PATENT AND LICENSE SECURITY AGREEMENT
PATENT AND LICENSE SECURITY AGREEMENT ("Agreement") dated as of August
31, 2000 made by ONKYO AMERICA SPECIALTY PRODUCTS, INC., a Michigan corporation
("Grantor"), in favor of GMAC BUSINESS CREDIT, LLC, a Delaware limited liability
company in its capacity as agent for the Lenders under the Credit Agreement (as
defined below) (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Onkyo America, Inc., an Indiana corporation, as successor by
Merger to Onkyo Acquisition Corporation, an Indiana corporation ("Borrower"),
Lenders, and Agent have entered into that certain Credit Agreement dated as of
August 31, 2000 (as amended or otherwise modified from time to time, the "Credit
Agreement") pursuant to which, the Lenders have made a loan to Borrower and have
agreed to make additional loans to, and issue or participate in letters of
credit for the account of Borrower from time to time;
WHEREAS, the Grantor is a wholly owned subsidiary of the Borrower;
WHEREAS, pursuant to that certain Guaranty of even date herewith (the
"Guaranty"), made by the Grantor in favor of the Agent, for itself and the
benefit of the Lenders, the Grantor has guaranteed the full and prompt payment
and performance and/or observance of all of Borrower's obligations and
liabilities under or in connection with the Credit Agreement, and Borrower's
obligations and liabilities under any other Loan Documents (as defined in the
Credit Agreement) (the "Obligations");
WHEREAS, it was an express condition to Agent, on behalf of the
Lenders, consenting to the aforesaid merger under the Credit Agreement and
permitting Borrower to assume the liabilities and obligations thereof and to
receive the benefits of the financing thereof, that Grantor enter into this
Agreement;
WHEREAS, the Agent and the Lenders have required, as a further
condition to their willingness to continue to make loans and to extend credit to
the Borrower and to secure the obligations and liabilities of the Borrower under
the Credit Agreement and under the other Loan Documents, that Grantor execute
this Agreement; and
WHEREAS, the Grantor acknowledges that in view of the subsidiary
relationship and other business relations between the Grantor and the Borrower,
the extensions of credit and other financial accommodations contemplated by the
Credit Agreement will inure to the benefit of the Grantor, and it is in the
direct interest and to the direct advantage of the Grantor that it execute and
deliver this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Grantor agrees as follows:
Defined Terms.
a. When used herein, (a) capitalized terms which are not otherwise defined have
the meanings assigned thereto in the Credit Agreement; and (b) the following
terms have the following meanings (such meanings to be applicable to both the
singular and plural forms of such terms):
b. Collateral - see Section 2.
Default means the occurrence of an Event of Default.
Lender Party means (i) each Lender, and (ii) any Affiliate of
a Lender which is a party to a Hedging Agreement with the Borrower.
Liabilities means (i) all obligations (monetary or otherwise)
of the Borrower or the Grantor, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, which arise out of or in
connection with the Credit Agreement, the Notes, this Agreement, any
other Loan Document or any document or instrument executed in
connection therewith and (ii) all Hedging Obligations owed by the
Borrower to any one or more of the Lender Parties or any Affiliate
thereof.
a. The words "hereof", "herein", and "hereunder" and words of like import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section and schedule references are
to this Agreement unless otherwise specified.
b. All terms defined in this Agreement in the singular shall have comparable
meanings when used in the plural, and vice versa unless otherwise specified.
2. Security Interest in Patents. To secure the complete and timely payment,
performance and satisfaction of all of the Liabilities, the Grantor hereby
grants to Agent, for its benefit and the ratable benefit of the Lender Parties,
a first priority security interest, having priority over all other security
interests, with power of sale (to the extent permitted by applicable law), in
all of Grantor's now owned or existing and hereafter acquired or arising
(collectively, the "Collateral"):
a. patents and patent applications, and the inventions and improvements
described and claimed therein, including, without limitation, those patents and
patent applications listed on Schedule A, and (a) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (b) all
income, royalties, damages and payments now and hereafter due and/or payable
under and with respect thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and payments for
past or future infringements thereof, (C) the right to ▇▇▇ for past, present and
future infringements thereof, (d) to the extent any of the foregoing patents or
applications are or become subject to a terminal disclaimer, any patent which
necessitated said terminal disclaimer, and (e) all rights corresponding thereto
throughout the world (all of the foregoing patents and applications, together
with the items described in the foregoing clauses (a)-(d), being sometimes
hereinafter individually and/or collectively referred to as the "Patents"); and
b. license agreements with any other party in connection with any Patents or
such other party's patents or patent applications, whether Grantor is a licensor
or licensee under any such license agreement, including, but not limited to, the
license agreements listed on Schedule B, and the right upon the occurrence and
during the continuance of a Default to use the foregoing in connection with the
enforcement of the rights of the Agent and Lender Parties under the Credit
Agreement (all of the foregoing being hereinafter referred to collectively as
the "Licenses"). Notwithstanding the foregoing provisions of this Section 2, the
Licenses shall not include any license agreement which by its terms prohibits
(which prohibition is enforceable under applicable law) the grant of the
security interest contemplated by this Agreement for so long as such prohibition
continues; it being understood that upon request of the Agent, Grantor will in
good faith use reasonable efforts to obtain consent for the creation of a
security interest in favor of the Agent in Grantor's rights under such license
agreement.
3. Restrictions on Future Agreements. Grantor will not, without Agent's prior
written consent, enter into any agreement, including, without limitation, any
license agreement, which is inconsistent with this Agreement, and Grantor
further agrees that it will not take any action, and will use its best efforts
not to permit any action to be taken by others subject to its control, including
licensees, or fail to take any action, which would in any material respect
affect the validity or enforcement of the rights transferred to Agent, for its
benefit and the ratable benefit of the Lender Parties, under this Agreement or
the rights associated with those Patents which are necessary or desirable in the
operation of Grantor's business.
4. New Patents. Grantor represents and warrants that the Patents and Licenses
listed on Schedules A and B, respectively, include all of the patents, patent
applications and license agreements in connection with patents or patent
applications now owned or held by Grantor. If, prior to the termination of this
Agreement, Grantor shall (i) obtain rights to any new patentable inventions or
license agreements or any patents or patent applications in connection therewith
or (ii) become entitled to the benefit of any patent, patent application or any
reissue, division, continuation, renewal, extension or continuation-in-part
related to any Patent or any improvement on any Patent, the provisions of
Section 2 shall automatically apply thereto and Grantor shall give to Agent
prompt written notice thereof. Grantor hereby authorizes Agent to modify this
Agreement by (a) amending Schedules A or B, as the case may be, to include any
future patents, patent applications and license agreements in connection with
patents and patent applications that are Patents or Licenses under Section 2 or
under this Section 4, and (b) filing, in addition to and not in substitution
for, this Agreement, a duplicate original of this Agreement containing on
Schedules A or B thereto, as the case may be, such future patents, patent
applications and license agreements which are Patents or Licenses, as the case
may be, under Section 2 or this Section 4.
5. Royalties. Grantor hereby agrees that the Agent's rights in the Patents and
Licenses as authorized hereunder shall be coextensive with Grantor's rights
thereunder and with respect thereto and without any liability for royalties or
other related charges from Agent to Grantor.
6. Nature and Continuation of Agent's Security Interest. This Agreement is made
for collateral security purposes only. This Agreement shall create a continuing
security interest in the Patents and the Licenses and shall remain in full force
and effect until the Liabilities have been paid in full and the Credit Agreement
terminated. At such time the rights granted to Agent hereunder shall also
terminate.
7. Right to Inspect; Further Assignments and Security Interests. Agent shall
have the right, at any reasonable time and from time to time, to inspect the
premises of Grantor and to examine the books, records and operations of Grantor
relating to the patents; provided, that in conducting such inspections and
examinations, Agent shall use reasonable efforts not to disturb unnecessarily
the conduct of Grantor's ordinary business operations. Grantor agrees not to
sell or assign its respective interests in, or grant any license under, the
Patents without the prior written consent of Agent which will not be
unreasonably withheld or delayed.
8. Duties of Grantor. Grantor shall have the duty to the extent desirable in the
normal conduct of Grantor's business and consistent with Grantor's current
business practices or Grantor's commercially reasonable business judgement: (i)
to prosecute diligently any patent application that is part of the Patents
pending as of the date hereof or thereafter until the termination of this
Agreement; (ii) to make application on such unpatented but patentable inventions
as Grantor deems appropriate; and (iii) to take reasonable steps to preserve and
maintain all of Grantor's rights in the patent applications and patents that are
part of the Patents. Any expenses incurred in connection with the foregoing
shall be borne by Grantor. Grantor shall not abandon any right to file a patent
application or any pending patent application or patent which is or shall be, in
Grantor's commercially reasonable business judgement, necessary or economically
desirable in the operation of Grantor's business. Neither Agent nor any Lender
Party shall have any duty with respect to the Patents and Licenses. Without
limiting the generality of the foregoing, neither Agent nor any Lender Party
shall be under obligation to take any steps necessary to preserve rights in the
Patents or Licenses against any other parties, but may do so at its option
during the continuance of a Default, and all expenses incurred in connection
therewith shall be for the sole account of Grantor and added to the Liabilities
secured hereby.
9. Agent's Right to ▇▇▇. Only from and after the occurrence and during the
continuance of a Default, Agent shall have the right, but shall not be
obligated, to bring suit to enforce the Patents and the Licenses, and, if Agent
shall commence any such suit, Grantor shall, at the request of Agent, do any and
all lawful acts and execute any and all proper documents required by Agent in
aid of such enforcement. Grantor shall, upon demand, promptly reimburse and
indemnify Agent for all costs and reasonable expenses incurred by Agent in the
exercise of its rights under this Section 9 (including, without limitation, all
attorneys' and paralegals' fees). If, for any reason whatsoever, Agent is not
reimbursed with respect to the costs and expenses referred to in the preceding
sentence, such costs and expenses shall be added to the Liabilities secured
hereby.
10. Waivers. No course of dealing between Grantor and Agent, and no failure to
exercise or delay in exercising on the part of Agent any right, power or
privilege hereunder or under any of the other Loan Documents shall operate as a
waiver of any of Agent's rights, powers or privileges. No single or partial
exercise of any right, power or privilege hereunder or under the other Loan
Documents shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
11. Agent's Exercise of Rights and Remedies Upon Default. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of a Default, Agent may exercise
any of the rights and remedies provided in this Agreement or any of the other
Loan Documents. Without limiting the generality of the foregoing, Grantor
acknowledges and agrees that from and after the occurrence of a Default, Agent
or its nominee may use the Patents and Licenses in connection with the conduct
of Grantor's business.
12. Severability. The provisions of this Agreement are severable, and if any
clause provisions shall be held invalid and unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
13. Modification. This Agreement cannot be altered, amended or modified in any
way, except as specifically provided in Sections 2 and 4 hereof or by a writing
signed by the parties hereto.
14. Cumulative Remedies; Power of Attorney. All of Agent's rights and remedies
with respect to the Patents and the Licenses, whether established hereby, by any
other agreements or by law, shall be cumulative and may be exercised singularly
or concurrently. Grantor hereby irrevocably appoints Agent as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor or otherwise to carry out the acts described below. Upon the
occurrence and during the continuance of a Default, Grantor hereby authorizes
Agent to, in its sole discretion, (i) endorse Grantor's name on all
applications, documents, papers and instruments necessary or desirable for Agent
in the use of the Patents and the Licenses, (ii) take any other actions with
respect to the Patents and the Licenses as Agent deems is in its best interest,
(iii) grant or issue any exclusive or non-exclusive license with respect to the
Patents to anyone on commercially reasonable terms, and (iv) assign, pledge,
convey or otherwise transfer title in or dispose of the Patents and the Licenses
to anyone on commercially reasonable terms. Grantor hereby ratifies all that
such attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable
until this Agreement shall have been terminated pursuant to Section 6 hereof.
Grantor acknowledges and agrees that this Agreement is not intended to limit or
restrict in any way the rights and remedies of Agent or Lender Parties under the
Credit Agreement or other Loan Documents, but rather is intended to facilitate
the exercise of such rights and remedies. Agent and each of the Lender Parties
shall have, in addition to all other rights and remedies given it by the terms
of this Agreement, all rights and remedies allowed by law and the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
jurisdiction in which the Patents may be located or deemed located.
15. Binding Effect; Benefits. This Agreement shall be binding upon Grantor and
its successors and assigns, and shall inure to the benefit of Agent, for its
benefit and the benefit of the Lender Parties, and their nominees, successors
and assigns. The successors and assigns of Grantor shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for Grantor;
provided, however, that Grantor shall not voluntarily assign its obligations
hereunder without the prior written consent of Agent.
16. Governing Law. 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 Collateral may be
located or deemed located at any given time.
17. Forum Selection. 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 AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE LOCATED OR DEEMED LOCATED. GRANTOR 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. GRANTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, TO THE ADDRESS OF THE GRANTOR SPECIFIED IN, OR PURSUANT TO, THE
CREDIT AGREEMENT OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
GRANTOR 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.
18. Jury Trial. GRANTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
LENDER PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY 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.
19. Notices. All notices or other communications hereunder shall be given in the
manner and to the addresses set forth in the Credit Agreement.
20. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
21. Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by facsimile shall also
deliver a manually executed counterpart of this Agreement, but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
22. Right of Recordal of Security Interest. Agent shall have the right, but not
the obligation, at the expense of Grantor, to record this Agreement in the
United States Patent and Trademark Office and with such other recording
authorities deemed reasonable and proper by Agent, and Agent shall advise
Grantor of such recordals. Upon satisfaction in full of the Liabilities and
termination of the Credit Agreement, Grantor shall have the right to effect
recordal of such satisfaction or termination at the expense of Grantor in the
United States Patent and Trademark Office and with such other recording
authorities deemed reasonable and proper by Grantor. Agent and Grantor shall
cooperate to effect all such recordals hereunder.
[SIGNATURE PAGE FOLLOWS]
VPCHI01/#652542
Signature Page to Patent and License Security Agreement
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
GRANTOR: ONKYO AMERICA SPECIALTY PRODUCTS, INC., a Michigan corporation
By:
Title:
AGENT: GMAC BUSINESS CREDIT, LLC, a Delaware limited liability company, as
Agent
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
STATE OF ILLINOIS )
) SS
COUNTY OF ▇▇▇▇ )
The foregoing Patent and License Security Agreement was
executed and acknowledged before me this 31st day of August, 2000, by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, personally known to me to be the President of Onkyo America Specialty
Products, Inc., a Michigan corporation on behalf of each such corporation.
(SEAL)
Notary Public
My commission expires
STATE OF ILLINOIS )
) SS
COUNTY OF ▇▇▇▇ )
The foregoing Patent and License Security Agreement was executed and
acknowledged before me this 31st day of August, 2000, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
personally known to me to be the Vice President of GMAC Business Credit, LLC, a
Delaware limited liability company, on behalf of such entity.
(SEAL)
Notary Public
My commission expires
SCHEDULE A
to Patent and License Security Agreement
PATENTS
SCHEDULE B
to Patent and License Security Agreement
LICENSES