1
Exhibit 10.36C
Dated October 23, 1997
JAKKS PACIFIC (H.K.) LIMITED
in favour of
NORWEST BANK MINNESOTA, N.A.,
HONG KONG BRANCH
----------------------------------
DEBENTURE
----------------------------------
2
INDEX
CLAUSE NO. PAGE NO.
1. DEFINITIONS AND INTERPRETATION 1
2. COVENANTS FOR PAYMENT 3
3. CHARGES BY WAY OF SECURITY 3
4. FURTHER ASSURANCES 7
5. COVENANTS 8
6. ENFORCEMENT OF SECURITY 12
7. RECEIVERSHIP 13
8. SALE OF CHARGED ASSETS 16
9. COSTS AND EXPENSES, INDEMNITY 18
10. APPLICATION OF PROCEEDS 18
11. POWER OF ATTORNEY 20
12. TRUSTEESHIP 20
13. CONTINUING SECURITY 20
14. RIGHTS CUMULATIVE, WAIVERS, VARIATIONS 22
15. WARRANTIES 23
16. SUCCESSORS AND ASSIGNMENT 24
17. NOTICES 25
18. SEVERABILITY 25
19. GOVERNING LAW AND JURISDICTION 25
3
THIS DEBENTURE dated , 1997 is made
BY:-
JAKKS PACIFIC (H.K.) LIMITED whose registered office is at Rooms 1605-6, 16/F.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ("the Company");
IN FAVOUR OF:-
NORWEST BANK MINNESOTA, N.A., HONG KONG BRANCH of 9/F., The Peninsula Office
Tower, 18 Middle Road, Tsim Sha Tsui, Kowloon, Hong Kong ("the Bank").
1. DEFINITIONS AND INTERPRETATION
1.01 In this Debenture, in addition to the above definitions:-
"Charged Assets" shall have the meaning ascribed to it in Clause 3.01 and
references to the Charged Assets include references to any part of them;
"Default Interest" means interest at such rate per annum charged by the Bank
from time to time on unauthorised overdrafts in the relevant currency,
compounded monthly in arrears;
"Exchange Rate" means the rate for converting one currency into another currency
which the Bank determines to be prevailing in the relevant foreign exchange
market at the relevant time, such determination to be conclusive and binding on
the Company;
"Receiver" includes each of the receivers and/or receivers and managers at any
time or from time to time appointed under this Debenture whether appointed
simultaneously or to act jointly and/or severally or to act in place of any one
or more receivers and/or receivers and managers previously appointed under this
Debenture or otherwise;
"Secured Indebtedness" means all amounts which are now or may at any time be or
become from time to time due or owing, actually or contingently, to the Bank by
the
4
Company together with interest, commission, fees and all legal and other costs,
charges, expenses and liabilities incurred by the Bank or a Receiver in relation
to this Debenture, the Company or the Charged Assets on a full indemnity basis;
"Shares" shall have the meaning ascribed to it in Clause 3.01 (a) (ii).
1.02 References to "Company" and "Lender" include, where the context admits,
their respective successors, transferees and assigns, whether immediate or
derivative. Any appointment or removal of a Receiver under this Debenture may be
made by writing signed or executed as a deed by or on behalf of the Bank.
1.03 In this Debenture, unless the context otherwise requires, references to
(or to any specific provision of) this Debenture or this security, or any other
instrument, agreement or document shall be construed as references to this
Debenture, that provision, that instrument, agreement or document as amended
with the agreement of the relevant parties and the Bank and in force at the
relevant time; references to (or to any specific provision of) any Ordinance or
enactment shall be deemed to include a reference to any re-enactment thereof for
the time being in force or any modification thereof having substantially the
same legal effect; references to Clauses shall be to clauses of this Debenture;
clause headings and the index have been inserted for convenience of reference
only and shall not affect the interpretation of this Debenture; words importing
the plural shall include the singular and vice versa and references to the
masculine, feminine or neuter shall include the others of them; and references
to a person shall be construed as references to an individual, firm, company,
corporation, unincorporated body of persons or any State or any agency thereof
or any combination of them whether or not having separate legal identity.
5
2. COVENANTS FOR PAYMENT
2.01 The Company hereby covenants to pay the Secured Indebtedness to the
Bank on demand by the Bank.
2.02 The Company shall pay Default Interest on the Secured Indebtedness from
the date of demand by the Bank on the Company until the Bank receives payment of
the whole of the Secured Indebtedness.
2.03 Payments by the Company shall be made to the Bank as specified by the
Bank without any set-off, counterclaim, withholding or condition of any kind
except that, if the Company is compelled by law to make such withholding, the
sum payable by the Company shall be increased so that the amount actually
received by the Bank is the amount it would have received if there had been no
withholding.
2.04 A certificate of balance signed by any duly authorised officer of the
Bank shall be conclusive evidence against the Company of the amount of the
Secured Indebtedness owing at any time.
3. CHARGES BY WAY OF SECURITY
3.01 The Company, as beneficial owner, charges to the Bank, as a continuing
security for the payment and discharge of the Secured Indebtedness the Charged
Assets, namely, both present and future:-
(a) by way of first fixed charge:-
(i) all book and other debts, accounts receivable, moneys, revenues,
claims and things in action due, payable, owing, or incurred to,
or purchased or otherwise acquired by the Company (including,
without limitation, all moneys received or receivable by virtue
of any insurances and all credit balances and deposits of the
6
Company with any other bank or financial institution or person
and any surplus arising on a realisation of any legal and/or
equitable assignment and/or charge whether in favour of the Bank
or any other person) and the full benefit of all negotiable or
non-negotiable instruments, guarantees, indemnities, debentures,
charges, pledges, liens, rights of set off, security reservations
of proprietary rights, rights of tracing and all other rights and
remedies in respect of the same;
(ii) the Shares, namely all stocks, shares, bonds and securities of
any kind whatsoever, whether marketable or otherwise, and all
other interests (including, but not limited to, loan capital) of
the Company in or issued by any person wheresoever situate,
including all allotments, accretions, offers, rights, benefits
and advantages whatsoever at any time accruing, offered or
arising in respect of or incidental to the same whether by way of
conversion, redemption, bonus, preference, option, dividend,
interest or otherwise;
(iii) the uncalled capital, goodwill and all patents, patent
applications, inventions, trademarks, trade names, registered
designs, copyrights, know-how and other intellectual property
rights of the Company, whatsoever and wheresoever, and all
licences, rights, benefits and advantages, including, without
limitation, all royalties, fees and other income, whatsoever and
wheresoever, deriving from or arising in respect of or incidental
to the same;
(iv) all real property of the Company, wheresoever situate, and all
rights and interests in or affecting land of the Company and all
buildings, structures and fixtures (including trade fixtures)
from time to time on any such property and the full benefit of
all debentures, mortgages, charges, pledges, options, agreements,
7
rights and interests of the Company over or affecting land,
wheresoever situate; and
(v) all furniture, fittings, equipment, plant and machinery,
computers and vehicles of the Company, whatsoever and
wheresoever, and all spare parts, replacements, modifications and
additions for or to any of the same, whatsoever and wheresoever,
and the full benefit of all warranties and maintenance contracts
for any of the same, whatsoever and wheresoever, but excluding
any stock-in-trade of the Company; and
(b) by way of first floating charge:-
(i) the undertaking and all the property, assets, rights and revenues
of the Company, whatsoever and wheresoever including, but not
limited to, its inventory and stock-in-trade; and
(ii) the property, assets, rights and revenues described in Clause
3.01(a) if and in so far as the charges thereon created by this
Debenture shall for any reason be ineffective as fixed charges.
3.02 It is a term of this Debenture that and the Company hereby covenants
that it will not, without the prior consent in writing of the Bank:-
(a) create, purport, attempt or agree to create or permit to subsist, arise
or be created any debenture, mortgage, charge, pledge, lien or other
encumbrance upon, or permit any lien or other encumbrance (save a lien
arising by operation of law in the ordinary course of trading) to arise
on, extend to or otherwise affect, any of the Charged Assets or any
interest therein; or
8
(b) part with, transfer, sell or dispose of or attempt or agree to part
with, transfer, sell or dispose of any of the Charged Assets or any
interest therein except, in the case of stock-in-trade charged by way
of floating charge only, by way of sale at market value in the usual
and ordinary course of trading as now conducted and for the purpose of
carrying on its business.
3.03 For the avoidance of doubt, it is hereby declared that the Company
shall have no power to, and the Company covenants that it will not without the
prior consent in writing of the Bank, charge, factor, pledge, assign or
otherwise dispose of any of the premises described in Clause 3.01(a)(i) or deal
with the same otherwise than by getting in and realising the same in the
ordinary course of and for the purpose of carrying on its business.
3.04 In addition and without prejudice to any other event resulting in a
crystallisation of the floating charge, the floating charge created by 3.01 (b)
over the Charged Assets shall automatically be converted into a fixed charge if
and when:-
(a) the Company ceases to carry on business or a substantial part thereof
or shall cease to be a going concern; or
(b) the Company stops making payments to its creditor or gives notices to
creditors that it intends to stop payment; or
(c) immediately prior to the occurrence of any of the events stipulated in
Clause 3.02; or
(d) if the holder of any security interests whether ranking in priority to
or pari passu with or after the charges contained in this Debenture
shall appoint an administrative receiver, receiver, manager or receiver
and manager.
9
3.05 In addition and without prejudice to any other event resulting in a
crystallisation of the floating charge, the Bank may at any time and from time
to time, by notice in writing to the Company, convert the floating charge
created by Clause 3.01(b) into a fixed charge as regards all of the premises
described in Clause 3.01(b) and/or only those premises specified in such notice.
3.06 No payment by the Company to the Bank in respect or on account of the
Secured Indebtedness shall operate to reduce the Secured Indebtedness if made
after receipt by the Bank of notice (actual or otherwise) of any of the matters
referred to in Clauses 3.02 and 3.03 to which the Bank has not given its prior
written consent and any such payments shall be deemed to have been credited to a
new account of the Company with the Bank.
4. FURTHER ASSURANCES
The Company covenants at any time, if and when required by the Bank, on
demand to execute or do at the cost and expense of the Company such deeds,
assurances, agreements, instruments, acts and things as the Bank shall require
in respect of the Charged Assets to secure further the Secured Indebtedness or
any part thereof and/or perfect, improve, preserve, enforce or realise any
security created or intended to be created by this Debenture and/or to
facilitate the preservation or exercise of any right, power or remedy under this
Debenture or any proposed preservation or exercise as aforesaid and/or to
facilitate the realisation of any of the Charged Assets or any interest therein
or the exercise or proposed exercise by the Bank or a Receiver of any of their
powers under this Debenture. All mortgages, charges, pledges, assignments or
other security interests which the Bank may require the Company so to execute
pursuant to the provisions of this Clause 4 shall contain: (i) an immediate and
unrestricted power of sale without notice, (ii) a clause excluding any other
restrictions imposed by any applicable law on the power of sale, (iii) a clause
excluding any restrictions imposed by any applicable law on the consolidation of
mortgages or charges or other security interests, and (iv) such other clauses
and provisions for the protection and benefit of the Bank as the Bank may
require.
10
5. COVENANTS
5.01 The Company covenants that, during the continuance of this security, it
will:-
(a) conduct and carry on its business in a proper and efficient manner and
not make any substantial alteration in the nature or mode of conduct of
its business;
(b) keep or cause to be kept proper books of accounts relating to its
business and promptly provide to the Bank such financial and other
information concerning it as the Bank may from time to time require;
(c) promptly file or cause to be filed all tax returns required to be filed
in all jurisdictions in which it is situate or carries on business or
is otherwise subject to taxation and pay or cause to be paid all taxes
shown to be due and payable on such returns or any assessments made
against it before the date from which penalties attach for failure to
pay the same (except those being contested in good faith and where such
payment may be lawfully withheld and for the payment of which adequate
reserves have been set aside);
(d) promptly pay into the Company's account with the Bank (or such other
accounts as the Bank shall from time to time direct) all moneys which
it may receive in respect of any premises described in Clause
3.01(a)(i) forthwith on receipt (except to the extent that the Bank may
agree otherwise in writing) and, pending such payment, hold such moneys
on trust for the Bank and not withdraw the monies it receives from such
account(s) unless and to the extent that the Bank shall agree thereto
in writing;
11
(e) if so required by the Bank, promptly give notice (in such form as the
Bank may require) to any person requiring payment into the Company's
account(s) with the Bank of all moneys due or to become due to the
Company from that person;
(f) promptly deposit with the Bank and permit the Bank to hold and retain
all certificates and documents of title, duly executed transfers or
assignments and any other documents relating to the Charged Assets or
any interest therein as the Bank may from time to time require to
perfect its title thereto or to vest or enable it to vest the same in
itself or its nominees or any purchaser;
(g) observe and perform all covenants and stipulations from time to time
affecting any of the Charged Assets or any interest therein, take such
action as may from time to time be necessary or desirable to preserve,
maintain and renew any of the Charged Assets or any interest therein,
and not do or suffer or omit to be done any act matter or thing whereby
any provision of any applicable law, decree, order or regulation from
time to time in force affecting any of the Charged Assets or any
interest therein is infringed;
(h) keep all its buildings, structures, fixtures, furniture, fittings,
equipment, plant and machinery, computers, and vehicles in good and
substantial repair and in good working order and condition with
recognisable identification markings, and not pull down, demolish,
dismantle, remove or do anything similar with any of the same without
the prior written consent of the Bank except in the ordinary course of
use, repair, maintenance or improvement or where the asset concerned is
no longer required for the purpose of its business;
(i) inform the Bank immediately on contracting to purchase or otherwise
acquire any estate or interest in real property and promptly provide
the
12
Bank with such information in relation to the same as the Bank may from
time to time require;
(j) insure and keep insured such of the Charged Assets as are of an
insurable nature with insurers previously approved by the Bank against
such risks, contingencies, losses and liabilities in respect of which
insurance is prudently taken out and against such other risks,
contingencies, losses or liabilities as the Bank shall from time to
time request to their full replacement value from time to time
(including fees and other charges and expenses), with the interest of
the Bank noted on every policy or cover note relating to such
insurances each of which shall contain such provisions for the
protection of the Bank as the Bank may require; duly and punctually pay
all premiums and other moneys necessary for effecting and keeping up
such insurances and on demand produce to the Bank the policies of such
insurances and proof of such payments; forthwith upon receipt pay to
the Bank and pending such payment hold on trust for the Bank all moneys
received by it by virtue of any insurances maintained or effected by it
(whether or not effected pursuant to the above) for application, at the
option of the Bank, in making good the loss, damage, destruction or
liability in respect of which such moneys are received (any deficiency
being made good by the Company) or in or towards payment, discharge or
satisfaction of any Secured Indebtedness;
(k) duly and punctually pay, discharge and indemnify the Bank and any
Receiver against all debts, obligations and liabilities which would
have preference to the floating charge created by this Debenture and
all existing and future taxes, duties, rates, rents and outgoings
assessed upon or payable by the Company in respect of any of the
Charged Assets or any interest therein and on demand produce to the
Bank receipts or other evidence satisfactory to the Bank that such
payments have been duly made or (as the case may be) such obligations
and liabilities have been duly discharged (failing which, the Bank may
assume that such
13
payments have not been duly made or such obligations and liabilities
have not been duly discharged); and
(l) promptly take such action as may be necessary or desirable to preserve,
protect, maintain or renew any Charged Assets or any interest therein.
5.02 The Company covenants with the Bank that during the continuance of this
security, it will not, without the prior written consent of the Bank:-
(a) declare or pay any dividend on, or declare or make any cash or other
distribution in respect of , any class or part of its share or loan
capital in respect of any financial year except to such extent and in
such manner as the Bank may from time to time agree;
(b) make or grant any loan or advance, provide or extend any credit or
accommodation, enter into any funding arrangement, give any guarantee,
indemnity or assurance against loss to or for the benefit of any person
or act as surety or otherwise voluntarily assume any liability, whether
actual or contingent, in respect of any obligation of any other person,
except (in each case) on normal commercial terms in the ordinary course
of its business as now conducted and for the purpose of carrying on
that business;
(c) borrow or in any manner raise money or incur or create any actual or
contingent liability for any indebtedness beyond any limit from time to
time determined by the Bank;
(d) enter into or undertake any new capital commitment involving estimated
expenditure by the Company beyond any limit from time to time
determined by the Bank;
14
(e) incur any expenditure, indebtedness or financial or other obligation or
liability of an exceptional or unusual nature;
(f) form or co-operate in the formation of, or purchase or acquire, any
subsidiary or purchase or acquire any share or other ownership interest
in any other company or person or enter into any partnership agreement
or arrangement;
(g) change its financial year or its auditors;
(h) do, neglect or omit or cause, permit or suffer to be done, neglected or
omitted any act, matter or thing which might infringe any law,
ordinance, enactment, decree, order or regulation affecting any of the
Charged Assets or any interest therein; or
(i) generally do or cause or permit to be done anything which may in any
way depreciate, jeopardise or otherwise prejudice the value of any of
the Charged Assets or any interest therein or this security.
5.03 If the Company fails to observe or perform any of its covenants under
this Debenture, the Bank shall be entitled (but not obliged) to take such action
as it shall in its absolute discretion consider appropriate on behalf of or in
the name of the Company or otherwise with a view to remedying or mitigating the
consequences of any such failure (and the Bank shall be indemnified by the
Company accordingly) and any moneys expended by the Bank in such regard shall be
repayable by the Company to the Bank on demand together with Default Interest on
the sums demanded.
6. ENFORCEMENT OF SECURITY
At any time after demand by the Bank for the payment of the Secured
Indebtedness, the Bank and any nominee of the Bank may exercise, without further
15
notice and without first appointing a Receiver under this Debenture, all the
powers and discretions conferred by this Debenture on a Receiver appointed under
this Debenture.
16
7. RECEIVERSHIP
7.01 At any time after demand by the Bank for the payment of the Secured
Indebtedness, the Bank may appoint any one or more persons to be a Receiver of
all or any part of the Charged Assets and may from time to time fix his
remuneration (which shall be of such amount as may be agreed from time to time
between the Bank and such Receiver) and may remove any Receiver so appointed and
appoint another in his place.
7.02 Where two or more persons are appointed Receivers, then, unless the
Bank otherwise directs, their appointment shall be deemed to be joint and
several and each may exercise any power independently of the others.
7.03 A Receiver so appointed shall be the agent of the Company for all
purposes, and the Company shall be solely responsible for his acts, defaults,
losses or misconduct and for his remuneration and the Bank shall incur no
liability therefor by reason of its appointing him as Receiver.
7.04 A Receiver so appointed shall have power:-
(a) to enter into and upon and take possession of, collect and get in all
or any of the Charged Assets, exercise in respect of the Shares all
voting or other powers or rights available to a registered and/or
beneficial (as appropriate) owner of the same in such manner as he may
think fit and to take, defend, settle, refer to arbitration, enforce,
compromise, or abandon any proceedings in the name of the Company or
otherwise concerning the Company's business or any part thereof or any
of the Charged Assets as he shall think necessary or expedient;
(b) to carry on or authorise or concur in carrying on the business or any
part of the business of the Company and to manage, conduct,
reconstruct, amalgamate or diversify the business of the Company or any
part thereof (including power to buy, lease or otherwise acquire,
develop or improve
17
properties or other assets) without being responsible for loss or
damage and do all acts and things which the Company might do in the
ordinary conduct of its business or for the preservation, protection or
improvement of any of the Charged Assets or any interest therein or
obtaining any income or return therefrom;
(c) to raise or borrow money from or incur any other liability to the Bank
or others on such terms with or without security as he may think fit
and so that any such security may be or include a charge on all or any
part of the Charged Assets ranking in priority to this security or
otherwise;
(d) to sell by public auction or private contract, let, surrender or accept
surrenders, grant leases, tenancies or licences or otherwise dispose of
or deal with all or any of the Charged Assets in such manner, for such
consideration and generally on such terms and conditions as he may
think fit, with full power to convey or otherwise transfer such Charged
Assets in the name of the Company or other the estate owner. Any such
consideration may be cash, debentures or other obligations, shares,
stock or other consideration and may be payable immediately or by
instalments spread over such period or periods as he shall think fit,
and so that any consideration received or receivable shall ipso facto
forthwith be and become charged with the payment and discharge of the
Secured Indebtedness. Equipment, accessories and other fixtures and
fittings may be severed and sold separately from any premises of the
Company containing them and the Receiver may apportion any rent and the
performance of any obligations affecting any premises sold without the
consent of the Company;
(e) to promote the formation of companies with a view to the same
purchasing, leasing, licensing or otherwise acquiring interests in all
or any of the Charged Assets or otherwise;
18
(f) to make any arrangement, settlement or compromise or enter into,
continue, cancel, abandon or disregard any contracts which he shall
think necessary or expedient in the interests of the Bank;
(g) to make and effect all repairs, renewals, alterations and improvements
and to maintain, renew, take out or increase insurances with respect to
any of the Charged Assets;
(h) to appoint and remunerate any person for any of the purposes mentioned
in this Clause 7.04 or to guard or protect the Charged Assets for such
periods as he may determine and to dismiss the same;
(i) to make calls conditionally or unconditionally on the members of the
Company in respect of uncalled capital with the same powers of
enforcing payment of any calls so made as are by the constitutional
documents of the Company conferred upon the Directors thereof and to
the exclusion of the Directors' powers in that behalf;
(j) to do anything which he shall think necessary or expedient to preserve,
protect, maintain or manage any of the Charged Assets;
(k) to exercise all rights and powers incidental to ownership of all or any
of the Charged Assets or any interest therein;
(l) to sign any document, execute any deed and do all such other acts and
things as may be considered to be incidental or conducive to any of the
above matters or powers or to the realisation of this security, and to
use the name of the Company for all the above purposes; and
(m) generally on behalf and at the cost of the Company (notwithstanding
liquidation of the Company or any event analogous thereto) to do, omit
to do or cause, permit or suffer to be done or omitted anything which
the
19
Company could do, omit, cause, permit or suffer in relation to all or
any part of the Charged Assets or any interest therein.
7.05 A Receiver shall in the exercise of his powers conform to any
regulations or directions from time to time made or given by the Bank.
7.06 The Bank may require a Receiver to give security for the due
performance of his duties as Receiver and may fix the nature and amount of the
security to be so given, but the Bank shall not be bound in any case to require
any such security.
7.07 The Bank may pay over to a Receiver any moneys forming part of the
Charged Assets or the income thereof to the intent that the same may be applied
for the purposes of this Debenture by the Receiver and the Bank may from time to
time determine what funds a Receiver may keep in hand to enable him to perform
his duties as Receiver.
7.08 A Receiver may retain out of any money which he receives, collects,
recovers or realises under this Debenture his remuneration and all costs,
charges and expenses incurred by him as Receiver.
8. SALE OF CHARGED ASSETS
8.01 No restrictions imposed by any enactment or law on any immediate or
other power of sale, or on the consolidation of mortgages or charges or other
securities shall apply to this Debenture or to any security given to the Bank
pursuant to this Debenture.
8.02 Any sale or other disposition by or on behalf of the Bank, or any of
its nominees, or a Receiver may be made upon such terms as to indemnity as the
Bank or such Receiver may think fit.
20
8.03 Upon any such sale or other disposition and upon any other dealing or
transaction under the provisions of this Debenture, the receipt of the Bank or a
Receiver for the purchase money of the property or asset sold or for any other
moneys paid to or other consideration received by it or him shall effectually
discharge the purchaser or person paying or giving the same therefrom and from
being concerned to see to the application or being answerable for the loss,
non-application or mis-application thereof.
8.04 No purchaser or other person shall be bound or concerned to see or
enquire whether the right of the Bank, or any of its nominees, or a Receiver to
exercise any of the powers conferred by this Debenture has arisen or not or with
the propriety of the exercise or purported exercise of such powers or be
concerned with notice to the contrary of any of the foregoing.
8.05 Any dealing by any purchaser or other person with the Bank, a Receiver
or its or his attorney, agent or nominee shall be deemed, so far as concerns the
safety and protection of such purchaser or other person, to be within the powers
conferred by this Debenture and to be valid and effectual accordingly.
8.06 The remedy of the Company in respect of any irregularity or impropriety
whatsoever in the exercise or purported exercise of any power or right under
this Debenture or the execution or purported execution of any provision of this
Debenture shall be in damages only.
8.07 Neither the Bank nor a Receiver shall be answerable for any losses
which may arise in the exercise of any of their powers nor shall they be liable
by reason of any entry into possession of the Charged Assets or any part thereof
to account as mortgagee in possession for any moneys except actual receipts or
be liable for any loss on realisation or for any default or omission for which a
mortgagee in possession may be liable.
21
9. COSTS AND EXPENSES, INDEMNITY
9.01 The Company covenants with the Bank, on demand, to pay all costs and
expenses (on a full and unqualified basis) incurred in connection with the
negotiation, preparation, execution and registration of this Debenture, and by
the Bank or by a Receiver in the exercise of any powers, rights or remedies
conferred by this Debenture, or which the Bank or a Receiver shall incur in or
about the preservation or attempted preservation of this security or the
preservation, recovery or realisation or attempted preservation, recovery or
realisation of all or any part of the Charged Assets, together with Default
Interest on the sums demanded.
9.02 The Company covenants to indemnify the Bank and a Receiver against all
losses, actions, claims, expenses, demands and liabilities whether in contract,
tort or otherwise now or hereafter incurred by it or him or by any manager,
agent, officer or employee for whose liability act or omission it or he may be
answerable for anything done or omitted in the exercise or purported exercise of
the powers contained in this Debenture or occasioned by any breach by the
Company of any of its covenants or other obligations to the Bank. The Company
shall so indemnify the Bank and a Receiver on demand and shall pay Default
Interest on the sums demanded.
9.03 The Bank and any Receiver may retain and pay out of any money received,
collected, recovered or realised under this Debenture all sums required to
implement the indemnity in Clause 9.02 and such sums shall be a charge on the
Charged Assets and shall rank in priority to any other Secured Indebtedness.
10. APPLICATION OF PROCEEDS
10.01 All moneys received by a Receiver and/or by the Bank in the exercise of
any powers conferred by this Debenture shall, subject to any claims ranking in
priority to the Secured Indebtedness to the extent of such priority, be
applied:-
22
(a) first, in or towards the payment, discharge or satisfaction of all
actions, claims, demands, proceedings, liabilities, losses, damages,
costs, charges and expenses covered by the indemnity in Clause 9.02;
(b) secondly, in or towards the payment of any such Receiver's remuneration
and the costs, charges, expenses and liabilities incurred or suffered
by any such Receiver and/or the Bank in or incidental to realisation of
such moneys or to the exercise or purported exercise of their
respective powers or otherwise in relation to this Debenture or the
Charged Assets if and to the extent that such costs, charges, expenses
and liabilities do not fall within the indemnity in Clause 9.02; and
(c) thirdly, in or towards the payment, discharge or satisfaction of all
other Secured Indebtedness in such order as the Bank may in its
absolute discretion from time to time determine,
provided that all or any such moneys may in the absolute discretion of the Bank
be credited to any suspense account and may be held in such account for so long
and in such manner as the Bank may think fit and a Receiver may retain the same
for such period as he may consider expedient.
10.02 The Bank and/or a Receiver may convert any moneys received, recovered
or realised under this Debenture (including the proceeds of any previous
conversion under this Clause 10.02) from their existing currency of denomination
into such other currency of denomination as the Bank and/or a Receiver may think
fit and any such conversion shall be effected at the Exchange Rate.
10.03 No payment to the Bank pursuant to any judgment or order of any court
or otherwise shall discharge the obligation of the Company in respect of which
it was made unless and until payment in full has been received in the currency
in which such obligation was incurred and to the extent that the amount of any
such payment shall, on actual conversion into such currency at the Exchange
Rate, fall short of the amount of
23
the obligation expressed in that currency, the Company shall be liable to the
Bank for the shortfall.
11. POWER OF ATTORNEY
The Company, by way of security, irrevocably appoints the Bank and
separately each Receiver to be its attorney (with full power to appoint
substitutes and to sub-delegate) and on behalf of and in the name of the Company
and as its act and deed or otherwise, to execute, seal and deliver and otherwise
perfect and do all such deeds, assurances, agreements, instruments, acts and
things required to be done pursuant to Clause 4 or which otherwise may be
required for or deemed proper on or in connection with the full exercise of the
powers conferred by this Debenture by the Bank or by a Receiver or to give full
force and effect to the covenants, undertakings, terms and conditions contained
in this Debenture. The Company ratifies and confirms and agrees to ratify and
confirm any deed, document, act or thing which any such attorney may lawfully
execute or do.
12. TRUSTEESHIP
The Company declares that, as and when the security created by this
Debenture shall become enforceable, it will hold all the Charged Assets (subject
to the Company's right of redemption) upon trust to convey, assign, transfer or
otherwise dispose of or deal with the same in such manner and to such person as
the Bank shall direct, and declares that it shall be lawful for the Bank to
appoint new trustees of the Charged Assets, or any part thereof, from time to
time in place of the Company or in place of any trustee appointed under this
power.
13. CONTINUING SECURITY
13.01 This Debenture is a continuing security and shall secure the whole of
the Secured Indebtedness and is in addition to, shall not be affected by and may
be enforced despite the existence of any other guarantee or security held by or
available to the Bank.
24
13.02 Any release, discharge or settlement under this Debenture shall be
conditional upon no payment of the Secured Indebtedness by the Company or any
other person being avoided, reduced or repaid for any reason and the Bank shall
be entitled to enforce this Debenture if such condition is not fulfilled as if
such release, discharge or settlement had not occurred.
13.03 The Company hereby agrees that the Bank may, at any time without
notice, combine or consolidate all or any of the Company's then existing
accounts with the Bank (of any nature of description whatsoever and whether
subject to notice or not), and set-off or transfer any sum standing to the
credit of any one or more such accounts wheresoever situate in or towards
satisfaction of any liabilities of the Company to the Bank under this Debenture
whether such liabilities be present or future, actual or contingent, primary or
collateral, and several or joint.
13.04 The Bank may at any time without notice apply any credit balance to
which the Company is entitled on any account with the Bank in or towards
satisfaction of the Secured Indebtedness. For this purpose, the Bank is
authorised to purchase, at the Exchange Rate, such other currencies as may be
necessary to effect such application with the moneys standing to the credit of
such account.
13.05 The Bank shall have and shall be authorised to exercise a lien over all
property of the Company coming into the possession or control of the Bank, for
custody or any other reason with power for the Bank to sell such property to
satisfy the Secured Indebtedness.
13.06 If there are any security interests having priority to the charges
contained in this Debenture in respect of all or any part of the Charged Assets
then :-
(a) if any proceedings or steps are being taken to exercise or enforce any
powers or remedies conferred by such prior security interest against
the Charged Assets, the Bank or any Receiver may (but without prejudice
to
25
any rights the Bank or the Receiver may have under statute) redeem such
prior charge or procure the transfer thereof to itself or himself, as
the case may be, and may settle and pass the accounts of the prior
chargees and any account so settled and passed shall be conclusive and
binding on the Company and the principal, interest, costs, charges and
expenses of and incidental to such redemption or transfer shall be paid
to the Bank on demand with interest at the rate as may be conclusively
determined by the Bank and, until payment, the Charged Assets shall
stand charged with the amount to be paid; and
(b) all the powers, authorities and discretions conferred by a prior charge
upon the chargee or any receiver thereunder shall be exercisable by the
Bank or a Receiver in like manner as if the same were expressly
included herein and the Bank shall be entitled to exercise all the
powers, authorities and discretions of an administrative receiver,
receiver, manager or receiver and manager appointed thereunder.
13.07 This Debenture shall remain valid and enforceable notwithstanding any
change in the name, composition or constitution of the Bank or the Company or
any amalgamation or consolidation by the Bank or the Company with any other
corporation.
14. RIGHTS CUMULATIVE, WAIVERS, VARIATION
14.01 The rights, powers and remedies provided in this Debenture are
cumulative, may be exercised as often as the Bank or a Receiver thinks fit and
are in addition to and not exclusive of any rights, powers or remedies provided
by law. No single or partial exercise by the Bank or a Receiver of any right,
power or remedy shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
14.02 No failure or delay on the part of the Bank to exercise any power,
right or remedy shall operate as a waiver thereof, nor shall any single or
partial exercise or
26
waiver by the Bank of any power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.
15. WARRANTIES
The Company represents and warrants to the Bank that:-
(a) it is duly incorporated and validly existing in its jurisdiction of
incorporation;
(b) it has the power and has taken all necessary action to authorise it to
enter into and perform its obligations under this Debenture;
(c) this Debenture constitutes its legal and validly binding obligations
enforceable in accordance with its terms;
(d) it is absolutely entitled to all of the Charged Assets vested in it as
at the date of this Debenture free from all security interests and
claims whatsoever; and
(e) the execution, delivery and performance of this Debenture and any
assurance given hereunder by or on behalf of the Company will not:-
(i) contravene any existing applicable law, enactment, rule or
regulation or any judgment, decree or permit to which the
Company is subject or by which it or any of the Charged Assets
is bound; or
(ii) conflict with, or result in any breach of any of the terms of,
or constitute a default under, any agreement or other
instrument or document to which the Company is a party or is
subject or by which it or any of the Charged Assets is bound;
or
27
(iii) contravene or conflict with any provision of the Company's
constitutional documents; or
(iv) result in the creation or imposition of or oblige the Company
to create any security interest on or over any Charged Asset
or any interest therein;
and undertakes to ensure that the above representations and warranties remain
true so long as it is under any liability under this Debenture.
16. SUCCESSORS AND ASSIGNMENT
16.01 This Debenture shall be binding upon the Company and its successors and
enure for the benefit of the Bank and its successors.
16.02 The Company may not assign or transfer any of its rights or obligations
under this Debenture.
16.03 The Bank may assign all or any part of this security and all or any
part of its rights or benefits under this Debenture to any persons, in which
event all relevant references in this Debenture to the Bank shall thereafter be
construed as a reference to the Bank or its assignee(s) to the extent of their
respective interests.
16.04 The Bank may disclose to a potential assignee or other person with whom
it may propose contracting in relation to this Debenture or any assurance such
information about the Company, its subsidiaries (if any) and the Charged Assets
as the Bank considers appropriate.
17. NOTICES
28
17.01 Any notice, demand or other communication under this Debenture shall be
in writing in the English language addressed to the Company at its registered
office or its principal place of business in Hong Kong or the last address
registered with the Bank and to the Bank at its address specified above or such
other address as the Bank may notify to the Company for this purpose and may be
delivered by leaving it at such address or by post, facsimile transmission or
telex.
17.02 Any such notice, demand or other communication shall be deemed to have
been delivered to the Company on leaving it at such address, on the second day
after posting (if to an address in Hong Kong), on the fifth day after posting by
airmail (if to an address outside Hong Kong), at the time of transmission if
sent by facsimile and on receipt of the addressee's answerback if sent by telex.
Any notice or other communication to the Bank under this Debenture shall be
effective only when actually received by the Bank.
18. SEVERABILITY
Any provision of this Debenture prohibited by or unlawful or
unenforceable under any applicable law actually applied by any court of
competent jurisdiction shall, to the extent required by such law, be severed
from this Debenture and rendered ineffective so far as is possible without
modifying the remaining provisions of this Debenture. Where, however, the
provisions of any such applicable law may be waived, they are hereby waived by
the Company to the full extent permitted by such law.
19. GOVERNING LAW AND JURISDICTION
19.01 This Debenture shall be governed by and construed in accordance with
the laws of the Hong Kong Special Administrative Region.
19.02 The Company submits to the non-exclusive jurisdiction of the Courts of
the Hong Kong Special Administrative Region but the submission by the Company to
29
the non-exclusive jurisdiction of such Courts shall not (and shall not be
construed so as to) limit the right of the Bank to take proceedings against the
Company in whatsoever jurisdictions shall to it seem fit, nor shall the taking
of proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not. The
Company:-
(a) waives any objection to the laying of the venue of any legal action or
proceedings brought against it under this Debenture and any immunity
from suit, execution, attachment or other legal process to the full
extent permitted by applicable law; and
(b) consents generally and irrevocably in respect of any legal action or
proceedings under this Debenture to the giving of any relief or the
issue of any process in connection with such legal action or
proceedings.
IN WITNESS whereof this Debenture has been duly executed and delivered
as a Deed by the Company the date first above written.
SEALED with the COMMON SEAL of ) /S/ JF
JAKKS PACIFIC (H.K.) LIMITED )
by authority of its Board of ) /S/ JF
Directors, in the presence of:- )
Witness:-
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
