Swing Line, including the Note and Bank One
Letter of Credit; in each case, however, subject to the Intercreditor
Agreement
3. AFFIRMATION; ACKNOWLEDGEMENTS. The Borrower hereby (i) reaffirms and
admits the validity and (subject to the terms of the Credit Agreement as
referenced in and made a part of the terms of the Note, as such Credit Agreement
terms are waived or modified by the Amendment, the Further Amendment and the
Second Waiver and Extension) enforceability of the Note and Bank One Letter of
Credit and all of its obligations thereunder as of the date hereof, (ii)
acknowledges that Bank One is in compliance with all of its obligations under
the Note and the Bank One Letter of Credit as of the date hereof and (iii)
acknowledges that no further draws can be made by the Borrower under the Note
without the consent of Bank One. The Borrower shall enter into an Amended and
Restated Security Agreement, Patent and Trademark Security Agreement and Deed of
Trust with Bank One (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 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.
Page 3 of 5
<PAGE> 4
4. CONSENT LIMITED. In all other respects, the Note and Bank One Letter of
Credit shall remain in full force and effect.
5. COUNTERPARTS. This Consent may be executed in any number of counterparts
all of which, taken together shall constitute one Consent. In making proof of
this Consent, it shall only be necessary to produce the counterpart executed and
delivered by the party to be charged.
6. RELEASE. The Borrower releases Bank One, BANK ONE CORPORATION and each
of their respective directors, officers, employees, attorneys, agents, advisors,
attorneys-in-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 Note or Bank One Letter of Credit, and/or any
actions taken or omitted to be taken by Bank One with respect thereto on or
prior to the Effective Date (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 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). The agreements of
the Borrower contained in this Section shall survive the payment in full in
cash, the expiration or cancellation of the Bank One Letter of Credit, the
expiration or termination of the Swing Line and the repayment of the Note.
7. GOVERNING LAW. THIS CONSENT IS BEING EXECUTED AND DELIVERED IN, AND IS
INTENDED TO BE PERFORMED IN, THE STATE OF OHIO AND SHALL BE CONSTRUED AND
ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS
Page 4 of 5
<PAGE> 5
OF THE STATE OF OHIO, WITHOUT REGARD TO PRINCIPLES FOR CONFLICTS OF LAWS.
IN WITNESS WHEREOF, each of the undersigned have caused this Consent to be
executed on its behalf as of the date first above written.
BANK ONE, NA
By: /s/ JOSEPH E. MANLEY
-----------------------------
Name: JOSEPH E. MANLEY
---------------------------
Title: VICE PRESIDENT
--------------------------
TELXON CORPORATION
By: /s/ GERALD J. GABRIEL
-----------------------------
Name: GERALD J. GABRIEL
---------------------------
Title: SENIOR VICE PRESIDENT
--------------------------
Page 5 of 5
<PAGE> 1
EXHIBIT 99
----------
[TELXON LOGO]
NEWS RELEASE
TELXON ANNOUNCES EXTENSION OF
BANK WAIVERS AND REDUCTION IN FORCE
AKRON, Ohio, April 1, 1999 - Telxon Corporation (Nasdaq-NNM: TLXN)
announced today that it has obtained an extension of waivers under its revolving
credit facility and separate business purpose revolving promissory note. The
waivers, effective through June 29, 1999, are for certain covenant violations
arising from the restatement of the company's financial statements, as described
in its news release dated February 23, 1999, and current operating results.
In addition to the waiver extensions, the company has agreed to certain
amendments to the underlying credit agreements. These amendments, which will be
disclosed in detail in a company filing with the SEC, include a broadening of
the lenders' collateral and, subject to borrowing base requirements and the
further approval of the banks, an ability to borrow $5 million in addition to
the $55 million currently outstanding under the revolving credit agreement. The
company is also subject to mandatory prepayments and commitment reductions
relating to dispositions of assets approved by the banks.
The company anticipates that the waiver extensions and amendments will
provide it with the time necessary to seek permanent replacement financing and,
together with the cash flow it expects to generate from operations, will provide
adequate funding in the interim.
In a separate action, the company announced today that it has reduced
its workforce by approximately 4%. The majority of the headcount reductions were
to white-collar, managerial-level and salaried positions. This action represents
the fine tuning that the company indicated it would have to do as part of its
strategic objectives to reduce costs, be competitive in the market and return
the company to profitability.
Telxon Corporation/3330 West Market Street/P.O. Box 5582/Akron, Ohio 44334-0582
800.800.8001/Fax 330.664.2058/www.telxon.com
<PAGE> 2
Telxon Corporation is a leading global designer and manufacturer of
wireless and mobile information systems for vertical markets. The company
integrates advanced mobile computing and wireless data communication technology
with a wide array of peripherals, application-specific software and global
customer services for its customers in more than 60 countries. Telxon's website
address is: http://www.telxon.com.
Other than the historical information discussed above, this news release
constitutes forward-looking statements that are inherently subject to risks and
uncertainties which could cause Telxon's actual results or other future events
pertaining to the company to differ materially from the forward-looking
statements. The important factors affecting the realization of those results or
the occurrence of those events include, without limitation, the company's
ability timely to obtain an adequate replacement credit facility on acceptable
terms, the continued adequacy of the company's internal and external sources of
working capital in the interim, and the company's ability to identify and
implement appropriate cost reduction, efficiency and other operating improvement
strategies, as well as general and industry-specific economic conditions,
customer acceptance of and demand for the company's products, and competitive
pressures. Reference should be made to the discussion of certain of the above
and other factors affecting Telxon's business and results as included from time
to time in the company's filings with the Securities and Exchange Commission.
# # #
For corporate information:
Alex L. Csiszar
Vice President, Investor Relations
Telxon Corporation
(330) 664-2961
