THE INDEBTEDNESS, OBLIGATIONS AND OTHER LIABILITIES DESCRIBED HEREIN AND THE
LIENS AND SECURITY INTERESTS GRANTED HEREBY ARE SUBORDINATE AND JUNIOR TO THE
INDEBTEDNESS, OBLIGATIONS AND OTHER LIABILITIES OF, AND THE LIENS AND SECURITY
INTERESTS GRANTED TO, CERTAIN SENIOR LENDERS, AS DESCRIBED IN THIS AGREEMENT.
SUBORDINATED LOAN AND SECURITY AGREEMENT
THIS SUBORDINATED LOAN AND SECURITY AGREEMENT (the "Agreement") is made
and entered into as of August __, 2000 by and between the Wilmington Trust
Company and Xxxxxx Xxxx Xxxxxx u/a dated November 25, 1970 with Xxxxxx X. Xxxxxx
FBO Xxxx Xxxxx Xxxxxx, and its assigns (the "Secured Party"), and Onkyo
Acquisition Corporation, an Indiana corporation, or its successors including
Onkyo America, Inc. (either or both the "Debtor"). Onkyo America, Inc. is
sometimes also referred to as "OAI" and Onkyo Acquisition Corporation is
sometimes also referred to as "OAC".
WHEREAS, the Secured Party has extended certain credit to the Debtor,
which is to be repaid with interest in accordance with the terms of a Senior
Subordinated Promissory Note of even date herewith executed by the Debtor in
favor of the Secured Party and in the original principal amount of Seven Million
Dollars ($7,000,000) (the "Mennen Note"), the form of which is annexed as
Exhibit A;
WHEREAS, in order to induce the Secured Party to extend the credit to
the Debtor referred to above; and to secure the payment of the Mennen Note, the
Debtor enters into this Agreement providing for, among other things, a junior
security interest in favor of the Secured Party in the Collateral (as such term
is defined below);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. Definitions. When used herein, (a) the terms Chattel Paper, Deposit Account,
Document, Equipment, Financial Asset, Fixture, Goods, Inventory, and Instrument
have the respective meanings assigned thereto in the UCC (as defined below); (b)
capitalized terms which are not otherwise defined have the respective meanings
assigned thereto in the Credit Agreement of even date by and among GMAC Business
Credit, LLC, for itself and as agent, certain financial institutions as
"Lenders" and the Debtor (the "Credit Agreement"); and (c) the following terms
have the following meanings (such definitions to be applicable to both the
singular and plural forms of such terms):
2. Account Debtor means the party who is obligated on or under any Account
Receivable, Contract
Right or General Intangible.
3. Account Receivable means any right of the Debtor to payment for goods sold or
leased or for services rendered.
4. Collateral means all personal property and rights of the Debtor, tangible and
intangible, in which a security interest is granted hereunder. Following the
Debtor's merger into OAI, Collateral shall refer to the items on Schedule 1,
which are owned by OAI or as to which OAI had any interest.
5. Computer Hardware and Software means all of the Debtor's rights (including
rights as licensee and lessee) with respect to (i) computer and other electronic
data processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware; (ii) all software programs designed for use on
the computers and electronic data processing hardware described in clause (i)
above, including all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (iii) any firmware
associated with any of the foregoing; and (iv) any documentation for hardware,
software and firmware described in clauses (i), (ii) and (iii) above, including
flow charts, logic diagrams, manuals, specifications, training materials, charts
and pseudo codes.
6. Contract Right means any right of the Debtor to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at the
time not yet earned by performance.
7. Default means the occurrence of a "Default" under the Mennen Note.
8. General Intangibles means all of the Debtor's "general intangibles" as
defined in the UCC and, in any event, includes (without limitation) all of the
Debtor's trademarks, trade names, patents, copyrights, trade secrets, customer
lists, inventions, designs, software programs, mask works, goodwill,
registrations, licenses, franchises, tax refund claims, guarantee claims,
security interests and rights to indemnification.
9. GMAC means GMAC Business Credit LLC, as agent and a "Lender" under the Credit
Agreement.
10. Intellectual Property means all past, present and future: trade secrets and
other proprietary information; trademarks, service marks, business names,
designs, logos, indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights; unpatented inventions (whether or not
patentable); patent applications and patents; industrial designs, industrial
design applications and registered industrial designs; license agreements
related to any of the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, source codes,
object codes and other physical manifestations, embodiments or incorporations of
any of the foregoing; the right to xxx for all past, present and future
infringements of any of the foregoing; and all common law and other rights
throughout the world in and to all of the foregoing.
11. Liabilities means all obligations (monetary or otherwise) of the Debtor
under the Mennen Note.
12. Non-Tangible Collateral means, collectively, the Debtor's Accounts
Receivable, Contract Rights and General Intangibles.
13. UCC means the Uniform Commercial Code as in effect in the State of Illinois
on the date of this Agreement; provided that, as used in Section 8 of the Credit
Agreement, "UCC" shall mean the Uniform Commercial Code as in effect from time
to time in any applicable jurisdiction.
14. Loan to the Debtor.
------------------
(a) The Secured Party shall lend the Debtor Seven Million and 00/100 Dollars
($7,000,000) as evidenced by the Mennen Note.
(b) The Secured Party consents to the merger of the Debtor into OAI only on
condition that OAI assumes payment of the Mennen Note and grants the Secured
Party a junior security interest in all of the present and future assets of OAI,
subordinate as provided in the Subordination Agreement (as herein defined).
15. Grant of Security Interest. As security for the payment of all Liabilities,
the Debtor hereby assigns and grants to the Secured Party a continuing junior
security interest in the following, whether now or hereafter existing or
acquired:
(a) All of the Debtor's: (i) Accounts Receivable; (ii) Chattel Paper; (iii)
Computer Hardware and Software and all rights with respect thereto, including,
any and all licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications, and any substitutions, replacements, additions or
model conversions of any of the foregoing; (iv) Contract Rights; (v) Deposit
Accounts; (vi) Documents; (vii) Financial Assets; (viii) General Intangibles;
(ix) Goods (including all of its Equipment, Fixtures and Inventory), and all
accessions, additions, attachments, improvements, substitutions and replacements
thereto and therefor; (x) Instruments; (xi) Intellectual Property; (xii) money
(of every jurisdiction whatsoever); and (xiii) to the extent not included in the
foregoing, other personal property of any kind or description; together with all
books, records, writings, data bases, information and other property relating
to, used or useful in connection with, or evidencing, embodying, incorporating
or referring to any of the foregoing, and all proceeds, products, offspring,
rents, issues, profits and returns of and from any of the foregoing; provided
that to the extent that the provisions of any lease or license of Computer
Hardware and Software or Intellectual Property expressly prohibit (which
prohibition is enforceable under applicable law) the assignment thereof, and the
grant of a security interest therein, the Debtor's rights in such lease or
license shall be excluded from the foregoing assignment and grant for so long as
such prohibition continues, it being understood that upon request of the Secured
Party, the Debtor will in good faith use reasonable efforts to obtain consent
for the creation of a security interest in favor of the Secured Party in the
Debtor's rights under such lease or license.
16. Warranties. The Debtor warrants that: (i) except as provided on Schedule 4,
[Schedule LaSalle, leases, etc.] no financing statement, other than any which
may have been filed on behalf of the Secured Party or in connection with the
Senior Lien (as defined in the Subordination Agreement), expressly permitted by
the Credit Agreement ("Permitted Liens"), covering any of the Collateral is on
file in any public office; (ii) the Debtor is and will be the lawful owner of
all Collateral, free of all liens and claims whatsoever, other than the Senior
Lien, the Junior security interest hereunder and Permitted Liens, with full
power and authority to execute this Agreement and perform the Debtor's
obligations hereunder, and to subject the Collateral to the security interest
hereunder; (iii) all information with respect to Collateral and Account Debtor's
set forth in any schedule, certificate or other writing at any time heretofore
or hereafter furnished by the Debtor to the Secured Party is and will be true
and correct in all material respects as of the date furnished; (iv) the Debtor's
chief executive office and principal place of business are as set forth on
Schedule 4 hereto (and neither Debtor has maintained its chief executive office
and principal place of business at any other location at any time after January
31, 1999); (v) each other location where the Debtor maintains a place of
business is set forth on Schedule 4 hereto; (vi) except as set forth on Schedule
4 hereto, neither Debtor is now known and during the five years preceding the
date hereof has not previously been known by any trade name; (vii) except as set
forth on Schedule 4 hereto, during the five years preceding the date hereof,
neither Debtor has been known by any legal name different from the one set forth
on the signature pages of this Agreement nor has either Debtor been the subject
of any merger or other corporate reorganization except as set forth on Schedule
4; (viii) Schedule 4 hereto contains a complete listing of all of the Debtor's
Intellectual Property which is subject to registration statutes; (ix) each
Debtor is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation; (x) the execution and delivery
of this Agreement and the performance by each Debtor of its obligations
hereunder are within each Debtor's corporate powers, have been duly authorized
by all necessary corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not contravene or
conflict with any provision of law or of the charter or by-laws of either Debtor
or of any material agreement, indenture, instrument or other document, or any
material judgment, order or decree, which is binding upon either Debtor; (xi)
this Agreement is a legal, valid and binding obligation of each Debtor,
enforceable in accordance with its terms, except that the enforceability of this
Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law); and (xii) OAC is, and to its knowledge, OAI is
in compliance with the requirements of all applicable laws (including the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would reasonably be
expected to result in a Material Adverse Effect.
17. Certificates, Schedules and Reports. The Debtor will from time to time, as
the Secured Party may request, deliver to the Secured Party such schedules,
certificates and reports respecting all or any of the Collateral at the time
subject to the security interest hereunder, and the items or amounts received by
the Debtor in full or partial payment of any of the Collateral, as the Secured
Party may reasonably request. Any such schedule, certificate or report shall be
executed by a duly authorized officer of the Debtor and shall be in such form
and detail as the Secured Party may specify. The Debtor shall immediately notify
the Secured Party of the occurrence of any event causing any loss or
depreciation in the value of its Inventory or other Goods which is material to
the Debtor, and such notice shall specify the amount of such loss or
depreciation.
18. Agreements of the Debtor. The Debtor (a) will, upon request of the Secured
Party, execute such financing statements and other documents (and pay the cost
of filing or recording the same in all public offices reasonably deemed
appropriate by the Secured Party) and do such other acts and things (including,
delivery to the Secured Party of any Instruments or Certificated Securities
which constitute Collateral), all as the Secured Party may from time to time
reasonably request, to establish and maintain a valid security interest in the
Collateral (free of all other liens, claims and rights of third parties
whatsoever, other than the Senior Lien and Permitted Liens) to secure the
payment of the Liabilities; (b) will keep all its Inventory at, and will not
maintain any place of business at any location other than, its address(es) shown
on Schedule 4 hereto or at such other addresses of which the Debtor shall have
given the Secured Party not less than 10 days' prior written notice, (c) will
keep its records concerning the Non-Tangible Collateral in such a manner as will
enable the Secured Party or its designees to determine at any time the status of
the Non-Tangible Collateral; (d) will furnish the Secured Party such information
concerning the Debtor, the Collateral and the Account Debtors as the Secured
Party may from time to time reasonably request; (e) will permit the Secured
Party and its designees, from time to time, on reasonable notice and at
reasonable times and intervals during normal business hours (or at any time
without notice during the existence of a Default) to inspect the Debtor's
Inventory and other Goods, and to inspect, audit and make copies of and extracts
from all records and other papers in the possession of the Debtor pertaining to
the Collateral and the Account Debtors, and will, upon request of the Secured
Party during the existence of a Default, deliver to the Secured Party all of
such records and papers; (f) will, upon request of the Secured Party, stamp on
its records concerning the Collateral, and add on all Chattel Paper constituting
a portion of the Collateral, a notation, in form satisfactory to the Secured
Party, of the security interest of the Secured Party hereunder; (g) except for
the sale or lease of Inventory in the ordinary course of its business, sales of
Equipment which is no longer useful in its business or which is being replaced
by similar Equipment, or as otherwise permitted by or pursuant to the Credit
Agreement, will not sell, lease, assign or create or permit to exist any Lien on
any Collateral other than Permitted Liens; (h) without limiting the provisions
of Section 10.3 of the Credit Agreement, will at all times keep all of its
Inventory and other Goods insured under policies maintained with reputable,
financially sound insurance companies against loss, damage, theft and other
risks to such extent as is customarily maintained by companies similarly
situated, (i) will take such actions as are reasonably necessary to keep its
Inventory in good repair and condition; (j) will take such actions as are
reasonably necessary to keep its Equipment in good repair and condition and in
good working order, ordinary wear and tear excepted; (k) will promptly pay when
due all license fees, registration fees, taxes, assessments and other charges
which may be levied upon or assessed against the ownership, operation,
possession, maintenance or use of its Equipment and other Goods; (l) will take
all steps reasonably necessary to protect, preserve and maintain all of its
rights in the Collateral; (m) except as listed on Schedule 7, will keep all of
the tangible Collateral in the United States; and (n) will reimburse the Secured
Party for all expenses, including reasonable attorney's fees and charges
(including pro rata salary and cash benefit costs of attorneys who are employees
of the Secured Party to the extent that they are acting in a legal capacity),
incurred by the Secured Party in seeking to collect or enforce any rights in
respect of the Debtor's Collateral.
19. Other Rights. Any expenses incurred in protecting, preserving or maintaining
any Collateral shall be borne by the Debtor. Whenever a Default shall be
existing, GMAC shall have the right to bring suit to enforce any or all of the
Intellectual Property or licenses thereunder, in which event the Debtor shall at
the request of GMAC or the Secured Party, as applicable, do any and all lawful
acts and execute any and all proper documents required by GMAC or the Secured
Party, as applicable, in aid of such enforcement and the Debtor shall promptly,
upon demand, reimburse and indemnify GMAC or the Secured Party for all costs and
expenses incurred by GMAC or the Secured Party, as applicable, in the exercise
of its rights under this Section 7. Notwithstanding the foregoing, GMAC and the
Secured Party shall have no obligation or liability regarding the Collateral or
any part thereof by reason of, or arising out of, this Agreement.
20. Default. Whenever a Default shall be existing, subject to the Subordination
Agreement, the Secured Party, may exercise from time to time any right or remedy
available to it under applicable law. The Debtor agrees, in case of Default
subject to Subordination Agreement, (i) to assemble, at its expense, all its
Inventory and other Goods (other than Fixtures) at a convenient place or places
acceptable to GMAC or the Secured Party, as applicable, and (ii) at the
applicable party's request, to execute all such documents and do all such other
things which may be necessary or desirable in order to enable the applicable
party or its nominee to be registered as owner of the Intellectual Property with
any competent registration authority. Any notification of intended disposition
of any of the Collateral required by law shall be deemed reasonably and properly
given if given at least 10 days before such disposition. Subject to the
Subordination Agreement, any proceeds of any disposition by GMAC or the Secured
Party of any of the Collateral may be applied by GMAC or the Secured Party to
payment of expenses in connection with the Collateral, including reasonable
attorney's fees and charges (including prorata salary and cash benefit costs to
the extent that they are acting in a legal capacity of attorneys who are
employees of GMAC or the Secured Party), and any balance of such proceeds may be
applied by GMAC or the Secured Party toward the payment of such of the
Liabilities, and in such order of application, as GMAC or the Secured Party may
from time to time elect (in all cases subject to the order established by the
Subordination Agreement).
21. General.
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(a) GMAC or the Secured Party shall be deemed to have exercised reasonable care
in the custody and preservation of any of the Collateral in its possession if it
takes such action for that purpose as the Debtor requests in writing, but
failure of GMAC or the Secured Party to comply with any such request shall not
of itself be deemed a failure to exercise reasonable care, and no failure of
GMAC or the Secured Party to preserve or protect any right with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by the Debtor, shall be deemed
of itself a failure to exercise reasonable care in the custody or preservation
of such Collateral.
(b) Any notice from the Secured Party to the Debtor, if mailed, shall be deemed
given five days after the date mailed, postage prepaid, addressed to the Debtor
either at the Debtor's address shown on Schedule 4 hereto or at such other
address as the Debtor shall have specified in writing to the Secured Party as
its address for notices hereunder.
(c) Subject to the Subordination Agreement, the Debtor agrees to pay all
expenses, including reasonable attorney's fees and charges (including pro rata
salary and cash benefit costs of attorneys who are employees of the Secured
Party to the extent that they are acting in a legal capacity) paid or incurred
by the Secured Party in endeavoring to collect the Liabilities of the Debtor, or
any part thereof, and in enforcing this Agreement against the Debtor, and such
obligations will themselves be Liabilities.
(d) No delay on the part of GMAC or the Secured Party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Secured Party of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
(e) This Agreement shall remain in full force and effect until the Mennen Note
has been paid in full. If at any time all or any part of any payment theretofore
applied by GMAC or the Secured Party to any of the Liabilities or the Mennen
Note is or must be rescinded or returned by GMAC or the Secured Party for any
reason whatsoever (including the insolvency, bankruptcy or reorganization of the
Debtor), such Liabilities or the Mennen Note shall, for the purposes of this
Agreement, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
GMAC or the Secured Party, and this Agreement shall continue to be effective or
be reinstated, as the case may be, as to such Liabilities or the Mennen Note,
all as though such application by GMAC or the Secured Party had not been made.
(f) This Agreement shall be construed in accordance with and governed by the
laws of the State of Illinois applicable to contracts made and to be performed
entirely within such State, subject, however, to the applicability of the UCC of
any jurisdiction in which any Goods of the Debtor may be located at any given
time. Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(g) The rights and privileges of the Secured Party hereunder shall inure to the
benefit of its successors and assigns.
(h) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement. At any time after the date of this
Agreement, one or more additional Persons may become parties hereto by executing
and delivering to the Secured Party a counterpart of this Agreement together
with supplements to the Schedules hereto setting forth all relevant information
with respect to such party as of the date of such delivery. Immediately upon
such execution and delivery (and without any further action), each such
additional Person will become a party to, and will be bound by all the terms of,
this Agreement.
(i) ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE SECURED PARTY'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE DEBTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE DEBTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE ADDRESS SET FORTH ON SCHEDULE 4 HERETO (OR SUCH OTHER ADDRESS AS
IT SHALL HAVE SPECIFIED IN WRITING TO THE SECURED PARTY AS ITS ADDRESS FOR
NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(j) THE DEBTOR AND THE SECURED PARTY HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY NOTE INCLUDING THE MENNEN NOTE, ANY OTHER LOAN DOCUMENT AND ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
(k) It is the intention of the parties hereto that the priorities and agreements
herein contained continue to apply after the enactment by the various States of
Revised Article 9--Secured Transactions (with conforming amendments to Articles
1, 2, 2a, 4, 5, 6, 7 and 8) to the UCC as approved by The American Law Institute
in 1998 and approved and recommended for enactment in all the States by the
National Conference of Commissioners for Uniform State Laws in 1998 ("Revised
Article 9") and the effectiveness of Revised Article 9 in any State. After the
effectiveness of Revised Article 9 in any State governing perfection and the
effect of perfection or non-perfection of a security interest in any Collateral,
as to such State and such Collateral, (i) all section references herein to, and
all defined terms used herein defined in, Article 9 of the UCC as currently in
effect shall be deemed to be to any corresponding Section or definition of
Revised Article 9, and (ii) if any definition used herein by reference to
Revised Article 9 is broader than the corresponding definition used in current
Article 9 of the UCC, such broader definition will apply herein.
(l) PURSUANT TO THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF AUGUST ____,
2000 (AS AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME, THE "SUBORDINATION
AGREEMENT") AMONG GMAC BUSINESS CREDIT, LLC, FOR ITSELF AND AS AGENT FOR THE
"LENDERS", AS DEFINED IN THE SUBORDINATION AGREEMENT (THE "SENIOR LENDERS");
WITH THE WILMINGTON TRUST COMPANY AND XXXXXX XXXX XXXXXX U/A DATED NOVEMBER 25,
1970 WITH XXXXXX X. XXXXXX FBO XXXX XXXXX XXXXXX, AND ITS ASSIGNS AS INITIAL
HOLDER HEREOF; ONKYO ACQUISITION CORPORATION; AND ONKYO AMERICA, INC., THE LIENS
AND SECURITY INTERESTS GRANTED HEREIN, AND THE ABILITY OF SECURED PARTY TO
EXERCISE REMEDIES HEREUNDER AND UNDER THE MENNEN NOTE, ARE SUBORDINATE IN THE
MANNER AND TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT TO THE SENIOR
LIEN (AS DEFINED IN THE SUBORDINATION AGREEMENT) AND THE PRIOR INDEFEASIBLE
PAYMENT, PERFORMANCE AND OBSERVANCE OF ALL SENIOR DEBT (AS DEFINED IN THE
SUBORDINATION AGREEMENT); AND SECURED PARTY, BY ITS EXECUTION HEREOF, AGREES TO
BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
(m)
[SIGNATURE PAGE FOLLOWS]
Security Agreement of Borrower Signature Page
IN WITNESS WHEREOF, this Security Agreement has been duly executed as
of the day and year first above written.
Debtor:
ONKYO ACQUISITION CORPORATION, an Indiana Corporation
---------
By:
Title: Xxxxx Xxxxx,
---------
President
Secured Party:
WILMINGTON TRUST COMPANY AND
---------
SCHEDULE 1
To Subordinated Loan And Security Agreement
Among Wilmington Trust Company and Xxxxxx Xxxx Xxxxxx
And Onkyo Acquisition Corporation or its successors including
Onkyo America, Inc.
All of the Debtor's: (i) Accounts Receivable; (ii) Chattel Paper; (iii) Computer
Hardware and Software and all rights with respect thereto, including, any and
all licenses, options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement rights, renewal rights
and indemnification, and any substitutions, replacements, additions or model
conversions of any of the foregoing; (iv) Contract Rights; (v) Deposit Accounts;
(vi) Documents; (vii) Financial Assets; (viii) General Intangibles; (ix) Goods
(including all of its Equipment, Fixtures and Inventory), and all accessions,
additions, attachments, improvements, substitutions and replacements thereto and
therefor; (x) Instruments; (xi) Intellectual Property; (xii) money (of every
jurisdiction whatsoever); and (xiii) to the extent not included in the
foregoing, other personal property of any kind or description; together with all
books, records, writings, data bases, information and other property relating
to, used or useful in connection with, or evidencing, embodying, incorporating
or referring to any of the foregoing, and all proceeds, products, offspring,
rents, issues, profits and returns of and from any of the foregoing; provided
that to the extent that the provisions of any lease or license of Computer
Hardware and Software or Intellectual Property expressly prohibit (which
prohibition is enforceable under applicable law) the assignment thereof, and the
grant of a security interest therein, the Debtor's rights in such lease or
license shall be excluded from the foregoing assignment and grant for so long as
such prohibition continues, it being understood that upon request of the Secured
Party, the Debtor will in good faith use reasonable efforts to obtain consent
for the creation of a security interest in favor of the Secured Party in the
Debtor's rights under such lease or license.
SCHEDULE 4(i) and (ii)
TO LOAN AND SECURITY AGREEMENT
LIENS ON COLLATERAL
Onkyo America, Inc.
1) Security Agreement dated September 24, 1999, in favor of LaSalle Bank.
2) UCC-1 Financing Statement covering copier with stapler/sorter dated
November 17, 1995 in favor of First United Leasing.
3) UCC-1 Financing Statement covering crown RR3520-45 trucks and
batteries dated April 4, 1997 in favor of CFC Investment Company.
4) UCC-1 Financing Statement covering crown RR3520-45 electric lift truck
with battery & charger dated December 2, 1997 in favor of CFC
Investment Company.
5) Real Estate Tax Search for Residential Real Estate in the amount of
$1,221.75.
SCHEDULE 4(iv)
TO LOAN AND SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICE AND NOTICE ADDRESS
Onkyo Acquisition Corporation
Onkyo Acquisition Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Onkyo America, Inc.
Onkyo America, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
SCHEDULE 4(v)
TO LOAN AND SECURITY AGREEMENT
ADDRESSES
Onkyo Acquisition Corporation
Onkyo Acquisition Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Onkyo America, Inc.
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Onkyo America, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xx 00000
Onkyo America, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
Onkyo America, Inc.
00000 Xxxxxxx Xxxxx Xxxx
Xxxxx Xxxxx, XX 00000
OTHER INVENTORY LOCATIONS
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
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* Confidential portions omitted and filed separately with the Commission.
SCHEDULE 4(vi) and (vii)
TO LOAN AND SECURITY AGREEMENT
TRADE NAMES, PRIOR LEGAL NAMES, ETC.
Onkyo Acquisition Corporation
None.
Onkyo America, Inc.
None.
SCHEDULE 4(viii)
TO LOAN AND SECURITY AGREEMENT
PATENTS
Onkyo Acquisition Corporation
None.
Onkyo America, Inc.
1) Subwoofer and cone technology owned by Onkyo Corporation:
Patent Number 4,377,617 for Loudspeaker Diaphragm and Process for Producing
Same. Patent Number 4,709,392 for Dome Speaker with Diaphragm Having at
Least One Elongated Cut-Out Portion.
Patent Number 5,205,897 for Method of Bonding Loudspeaker Diaphragm.
2) The following patents are licensed from Onkyo America Specialty Products,
Inc.
Patent Number 4,673,056 issued on June 16, 1987 for Loudspeaker System.
Patent Number 5,527,587 issued on June 18, 1996 for Trim and Piece Method
for Making Same. Patent Number 5,094,316 issued on March 10, 1992 for
Overhead Speaker System for Use in Vehicles.
Patent Number 5,606,623 issued on February 25, 1997 for Overhead Vehicle
Loud Speaker Cabinet XJ System.
Patent Number 5,646,381 issued on July 8, 1997 for Mounted Sound Horn.
Patent Application Serial No. 09/332,844 for Loud Speaker Assembly and
method of assembly for same.
TRADEMARKS
Onkyo Acquisition Corporation
None.
Onkyo America, Inc.
1) Pursuant to the Share Purchase Agreement dated June 29, 2000, and
amended as of August 3, 2000, among Onkyo Europe Electronics GmbH, Onkyo
Malaysia SDN.BHD., Onkyo Corporation, Global Technovations, Inc., and Onkyo
America, Inc. ("Share Purchase Agreement"), Onkyo America, Inc. was granted
the following: a) a royalty-free license and right to possess, use, display
and reproduce the names "Onkyo America" and "Onkyo America, Inc.," in
connection with Onkyo America, Inc.'s business for five years from August
31, 2000; and b) the right to use, display and reproduce the "Onkyo" name
on Onkyo Group Speakers (as defined in the Share Purchase Agreement) in its
capacity as exclusive distributor for Onkyo Corporation under the
Distribution and Technical Service Agreement, dated August 31, 2000, by and
among Onkyo Corporation and Onkyo America, Inc.
2) Pursuant to the Asset Purchase Agreement, dated September 30, 1999, by
and among Top Source Automotive, Inc., Top Source Technologies, Inc. and
Onkyo America, Inc., Onkyo America acquired rights in the following trade
names: Top Source Automotive, Inc., Top Source Automotive and Top Source.
COPYRIGHTS
Onkyo Acquisition Corporation
None.
Onkyo America, Inc.
None.
SCHEDULE 7
TO LOAN AND SECURITY AGREEMENT
COLLATERAL NOT LOCATED IN THE UNITED STATES
Onkyo Acquisition Corporation
None.
Onkyo America, Inc.
None.
