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EXHIBIT 10.12
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as
of February 27, 1998 and entered into by and between ZILOG, INC., a Delaware
corporation ("PLEDGOR"), and BANKBOSTON, N.A., as administrative agent for and
representative of (in such capacity herein called "SECURED PARTY") the financial
institutions ("LENDERS") party to the Credit Agreement referred to below.
PRELIMINARY STATEMENTS
A. Secured Party, Lenders and Xxxxxxx Xxxxx Credit Partners L.P.,
as Arranger and Syndication Agent, have entered into a Credit Agreement, dated
as of February 27, 1998 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined), with Pledgor pursuant to which Lenders have
made certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Pledgor.
B. It is a condition precedent to the initial extensions of credit
by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. CERTAIN DEFINITIONS. The following terms used in this
Agreement shall have the following meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all interest, cash,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Collateral, and (iv) to the extent not covered by clauses (i) through
(iii) above, all proceeds of any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account
established and maintained by Secured Party pursuant to Section 2(a).
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"SECURED OBLIGATIONS" means all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
extensions or renewals thereof, whether for principal, interest (including
interest that, but for the filing of a petition in bankruptcy with respect to
Pledgor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnities or otherwise, whether voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise, and all obligations of every nature of Pledgor now or hereafter
existing under this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
(a) Secured Party is hereby authorized to establish and maintain
at its office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, as a blocked account
in the name of Secured Party and under the sole dominion and control of Secured
Party, a restricted deposit account (Account #533-04379), designated as "Zilog,
Inc., Collateral Account in favor of BankBoston, N.A.".
(b) The Collateral Account shall be operated in accordance with
the terms of this Agreement.
(c) All amounts at any time held in the Collateral Account shall
be beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
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SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall be made
by wire transfer (or, if applicable, by intra-bank transfer from another account
of Pledgor) of immediately available funds in accordance with written wire
transfer instructions provided to Pledgor by Secured Party. Pledgor shall,
promptly after initiating a transfer of funds to the Collateral Account, give
notice to Secured Party by telefacsimile of the date, amount and method of
delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding under the Credit Agreement,
Pledgor shall deliver funds in such an amount for deposit in the Collateral
Account in accordance with Section 3(a). Upon any drawing under any outstanding
Letter of Credit in respect of which Pledgor has deposited in the Collateral
Account any amounts described above, Secured Party shall apply such amounts to
reimburse the Issuing Lender for the amount of such drawing. In the event the
amount on deposit in the Collateral Account exceeds the maximum amount available
to be drawn under all Letters of Credit, Secured Party shall apply the excess in
accordance with subsection 2.4C of the Credit Agreement.
(c) In accordance with subsection 2.4A(iv)(b) of the Credit
Agreement, Secured Party shall from time to time deposit into the Collateral
Account any Deferred Prepayment Amount (as defined in such subsection) received
from Pledgor. Secured Party shall apply any such Deferred Prepayment Amounts to
prepay the applicable Eurodollar Rate Loans at the end of the Interest Periods
applicable thereto in accordance with subsection 2.4A(iv)(b) of the Credit
Agreement.
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Pledgor
hereby pledges and assigns to Secured Party, and hereby grants to Secured Party
a security interest in, all of Pledgor's right, title and interest in and to the
Collateral as collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all Secured Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT;
INTEREST ON AMOUNTS IN THE COLLATERAL ACCOUNT.
(a) Cash held by Secured Party in the Collateral Account shall not
be invested by Secured Party but instead shall be maintained as a cash deposit
in the Collateral Account pending application thereof as elsewhere provided in
this Agreement.
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(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Collateral Account
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any
interest earned on deposits of cash in the Collateral Account in accordance with
Section 5(b) shall be deposited directly in, and held in the Collateral Account.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of
transfer thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) Perfection. The pledge and assignment of the Collateral
pursuant to this Agreement creates a valid and perfected First Priority security
interest in the Collateral in the Collateral Account from time to time, securing
the payment of the Secured Obligations.
(c) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with respect to
the Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES. Pledgor agrees that from time to
time, at the expense of Pledgor, Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Pledgor will: (a) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby and (b) at Secured Party's request, appear in and defend any
action or proceeding that may affect Pledgor's beneficial title to or Secured
Party's security interest in all or any part of the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Pledgor agrees that it will
not (a) sell, assign (by operation of law or otherwise) or otherwise dispose of
any of the Collateral or (b) create or suffer to exist any Lien upon or with
respect to any of the Collateral, except for the security interest under this
Agreement.
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SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
to file one or more financing or continuation statements, or amendments thereto,
relative to all or any part of the Collateral without the signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 13.
SECTION 11. STANDARD OF CARE. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral, it being understood that Secured Party shall
have no responsibility for (a) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect to any Collateral or (b) taking any necessary steps to collect or
realize upon the Secured Obligations or any guarantee therefor, or any part
thereof, or any of the Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property of like kind.
SECTION 12. REMEDIES. Subject to the provisions of Section 3(b),
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies otherwise available to it, all the rights and remedies
of a secured party on default under the Uniform Commercial Code as in effect in
any relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each Lender from
and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.
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(b) Pledgor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by Pledgor to perform or observe any of the provisions hereof.
(c) The provisions of this Section 13 shall survive any
termination of this Agreement.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Pledgor. Upon any
such termination Secured Party shall, at Pledgor's expense, execute and deliver
to Pledgor such documents as Pledgor shall reasonably request to evidence such
termination and Pledgor shall be entitled to the return, upon its request and at
its expense, against receipt and without recourse to Secured Party, of such of
the Collateral as shall not have been otherwise applied pursuant to the terms
hereof.
SECTION 15. SECURED PARTY AS ADMINISTRATIVE AGENT.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5A of the Credit Agreement
shall also constitute notice of resignation as Secured Party under this
Agreement; removal of Administrative Agent pursuant to subsection 9.5A of the
Credit Agreement shall also
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constitute removal as Secured Party under this Agreement; and appointment of a
successor Administrative Agent pursuant to subsection 9.5A of the Credit
Agreement shall also constitute appointment of a successor Secured Party under
this Agreement. Upon the acceptance of any appointment as Administrative Agent
under subsection 9.5A of the Credit Agreement by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Secured Party under this Agreement, and the retiring or removed Secured
Party under this Agreement shall promptly (i) transfer to such successor Secured
Party all sums held by Secured Party hereunder (which shall be deposited in a
new Collateral Account established and maintained by such successor Secured
Party), together with all records and other documents necessary or appropriate
in connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder, whereupon
such retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. NOTICES. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, or upon receipt
of telefacsimile or telex or United States mail with postage prepaid. For the
purposes hereof, the address of each party hereto shall be as provided in
subsection 10.8 of the Credit Agreement.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
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SECTION 19. SEVERABILITY. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection 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 or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 22. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ZILOG, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Secretary
BANKBOSTON, N.A., AS SECURED PARTY
By: /s/ XXXX X. XXXXXXX
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Name: Xxxx X. Xxxxxxx
Title: Vice President
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