Exhibit 10.28
▇▇▇▇▇▇ Financial
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (hereinafter referred to as "Agreement" or
"Security Agreement"), is made this 23 day of October, 1995, by and
between Iomega Corporation, a Delaware corporation ("Debtor"), whose
business address is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇ Financial, Inc., a Delaware corporation ("Secured Party"),
whose address is Commercial Equipment Finance Division, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇..
WITNESSETH:
1. Secure Payment. To secure payment of indebtedness in the
principal sum of up to Two Million Five Hundred Thousand and 00/100
Dollars ($2,500,000.00) as evidenced by a note or notes
(individually, a "Note," and together, the "Notes"), which Debtor has
executed and delivered or will execute and deliver to Secured Party
and also to secure any other indebtedness or liability of Debtor to
Secured Party, direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising and no matter how
acquired by Secured Party, including all future advances or loans
which may be made at the option of Secured Party (all the foregoing
hereinafter called the "Indebtedness"), Debtor hereby grants and
conveys to Secured Party a first superior continuing lien and
security interest in the property described below and/or on the
Schedule(s) attached hereto (the "Schedules"), all products and
proceeds (including insurance proceeds) thereof, if any, and all
increases, substitutions, replacements, attachments, additions, and
accessions thereto, all or any of the foregoing hereinafter called
the "Collateral".
(Description of Collateral on Attached Schedules. The Schedules
may be supplemented from time to time to evidence the Collateral,
subject to this Agreement.)
2. Warranties, Representations and Covenants. Debtor warrants,
represents, covenants and agrees as follows:
(a) Perform Obligations. Debtor shall pay as and when due
all of the Indebtedness secured by this Agreement and perform all
of the obligations contained in this Agreement according to its
terms. Debtor shall use the loan proceeds primarily for business
uses and not for personal, family, household, or agricultural uses.
(b) Defend the Collateral. Debtor shall defend the title to
the Collateral against all persons and against all claims and
demands whatsoever, which Collateral, except for the security
interest granted hereby, is lawfully owned by Debtor and is now
free and clear of any and all liens, security interests, claims
charges, encumbrances, taxes, and assessments of any kind, except
as may be set forth on the Schedules. At the request of Secured
Party, Debtor shall furnish further assurance of title, execute any
written agreement or do any other acts necessary to effectuate the
purposes and provisions of this Agreement, execute any instrument
or statement required by law or otherwise in order to perfect,
continue, or terminate the security interest of Secured Party in
the Collateral and pay all costs of filing in connection therewith.
(c) Keep Possession of the Collateral. Debtor shall retain
possession of the Collateral until the Indebtedness is fully paid
and performed (subject to Secured Party's rights and remedies upon
the occurrence of an Event of Default (defined below)) and shall
not sell, exchange, assign, loan, deliver, lease, mortgage, or
otherwise dispose of the Collateral or any part thereof without the
prior written consent of Secured Party. Debtor shall keep the
Collateral at the location(s) specified on the Schedules and shall
not remove same (except in the usual course of business for
temporary periods) without the prior written consent of Secured
Party.
(d) Collateral Free and Clear. Debtor shall keep the
Collateral free and clear of all liens, charges, encumbrances,
assessments, and other security interests of any kind (other than
the security interest granted hereby) and shall pay, when due, all
taxes, assessments, and license fees relating to the Collateral.
(e) Collateral in Good Operating Order. All of the
Collateral is in good operating order, condition and repair and is
used or useful in the business of Debtor. Debtor shall keep the
Collateral, at Debtor's sole cost and expense, in good repair and
condition and not misuse, abuse, waste, or allow it to deteriorate
except for normal wear and tear. Debtor shall make the Collateral
available for inspection by Secured Party at all reasonable times,
and Debtor will use and maintain the Collateral in a lawful manner
in accordance with all applicable laws, regulations, ordinances,
and codes.
(f) Insurance. Debtor shall insure the Collateral against
loss by fire (including extended coverage), theft and other
hazards, for its full insurable value including replacement costs,
with a deductible not to exceed $50,000.00 per occurrence and
without co-insurance. The insurance policy shall name Secured
Party as loss payee and shall contain such other terms as Secured
Party may require. In addition, Debtor shall obtain liability
insurance, including automobile if the Collateral includes motor
vehicles, respecting the Collateral covering liability for bodily
injury, including death and property damage, in an amount of at
least $5,000,000 per occurrence or such greater amount as may
comply with general industry standards, or in such other amounts as
Secured Party may otherwise require. Policies shall be in such
form, amounts, and with such companies as Secured Party may
approve; shall provide for at least thirty (30) days prior written
notice to Secured Party prior to any modification or cancellation
thereof; shall be payable to Debtor and Secured Party as their
interests may appear; shall waive any claim for premium against
Secured Party; and shall provide that no breach of warranty or
representation or act or omission of Debtor shall terminate, limit
or affect the insurers' liability to Secured Party. Certificates
of insurance or policies evidencing the insurance required hereby
along with satisfactory proof of the payment of the premiums
therefor shall be delivered to Secured Party who is authorized, but
under no duty, to obtain such insurance upon failure of Debtor to
do so. Debtor shall give immediate written notice to Secured Party
and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with insurers. Debtor hereby
irrevocably appoints Secured Party as Debtor's attorney-in-fact,
coupled with an interest, for the purpose of obtaining, adjusting
and canceling any such insurance and endorsing settlement drafts.
Debtor hereby assigns to Secured Party, as additional security for
the Indebtedness, all sums which may become payable under such
insurance, including return premiums and dividends.
(g) Complete Information. No representation or warranty made
by Debtor in this Agreement and no other document or statement
furnished to Secured Party by or on behalf of Debtor contains any
material misstatement of a material fact or omits to state any
material fact necessary in order to make the statements contained
herein or therein not misleading. Except as expressly set forth in
the Schedules, there is no fact known to Debtor that will or could
have a materially adverse affect on the business, operation,
condition (financial or otherwise), performance, properties or
prospects of Debtor or Debtor's ability to timely pay all of the
Indebtedness and perform all of its other obligations contained in
or secured by this Agreement.
(h) If Collateral Attaches to Real Estate. If the Collateral
or any part thereof has been attached to or is to be attached to
real estate, an accurate description of the real estate and the
name and address of the record owner is set forth on the Schedules.
If said Collateral is attached to real estate prior to the
perfection of the security interest granted hereby, debtor will, on
demand of Secured Party, furnish Secured Party with a disclaimer or
waiver of any interest in the Collateral satisfactory to Secured
Party and signed by all persons having an interest in the real
estate. Notwithstanding the foregoing, the Collateral shall remain
personal property and shall not be affixed to realty without the
prior written consent of Secured Party.
(I) Financial Statements. If Debtor is required to make such
reports to the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, then
Debtor shall, within sixty (60) days after the end of each fiscal
quarter of Debtor (except the last fiscal quarter of each fiscal
year), furnish to Secured Party a complete and accurate copy of
Debtor's Form 10-Q files with the Securities and Exchange
Commission for the quarterly period then ended. If Debtor is not
required to file a Form 10-Q with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, then Debtor shall, within sixty (60) days
after the end of each fiscal quarter of Debtor (except the last
fiscal quarter of each fiscal year), furnish to Secured Party
unaudited financial statements of Debtor, including, in each
instance, balance sheets and income statements, on a consolidated
basis, for the quarterly period then ended and for Debtor's fiscal
year to date, prepared in accordance with generally accepted
accounting principles, consistently applied ("GAAP"), certified as
to truth and accuracy by an appropriate officer of Debtor. If
Debtor is required to make such reports to the Securities and
Exchange Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, then Debtor shall, within ninety
(90) days after the end of each fiscal year of Debtor, furnish to
Secured Party a complete and accurate copy of Debtor's Form 10-K
files with the Securities and Exchange Commission for the fiscal
year then ended. If Debtor is not required to file a Form 10-K
with the Securities and Exchange Commission pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, then Debtor shall,
within ninety (90) days after the end of each fiscal year of
Debtor, furnish to Secured Party its annual audited financial
statements, including balance sheets, income statements and cash
flow statements for the fiscal year then ended, on a consolidated
and consolidating basis, as appropriate, which have been prepared
by its independent accounts in accordance with GAAP. Such audited
financial statements shall be accompanied by the independent
accountant's opinion, which opinion shall be in form generally
recognized as "unqualified".
(j) Perfection. This Agreement creates a valid and first
priority security interest in the Collateral, securing the payment
and performance of the Indebtedness and all actions necessary to
perfect and protect such security interest have been duly taken.
(k) Authorization. Debtor is now, and will at all times
remain, duly licensed, qualified to do business and in good
standing in every jurisdiction where failure to be so licensed or
qualified and in good standing would have a material adverse effect
on its business, properties or assets. Debtor has the power to
authorize, execute and deliver this Security Agreement, the Notes
and the other documents relating thereto (the Security Agreement,
Notes and other documents, all as amended from time to time, are
hereafter collectively referred to as the "Loan Documents"), to
incur and perform obligations hereunder and thereunder, and to
grant the security interests created hereby. The Loan Documents
have been duly authorized, executed, and delivered by or on behalf
of Debtor, and constitute the legal, valid, and binding obligations
of Debtor and are enforceable against Debtor in accordance with
their respective terms. Debtor will preserve and maintain its
existence and will not wind up its affairs or otherwise dissolve.
Debtor will not, without thirty (30) days prior written notice to
Secured Party, (1) change its name or so change its structure such
that any financing statement or other record notice becomes
misleading or (2) change its principal place of business or chief
executive or accounting offices from the address stated herein.
(l) Litigation. There are no actions, suits, proceedings, or
investigations ("Litigation") pending or, to the knowledge of
Debtor, threatened against Debtor. Debtor is not in violation of
any material term or provision of its by-laws, or of any material
agreement or instrument, or of any judgment, decree, order, or any
statute, rule, or governmental regulation applicable to it. The
execution, delivery, and performance of the Loan Documents do not
and will not violate, constitute a default under, or otherwise
conflict with any such term or provision or result in the creation
of any security interest, lien, charge, or encumbrance upon any of
the properties or assets of Debtor, except for the security
interest herein created. Debtor will promptly notify Secured Party
in writing of Litigation against it if: (1) the outcome of such
Litigation may materially or adversely affect the finances or
operations of Debtor (for purposes of this provision, One Hundred
Thousand and 00/100 Dollars ($100,000) shall be deemed material) or
(2) such Litigation questions the validity of any Loan Document or
any action taken or to be taken pursuant thereto. Debtor shall
furnish to Secured Party such information regarding any such
Litigation as Secured Party shall reasonably request.
(m) Compliance with Laws. Debtor shall comply in all
material respects with all applicable laws, rules, and regulations
and duly observe all valid requirements of all governmental
authorities, and all statutes, rules and regulations relating to
its business, including, without limitation, those concerning
public and employee health, safety, and social security and
withholding taxes and those concerning employee benefit plans and
as such may be required by the Internal Revenue Code, as amended
from time to time ("the Code") and the Employees Retirement Income
Security Act of 1974 as amended from time to time ("ERISA"). With
respect to any "multiple employer plan" or "single employer plan" as
defined in ERISA (collectively, "Plans"), Debtor will not: (I) incur
any liability to the Pension Benefit Guaranty Corporation ("PBGC");
(ii) participate in any prohibited transaction involving any of
such Plans or any trust created thereunder which would subject
Debtor to a tax or penalty on prohibited transactions imposed under
the Code or ERISA; (iii) fail to make any contribution which it is
obligated to pay under the terms of such Plan; (iv) allow or suffer
to exist any occurrence of a "reportable event", or any other event
or condition which presents a risk of termination by the PBGC of
any such Plan; or (v) incur any withdrawal liability with respect
to any Plan which is not fully bonded.
(n) Taxes. Debtor has timely filed all tax returns (federal,
state, local, and foreign) required to be filed by it and has paid
or established reserves for all taxes, assessments, fees, and other
governmental charges upon its properties, assets, income and
franchises. Debtor does not know of any actual or proposed
additional tax assessments for any fiscal period against it which
would have a material adverse effect on it. Debtor will promptly
pay and discharge all taxes, assessments, and other governmental
charges prior to the date on which penalties are attached thereto,
establish adequate reserves for the payments of such taxes,
assessments, and other governmental charges (including cash
reserves, if any, required by GAAP for any taxes, assessments, or
other charges being contested), make all required withholding and
other tax deposits, and, upon request, provide Secured Party with
receipts or other proof that any or all of such taxes, assessments,
or governmental charges have been paid in a timely fashion;
provided, however, that nothing contained herein shall require the
payment of any tax, assessment, or other governmental charge so
long as its validity is being contested in good faith and by
appropriate proceedings diligently conducted. Should any stamp,
excise, or other tax, including mortgage, conveyance, deed,
intangible, or recording taxes become payable in respect of this
Security Agreement, the Notes, or any other Loan Documents, Debtor
shall pay the same (including interest and penalties, if any) and
shall hold Secured Party harmless with respect thereto.
(o) Labor Laws. Debtor is in compliance with the Fair Labor
Standards Act. Debtor is not engaged in any unfair labor practice
which would have a material adverse effect on it. There are: (1)
no unfair labor practice complaints pending or, to the best
knowledge of Debtor, threatened against Debtor before the National
Labor Relations Board and no grievance or arbitration proceedings
arising out of or under collective bargaining agreements are
pending or, to the best knowledge of Debtor, threatened; (2) no
strikes, work stoppages, or controversies pending or threatened
between Debtor and any of its employees; and (3) no union
representation questions that exist with respect to Debtor's
business and no union organizing activities that are taking place.
(p) Environmental Laws. Debtor has complied and will comply
in all material respects with all Environmental Laws (defined
below) applicable to the transfer, construction on, and operations
of its property and business. Debtor has (1) not received any
summons, complaint, order, or similar notice that it is not in
compliance with, or that any public authority is investigating its
compliance with, any Environmental Laws on or about its assets or
property. Debtor will comply, in all material respects with all
Environmental Laws and provide Secured Party, promptly following
receipt, copies of any correspondence, notice, complaint, order, or
other document that it receives asserting or alleging a
circumstance or condition which requires or may require a cleanup,
removal, remedial action or other response by or on the part of
Debtor under Environmental Laws, or which seeks damages or civil,
criminal or punitive penalties from Debtor for an alleged violation
of any Environmental Laws. Debtor will advise Secured Party in
writing as soon as Debtor becomes aware of any condition or
circumstance that makes the environmental representations or
warranties contained in this Agreement inaccurate in any material
respect. For purposes of this Security Agreement, "Environmental
Laws" means all federal, state, and local laws, rules, resolutions,
orders, and decrees relating to health, safety, hazardous
substances, and environmental matters, including without
limitation, the Resource Recovery and Reclamation Act of 1976, the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, the Toxic Substances Control Act, the Clean Water Act
of 1977, and the Clean Air Act, all as amended from time to time.
(q) No Liability. Debtor acknowledges and agrees that
Secured Party shall not be liable for any acts or omissions nor for
any error of judgment or mistake of fact or law other than as a
result of Secured Party's gross negligence or willful misconduct.
(r) Setoff. Without limiting any other right of Secured
Party, whenever Secured Party has the right to declare any
Indebtedness to be immediately due and payable (whether or not it
has so declared), Secured Party is hereby authorized at any time
and from time to time to the fullest extent permitted by law, to
set off and apply against any and all of the Indebtedness, any and
all monies then or thereafter owed to Debtor by Secured Party in
any capacity, whether or not the obligation to pay such monies owed
by Secured Party is then due. Secured Party shall be deemed to
have exercised such right of setoff immediately at the time of such
election even though any charge therefor is made or entered on
Secured Party's records subsequent thereto.
(s) Regulations. No proceeds of the loans or any other
financial accommodation hereunder will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security, as that term is defined in Regulations G, T, U, X of the
Board of Governors of the Federal Reserve System.
(t) Books and Records. Debtor shall maintain, at all times,
true and complete books, records and accounts in which true and
correct entries are made of its transactions in accordance with
GAAP and consistent with those applied in the preparation of
Debtor's financial statements. At all reasonable times, upon
reasonable notice, and during normal business hours, Debtor will
permit Secured Party or its agents to audit, examine and make
extracts from or copies of any of its books, ledgers, reports,
correspondence, and other records. Secured Party may verify any
Collateral in any reasonable manner which Secured Party may
consider appropriate, and Debtor shall furnish all reasonable
assistance and information and perform any acts which Secured Party
may reasonably request in connection therewith.
(u) Written Notice. Debtor agrees to give Secured Party
written notice of any action or inaction by Secured Party or any
agent or attorney of Secured Party that may give rise to a claim
against Secured Party or any agent or attorney of Secured Party or
that may be a defense to payment of the obligations for any reason,
including, but not limited to, commission of a tort or violation of
any contractual duty or duty implied by law. Debtor agrees that
unless such notice is fully given as promptly as possible (and in
any event within thirty (30) days) after Debtor has knowledge, or
with the exercise of reasonable diligence should have had
knowledge, of any such action or inaction, Debtor shall not assert,
and Debtor shall be deemed to have waived, any claim or defense
arising therefrom.
(v) Indemnity. Debtor shall indemnify, defend and hold
Secured Party, its parent, officers, directors, agents, employees,
and attorneys harmless from and against any loss, expense
(including reasonable attorneys' fees and costs), damage or
liability arising directly or indirectly out of (I) any breach of
any representation, warranty or covenant contained herein and in
the other Loan Documents, (ii) any claim or cause of action that
would deny Secured Party the full benefit or protection of any
provision herein and in the Loan Documents, and (iii) the
ownership, possession, lease, operation, use, condition, sale,
return, or other disposition of the Collateral. If after the
receipt of any payment of all or any part of the Indebtedness,
Secured Party is for any reason compelled to surrender such payment
to any person or entity, because such payment is determined to be
void or voidable as a preference, impermissible set-off, or a
diversion of trust funds, or for any other reason, this Security
Agreement and the Loan Documents shall continue in full force and
effect and Debtor shall be liable to Secured Party for the amount
of such payment surrendered. The provisions of the preceding
sentence shall be and remain effective notwithstanding any contrary
action which may have been taken by Secured Party in reliance upon
such payment, and any such contrary action so taken shall be
without prejudice to Secured Party's rights under this Security
Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable. Additionally, Debtor
will pay or reimburse Secured Party for any and all reasonable
costs and expenses incurred in connection herewith, including, but
not limited to, attorneys' fees, filing fees, search fees, and lien
recordation. The provisions of this paragraph shall survive the
termination of this Security Agreement and the Loan Documents.
(w) Collateral Documentation. Debtor shall deliver to
Secured Party prior to any advance or loan, satisfactory
documentation regarding the Collateral to be financed, including,
but not limited to, such invoices, canceled checks evidencing
payments, or other documentation as may be reasonably requested by
Secured Party. Additionally, Debtor must satisfy Secured Party
that Debtor's business and financial information is as has been
represented and there has been no material change in Debtor's
business, financial condition, or operations.
3. Prepayment. Upon forty-five (45) days prior written notice to
Secured Party, on any regular installment payment date under a
Note, Debtor may prepay in whole, but not in part, the then entire
unpaid principal balance of the Note, together with all accrued and
unpaid interest thereon to the date of such prepayment, provided
that along with and in addition to such prepayment, Debtor shall
pay (I) any and all other sums due hereunder or under the Note or
any other Loan Documents, and (ii) a prepayment fee as liquidated
damages and not as a penalty, in a sum equal to the following
percentages of the amount prepaid: three percent (3%) of the amount
prepaid for any prepayment during Loan Year 1; two percent (2%) of
the amount prepaid for any prepayment during Loan Year 2; and, one
percent (1%) of the amount prepaid for any prepayment during Loan
Year 3. The prepayment fee described in clause (ii) above shall
also be due upon the acceleration of the maturity date of the Note
following the occurrence of any Event of Default. The phrase "Loan
Year" as used herein shall mean each twelve (12) consecutive months
commencing on the date of the Note.
4. Events of Default. If any one of the following events (each
of which is herein called an "Event of Default") shall occur: (a)
Debtor fails to pay any part of the Indebtedness within ten (10)
days of its due date, or (b) any warranty or representation of
Debtor is untrue or inaccurate or Debtor breaches any warranty or
representation hereunder, or (c) Debtor breaches or defaults in the
performance of any other agreement or covenant hereunder, of (d)
Debtor shall default in the payment of performance of any debt or
other obligation owed by it to any person or entity in excess of
One Million and 00/100 Dollars ($1,000,000), including, but not
limited to, Secured Party, or (e) Debtor becomes insolvent, makes
an assignment for the benefit of creditors or ceases to continue as
a going business, of (f) a receiver, trustee, conservator, or
liquidator is appointed for Debtor or for all or a substantial
portion of Debtor's property, with or without the approval or
consent of Debtor, or (g) a petition is filed by or against Debtor
under the Bankruptcy Code or any debtors, or (h) in the reasonable
opinion of Secured Party the value of the Collateral is
substantially reduced or Secured Party considers that the prospect
of full performance and satisfaction by Debtor of the Indebtedness
is imperiled; or (I) if there is a material adverse change in the
business or financial condition or prospects of Debtor, then, and
in any such event, Secured Party shall have the right to exercise
any one or more of the remedies hereinafter provided.
Each of the following events shall also constitute an Event of
Default hereunder and upon the occurrence of any one or more of
them, Secured Party shall have the right to exercise any one or
more of the remedies hereinafter provided:
(aa) If, as of the end of any fiscal quarter, Debtor has
a Consolidated Net Worth of less than Forty-Two Million five
Hundred and 00/100 Dollars ($42,500,000.00), where "Consolidated
Net Worth" means, as of any date of determination, the
stockholders' equity of Debtor as determined in accordance with
GAAP and as would be reflected on a consolidated balance sheet of
Debtor prepared as of such date; or
(bb) If, as of the end of any fiscal quarter, Debtor has
Working Capital of less than Ten Million and 00/100 Dollars
($10,000,000.00), where "Working Capital" means, as of any date of
determination, the excess of Debtor's current assets over current
liabilities, each as determined in accordance with GAAP; or
(cc) If Debtor's income from operations as determined in
accordance with GAAP ("Operating Income") in any fiscal quarter is
less than Two Million and 00/100 Dollars ($2,000,000.00); or
(dd) If Debtor's Operating Income in any fiscal quarter
is less than the product of (I) Debtor's interest expense as
determined in accordance with GAAP ("Interest Expense") in the
fiscal quarter, times (ii) two (2).
Notwithstanding the foregoing, clauses (cc) and (dd)
shall not apply to any fiscal quarter ending after December 31,
1996, so long as (I) no Event of Default has then occurred, (ii)
Debtor's Operating Income for the fiscal year ending December 31,
1996, is at least Ten Million and 00/100 Dollars ($10,000,000.00),
and (iii) Debtor's Operating Income for the fiscal year ending
December 31, 1996, exceeds the product of (A) Debtor's Interest
Expense for the fiscal year ending December 31, 1996, times (B) two
(2).
5. Remedies. If an event of Default shall occur, in addition to
all rights and remedies of a secured party under the Uniform
Commercial Code, Secured Party may, at its option, at any time (a)
declare the entire unpaid Indebtedness to be immediately due and
payable; (b) without demand or legal process, enter into the
premises where the Collateral may be found and take possession of
and remove the Collateral, all without charge to or liability on
the part of Secured Party; and (c) require Debtor to assemble the
Collateral, render it unusable, and crate, pack, ship, and deliver
the Collateral to Secured Party in such manner and at such place as
Secured Party may require, all at Debtor's sole cost and expense.
DEBTOR HEREBY EXPRESSLY WAIVES ITS RIGHTS IF ANY TO (1) PRIOR
NOTICE OF REPOSSESSION AND (2) A JUDICIAL OR ADMINISTRATIVE HEARING
PRIOR TO SUCH REPOSSESSION. Secured Party may, at its option,
ship, store, and repair the Collateral so removed and sell any or
all of it at a public or private sale or sales. Unless the
Collateral is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market, Secured
Party will give Debtor reasonable notice of the time and place of
any public sale thereof or of the time after which any private sale
or any other intended disposition thereof is to be made, it being
understood and agreed that Secured Party may be a buyer at any such
sale and Debtor may not, either directly or indirectly, be a buyer
at any such sale. The requirements, if any, for reasonable notice
will be met if such notice is mailed postage prepaid to Debtor at
its address shown above, at least five (5) days before the time of
sale or disposition. Debtor shall also be liable for and shall
upon demand pay to Secured Party all expenses incurred by Secured
Party in connection with the undertaking or enforcement by Secured
Party of any of its rights or remedies hereunder or at law,
including, but not limited to, all expenses of repossessing,
storing, shipping, repairing, selling or otherwise disposing of the
Collateral and legal expenses, including reasonable attorneys' fees
and court costs (through any and all appeals and judgment
enforcement actions, it being acknowledged and agreed by Debtor
that this provision shall survive and not merge with any such
judgment), all of which costs and expenses shall be additional
Indebtedness hereby secured. After any such sale or disposition,
Debtor shall be liable for any deficiency of the Indebtedness
remaining unpaid, with interest thereon at the rate set forth in
the related Notes.
6. Cumulative Remedies. All remedies of Secured Party hereunder
are cumulative, are in addition to any other remedies provided for
by law or in equity and may, to the extent permitted by law, be
exercised concurrently or separately, and the exercise of any one
remedy shall not be deemed an election of such remedy or to
preclude the exercise of any other remedy. No failure on the part
of Secured Party to exercise, and no delay in exercising any right
or remedy, shall operate as a waiver thereof or in any way modify
or be deemed to modify the terms of this Security Agreement and the
other Loan Documents or the Indebtedness, nor shall any single or
partial exercise by Secured Party of any right or remedy preclude
any other or further exercise of the same or any other right or
remedy.
7. Assignment. Secured Party may transfer or assign this
Security Agreement, any Note, or any part of the Indebtedness and
the other Loan Documents either together or separately without
releasing Debtor or the Collateral, and upon such transfer or
assignment the assignee or holder shall be entitled to all the
rights, powers, privileges and remedies of Secured Party to the
extent assigned or transferred. The obligations of Debtor shall
not be subject, as against any such assignee or transferee, to the
defense, set-off, or counter-claim available to Debtor against
Secured Party and any such defense, set-off, or counter-claim may
be asserted only against Secured Party.
8. Time is of the Essence. Time and manner of performance by
Debtor of its duties and obligations under this Security Agreement,
the Notes, and the other Loan Documents is of the essence. If
Debtor shall fail to comply with any provision of this Security
Agreement or any of the other Loan Documents, Secured Party shall
have the right, but shall not be obligated, to take action to
address such non-compliance, in whole or in part, and all moneys
spent and expenses and obligations incurred or assumed by Secured
Party shall be paid by Debtor upon demand and shall be added to the
Indebtedness. Any such action by Secured Party shall not
constitute a waiver of Debtor's default.
9. Enforcement. This Agreement shall be governed by and
construed in accordance with the internal laws and decisions of the
State of Illinois, without regard to principles of conflicts of
law. At Secured Party's election and without limiting Secured
Party's right to commence an action in any other jurisdiction,
Debtor hereby submits to the exclusive jurisdiction and venue of
any court (federal, state or local) having situs within the State
of Illinois, expressly waives personal service of process and
consents to service by certified mail, postage prepaid, directed to
the last known address of Debtor, which service shall be deemed
completed within ten (10) days after the date of mailing thereof.
10. Further Assurance: Notice. Debtor shall, at its expense, do,
execute and deliver such further acts and documents as Secured
Party may from time to time reasonably require to assure and
confirm the rights created or intended to be created hereunder to
carry out the intention or facilitate the performance of the terms
of this Security Agreement and the Loan Documents or to assure the
validity, perfection, priority or enforceability of any security
interest created hereunder. Debtor agrees to execute any
instrument or instruments necessary or expedient for filing,
recording, perfecting, notifying, foreclosing, and/or liquidating
of Secured Party's interest in the Collateral upon request of, and
as determined by, Secured Party, and Debtor hereby specifically
authorizes Secured Party to prepare and file Uniform Commercial
Code financing statements and other documents and to execute same
for and on behalf of Debtor as Debtor's attorney-in-fact,
irrevocably and coupled with an interest, for such purposes. All
notices required or otherwise given by either party shall be deemed
adequately and properly given if sent by registered or certified
mail or by overnight courier with a copy by facsimile to the other
party at the addresses stated herein or at such other address as
the other party may from time to time designate in writing.
11. Waiver of Jury Trial. Debtor and Secured Party hereby waive
their respective rights to a jury trial of any claim or cause of
action based upon or arising out of this Security Agreement, the
Notes, or the other Loan Documents. This waiver is informed and
freely made. Debtor and Secured Party acknowledge that this waiver
is a material inducement to enter into a business relationship,
that each has already relied on the waiver in entering into this
Agreement and the other Loan Documents, and that each will continue
to rely on the waiver in their related future dealings. Debtor and
Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation
with legal counsel.
12. Complete Agreement. This Security Agreement and the other
related Loan Documents are intended by Debtor and Secured Party to
be the final, complete, and exclusive expression of the agreement
between them. This Security Agreement and the other related Loan
Documents may not be altered, modified or terminated in any manner
except by a writing duly signed by the parties hereto. Debtor and
Secured Party intend this Security Agreement and the other related
Loan Documents to be valid and binding and no provisions hereof and
thereof which may be deemed unenforceable shall in any way
invalidate any other provisions of this Security Agreement and the
other related Loan Documents, all of which shall remain in full
force and effect. This Security Agreement and the other related
Loan Documents shall be binding upon the respective successors,
legal representatives, and assigns of the parties. The singular
shall include the plural, the plural shall include the singular,
and the use of any gender shall be applicable to all genders. If
there be more than one Debtor, the warranties, representations and
agreements herein are joint and several. The Schedules on the
following page(s) are a part hereof. Sections and subsections
headings are included for convenience of reference only and shall
not be given any substantive effect.
13. Credit Facility.
(a) Purpose. On and subject to the terms and conditions set
forth in this Agreement, Secured Party and Debtor hereby establish
a credit facility pursuant to which Secured Party agrees to lend to
Debtor and Debtor agrees to borrow from Secured Party up to a sum
of Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00) (the "Facility"). The purpose of the Facility is
to finance the acquisition of items of the Collateral and proceeds
advanced under the Facility shall not in any event exceed the
actual cost of those items of Collateral, plus applicable taxes, as
verified and approved by Secured Party. All of the Collateral
shall be acceptable to Secured Party in its sole discretion.
(b) Disbursements. Provided no Event of Default shall have
occurred, upon Debtor's request therefor and upon all of the terms
and conditions set forth herein, Secured Party agrees to advance
proceeds under the Facility to or on behalf of Debtor, provided,
however, that Secured Party shall not be obligated to make more
than two (2) advances under the Facility, and shall not be
obligated to make any advance under the Facility at any time after
December 7, 1995. Each advance of funds under the Facility shall
reduce, dollar for dollar, the amount that may be advanced under
the Facility and no amount may be reborrowed once it has been
advanced.
(c) The Notes. Each advance of funds under the Facility
shall be evidenced by a Note, which shall be in form and substance
satisfactory to Secured Party. Interest shall accrue under each
Note at the rate of eight and 89/100 percent (8.89%) per annum.
Each Note shall be payable in thirty-seven (37) consecutive monthly
installments of principal and interest, the first thirty-six (36)
of which shall be in equal amounts so that ten percent (10%) of the
original principal amount of the Note remains outstanding after the
thirty-sixth (36th) such payment, and the thirty-seventh (37th) and
final payment of which shall be in the entire then remaining
outstanding principal balance under the Note, plus interest thereon
at the rate set forth above. At Secured Party's discretion, each
Note may also provide for an initial interest only payment. A
default under any Note shall constitute an Event of Default
hereunder and under any other Note. Reference is made to the Notes
for a full statement of the subjects addressed in this Subsection.
(d) Request for Advances. Each request for an advance of
funds under the Facility shall be in writing and shall be in form
and substance satisfactory to Secured Party (the "Proceeds
Request"). In connection with each Proceeds Request, Debtor shall
furnish to Secured Party complete and accurate copies of payoff
demands, purchase orders, invoices, canceled checks and other
information, documents and instruments as requested by Secured
Party relating to the Collateral. In addition, each such request
shall be accompanied by a certificate executed by a duly authorized
officer of Debtor and satisfactory in form and substance to Secured
Party, certifying (I) that no Event of Default or event which, with
the passage of time or the giving of notice, or both, would
constitute an Event of Default, has occurred hereunder, and (ii)
the authority and incumbency of the individual(s) executing the
Proceeds Request on behalf of Debtor.
(e) Rate Lock Fee. Debtor has previously deposited with
Secured Party the sum of Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Rate Lock Fee") in consideration for Secured
Party's assumption of interest rate risks upon its covenant to
advance funds under the Facility at a fixed rate of interest that
was previously set. The Rate Lock Fee was deemed earned upon
receipt by Secured Party. Notwithstanding the foregoing, Secured
Party agrees to apply the Rate Lock Fee to it's costs of legal
counsel (including internal counsel), and search, filing and other
incident fees and charges incurred by Secured Party in connection
with the Facility (collectively, "Transaction Expenses"). Secured
Party further agrees to apply any balance of the Rate Lock Fee
remaining after payment of the Transaction Expenses to the first
payment due under each Note, on a pro rate basis and if for any
reason the amount advanced under the Facility is less than Two
Million Five Hundred Thousand and 00/100 Dollars ($2,500,000) as of
December 8, 1995, Secured Party shall retain any remaining balance
of the Rate Lock Fee.
IN WITNESS WHEREOF, Secured Party and Debtor have each signed this
Security Agreement as of the day and year first above written.
▇▇▇▇▇▇ FINANCIAL, INC. Iomega Corporation,
a Delaware corporation a Delaware corporation
By: ____________________________ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:____________________________ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:____________________________ Title: Assistant Treasurer
Fax: ____________________________ Fax: ▇▇▇-▇▇▇-▇▇▇▇
SCHEDULE
Description of Collateral
Description of Collateral (Full description including make, model
and serial number):
See Schedule A attached hereto and incorporated herein by this
reference.
Place where Collateral is to be kept:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Other liens, encumbrances or security interests to which Collateral
is subject, if any:
None
Other Collateral:
None
If Collateral is attached or to be attached to real estate, set
forth:
Address of Real Estate (Including County, block number, lot
number, etc.):
Not Applicable
Record Owner of Real Estate (Name and Address):
Not Applicable
If the real estate at which the Collateral is to be kept is leased:
Name and Address of Lessor of Real Estate:
Not Applicable
/s/JSG
Initials