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EXHIBIT 10.5
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
(Akashic)
THIS SUBSIDIARY GUARANTOR SECURITY AGREEMENT dated as of May 29, 1998
(this "Agreement") is entered into by and between AKASHIC MEMORIES CORPORATION,
a California corporation (a "Subsidiary Guarantor" or "Akashic") and CANADIAN
IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as agent for the Banks, as defined
below (the "Agent").
RECITALS
A. StorMedia International, Ltd., a Cayman Islands corporation ("SIL"),
and Strates Pte. Ltd., a Singapore corporation ("Strates" and together with SIL,
the "Borrowers," each a "Borrower"), StorMedia Incorporated, a Delaware
corporation (the "Parent Guarantor," collectively with the Subsidiary
Guarantors, as defined below, and the Borrowers, the "Loan Parties," each a
"Loan Party"), certain financial institutions named on Annex I thereof or who
become parties thereto as Banks (each a "Bank" and collectively, the "Banks"),
Agent, Banque Nationale de Paris, San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as co-agent for the
Banks (the "Co-Agent"), and Canadian Imperial Bank of Commerce, Singapore Branch
as the Designated Issuer ("Designated Issuer") have entered into that certain
Credit Agreement dated as of August 23, 1996 (as amended, supplemented, or
otherwise modified through the date hereof, the "Existing Credit Agreement").
B. On December 31, 1997, StorMedia Foreign Sales Corporation, a U.S.
Virgin Islands corporation and wholly-owned Subsidiary of Parent Guarantor
("FSC," and together with Akashic, the "Subsidiary Guarantors"), acquired all of
the outstanding capital stock of Akashic through the merger of StorMedia
Acquisition Corporation, a California corporation and wholly-owned Subsidiary of
FSC with and into Akashic. In connection with such acquisition, certain of the
other Loan Parties purchased the patents and applications pending in Akashic's
parent corporation, Kubota Corporation.
C. Pursuant to a series of consents and limited waivers, the Agent, the
Co-Agent, the Banks and the Designated Issuer deferred certain principal
payments in respect of the Term Loan and waived certain Events of Default
arising out of the Loan Parties' failure to comply with certain provisions of
the Existing Credit Agreement.
D. The Parent Guarantor, FSC, the Borrowers and the other Loan Parties
propose to enter into a financial restructuring (the "Restructuring"), pursuant
to which, among other things, one or more of the Loan Parties will consummate
(i) the financing transactions contemplated by the Foothill Group Financing
Documents, (ii) the Equity Investment and (iii) the issuance of the Seagate
Subordinated Debt;
E. In connection with the Restructuring, the Loan Parties, the Banks,
the Agent and the Co-Agent desire to amend and restate the Existing Credit
Agreement in its entirety (the Existing Credit Agreement, as so amended and
restated, and the Amended and Restated Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time, collectively, being the
"Credit Agreement"). Capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to such terms in the Credit Agreement. Unless
otherwise defined herein or in the
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Credit Agreement, terms used in Division 9 of the California Uniform Commercial
Code (as in effect from time to time) are used herein as therein defined.
F. As a condition precedent to the effectiveness of the Credit
Agreement, the Banks, Agent, and Co-Agent have required that Akashic grant the
security interest and undertake the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks, Agent and Co-Agent to enter into the Credit Agreement and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Subsidiary Guarantor and Agent hereby agree as follows:
SECTION 1. Grant of Security. Subsidiary Guarantor hereby assigns to
Agent, for the benefit of Agent and Banks, and hereby grants to Agent, for the
benefit of Agent and Banks, a security interest in all of Subsidiary Guarantor's
right, title and interest in and to the property described on Exhibit A attached
hereto and in the Pledged Collateral, as defined in SECTION 10 hereof, in each
case whether now or hereafter existing or in which Subsidiary Guarantor now has
or hereafter acquires an interest and wherever the same may be located (the
"Collateral").
SECTION 2. Security for Obligations. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all obligations and liabilities of every
nature of Subsidiary Guarantor now or hereafter existing, under or arising out
of or in connection with the Credit Agreement or any Loan Documents, and all
extensions or renewals thereof, whether for principal, interest, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Agent or a Bank as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "Underlying Debt"), and all obligations of every nature of
Subsidiary Guarantor now or hereafter existing under this Agreement, the
Subsidiary Guaranty or any other Loan Document (all such obligations, together
with the Underlying Debt being the "Secured Obligations").
SECTION 3. Subsidiary Guarantor Remains Liable. Anything contained
herein to the contrary notwithstanding, (a) Subsidiary Guarantor shall remain
liable under any contracts and agreements included in the Collateral, to the
extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Agent of any of its rights hereunder shall not release
Subsidiary Guarantor from any of its duties or obligations under the contracts
and agreements included in the Collateral, and (c) Agent shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Agent be obligated to perform
any of the obligations or duties of Subsidiary Guarantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
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SECTION 4. Representations and Warranties. Subsidiary Guarantor
represents and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement and the Permitted Liens, Subsidiary Guarantor owns the
Collateral free and clear of any lien, mortgage, security interest, legal or
equitable charge, pledge, deed of trust or other encumbrance. Except such as may
have been filed in favor of Agent relating to this Agreement and the Permitted
Liens, no effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office.
(b) Condition and Location of Equipment and Inventory. Except for
Nextar thickness sorters whose suitability is in dispute, all of the Equipment
and Inventory is, as of the date hereof, of good and serviceable quality, free
from defects, and located at the places specified in Schedule I annexed hereto.
(c) Office Locations. The chief place of business, the chief
executive office and the office where Subsidiary Guarantor keeps its records
regarding its Accounts is, and has been for the four month period preceding the
date hereof, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇.
(d) Fictitious Names. Subsidiary Guarantor does not conduct any
business under any trade-name or fictitious business name.
(e) Delivery of Certain Collateral. All share certificates
representing the Shares (as defined in Section 10), all notes and other
instruments (excluding checks) comprising any and all items of Collateral have
been delivered to Agent duly endorsed or accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with (except for the filing of
financing statements to perfect Agent's Lien on the Collateral for which filing
of a financing statement is the method of perfection), any governmental
authority or regulatory body is required for either (i) the grant by Subsidiary
Guarantor of the security interest granted hereby or for the execution, delivery
or performance of this Agreement by Subsidiary Guarantor or (ii) the perfection
of or the exercise by Agent of its rights and remedies hereunder, other than
such actions and filings as have already been taken, unless the Credit Agreement
does not require that such authorization, approval, action, notice or filing be
made until after the Effective Date.
(g) Enforceability. All actions necessary to ensure the validity
and enforceability of the Agent's Lien on the Collateral, including as against
any bona fide purchaser for value, have been duly taken.
(h) Perfection. This Agreement, together with the filing of a
financing statement with the Secretary of State of California or the deliveries
of certain items of Collateral in accordance with the terms hereof, creates a
valid, perfected and, security interest in the Collateral of the priority
specified in the Intercreditor Agreement, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been
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duly made or taken, unless the Credit Agreement does not require that such
filing or action be made until after the Effective Date.
(i) Other Information. All information heretofore, herein or
hereafter supplied to Agent by or on behalf of Subsidiary Guarantor with respect
to the Collateral is (or, as to hereafter supplied information, will be)
accurate and complete in all material respects, and with respect to such
information prepared by a third party, to the best knowledge of the Subsidiary
Guarantor for which such information was prepared, such information is accurate
and complete in all material respects.
SECTION 5. Further Assurances.
(a) Subsidiary Guarantor shall execute and deliver to Agent,
prior to or concurrently with Subsidiary Guarantor's execution and delivery of
this Agreement and at any time thereafter at the request of Agent and at
Subsidiary Guarantor's expense, all financing statements, continuation financing
statements, fixture filings, security agreements, chattel mortgages, pledges,
mortgages, deeds of trust, assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices, schedules of accounts,
letters of authority, and all other documents that Agent may reasonably request,
in form satisfactory to Agent, to perfect and continue perfected Agent's
security interests in the Collateral, in order to fully consummate all of the
transactions contemplated under the Loan Documents and to enable Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Subsidiary
Guarantor will: (i) if any Account shall be evidenced by a promissory note or
other instrument (excluding checks), having a face value in excess of One
Thousand Dollars ($1,000) deliver and pledge to Agent hereunder such note or
instrument, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Agent; (ii)
execute and file such financing or continuation statements, or amendments
thereto, or such other instruments or notices, as may be necessary or desirable,
or as Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby; (iii) at any reasonable time, allow
Agent or such other persons designated by Agent in accordance with the terms of
the Credit Agreement to inspect the Subsidiary Guarantor's books and to check,
test, and appraise the Collateral in order to verify the Subsidiary Guarantor's
financial condition or the amount, quality, value, condition of, or to any other
matter relating to, the Collateral; and (iv) at Agent's request, appear in and
defend any action or proceeding that may affect Subsidiary Guarantor's title to
or Agent's security interest in all or any part of the Collateral.
(b) Subsidiary Guarantor hereby authorizes Agent to file,
register or record such documents as may be appropriate to protect Agent's
security interest in the Collateral, relative to all or any part of the
Collateral without the signature of Subsidiary Guarantor. Subsidiary Guarantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by Subsidiary Guarantor shall be sufficient as a
financing statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Subsidiary Guarantor will furnish to Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.
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(d) Subsidiary Guarantor will execute and deliver the Collateral
Assignment in the form of Exhibit B to this Agreement.
SECTION 6. Covenants of Subsidiary Guarantor. Subsidiary Guarantor
shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral where
violation is reasonably likely to have a material adverse effect on Agent's
rights in the Collateral or the value of the Collateral or Agent's ability to
foreclose on the Collateral;
(b) not change its name or any foreign equivalent, FEIN,
corporate structure (within the meaning of Section 9402(7) of the California
Uniform Commercial Code), or identity, or add any new fictitious name; provided,
however, that Subsidiary Guarantor may change its name upon thirty (30) days'
prior written notification thereof to Agent and so long as, at the time of such
written notification, Subsidiary Guarantor provides any financing statements
necessary to perfect and continue perfected Agent's security interests;
(c) not relocate its chief place of business, chief executive
office or residence to a new location without thirty (30) days' prior written
notification thereof to Agent and so long as, at the time of such written
notification, Subsidiary Guarantor provides any financing statements or fixture
filings necessary to perfect and continue perfected Agent's security interests
and also provides to Agent a Collateral Access Agreement with respect to such
new location in form and substance satisfactory to Agent;
(d) if Agent gives value to enable Subsidiary Guarantor to
acquire rights in or the use of any Collateral (as specified in writing by Agent
to Subsidiary Guarantor at the time of the giving of such value), use such value
for such purposes; and
(e) (i) cause all assessments and taxes, whether real, personal,
or otherwise, due or payable by, or imposed, levied, or assessed against
Subsidiary Guarantor or any of the Collateral to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest; (ii) make due and timely payment or deposit of all such
federal, state, foreign, and local taxes, assessments, or contributions required
of it by law, except to the extent that the validity of such assessment or tax
shall be the subject of a Permitted Protest, and will execute and deliver to the
Agent, on demand, appropriate certificates attesting to the payment thereof or
deposit with respect thereto; and (iii) make timely payment or deposit of all
tax payments and withholding taxes required of it by those laws concerning
F.I.C.A. (or its foreign equivalent) and F.U.T.A. (or its foreign equivalent),
state disability (or its foreign equivalent), and, upon request, furnish the
Agent with proof satisfactory to Agent indicating that Subsidiary Guarantor has
made such payments or deposits; provided that Subsidiary Guarantor shall in any
event pay such taxes, assessments, charges, levies or claims not later than five
(5) days prior to the date of any proposed sale under any judgement, writ or
warrant of attachment entered or filed against Subsidiary Guarantor or any of
the Collateral as a result of the failure to make such payment.
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SECTION 7. Special Covenants With Respect to Equipment and Inventory.
Subsidiary Guarantor shall:
(a) keep the Equipment and Inventory (other than Equipment
consisting of laptop computers and other than Inventory sold in the ordinary
course of business) at the places specified on Schedule I annexed hereto and to
the extent permitted by subsection (e) of this Section 7 or, upon thirty (30)
days' prior written notice to Agent, at such other places in jurisdictions where
all action that may be necessary or desirable, or that Agent may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, or to enable Agent to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;
(b) maintain the Equipment or cause the Equipment to be
maintained in good repair, working order, and condition (ordinary wear and tear
excepted), and in accordance with any manufacturer's manual, and make all
necessary replacements thereto so that the value and operating efficiency
thereof shall at all times be preserved, and shall forthwith, or, in the case of
any loss or damage to any of the Equipment when subsection (c) of Section 8 is
not applicable, as quickly as practicable after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end. Subsidiary Guarantor
shall promptly furnish to Agent a statement respecting any material loss or
damage to any of the Equipment. Subsidiary Guarantor shall not permit any item
of Equipment to become a fixture to real estate or an accession to other
property, and the Equipment is now and shall at all times remain personal
property;
(c) keep correct and accurate records of the Inventory, in
accordance with good business practices, including itemizing Subsidiary
Guarantor's cost therefor and (where applicable) the current list prices for the
Inventory;
(d) upon Agent's request, deliver to Agent, properly endorsed,
any and all evidences of ownership of, certificates of title, or applications
for title of any items of Equipment;
(e) not, at any time now or hereafter, store any of the Equipment
or Inventory with a bailee, warehouseman, or similar party without Agent's prior
written consent. The Agent and Subsidiary Guarantor hereby consent to the
transfer of up to $1,000,000 in book value of Inventory and up to $1,000,000 of
OLV of Equipment (as defined in the Intercreditor Agreement) to a warehouse
selected by Subsidiary Guarantor located in California, Singapore or Malaysia;
provided, however, that Subsidiary Guarantor shall provide twenty (20) days'
prior written notification thereof to the Agent and, at such time, provide
financing statements or fixture filings (or foreign equivalents) necessary to
perfect the Agent's Liens; and
(f) if any Inventory is in possession or control of any of
Subsidiary Guarantor's agents or processors, upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Agent and subject to the instructions of Agent.
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SECTION 8. Insurance.
(a) Subsidiary Guarantor shall, at its own expense, maintain
insurance with respect to the Equipment and Inventory in which it has an
interest in such amounts, against such risks, in such form and with such
insurers as is customary for similarly situated businesses. Such insurance shall
include, without limitation, property damage insurance and liability insurance.
Each policy for property damage insurance shall provide for all losses to be
paid directly to Agent in accordance with the Intercreditor Agreement. Each
policy shall in addition name Subsidiary Guarantor and Agent as insured parties
thereunder (without any representation or warranty by or obligation upon Agent)
as their interests may appear and have attached thereto a loss payable clause
acceptable to the Agent that shall (i) contain an agreement by the insurer that
any loss thereunder shall be payable to Agent in accordance with the
Intercreditor Agreement notwithstanding any action, inaction or breach of
representation or warranty by Subsidiary Guarantor, (ii) provide that there
shall be no recourse against Agent for payment of premiums or other amounts with
respect thereto, and (iii) provide that at least thirty (30) days' prior written
notice of cancellation, material amendment, reduction in scope or limits of
coverage or of lapse shall be given to Agent by the insurer. Subsidiary
Guarantor shall, if so requested by Agent, deliver to Agent original or
duplicate policies of such insurance and, as often as Agent may reasonably
request (but no more frequently than once per year, unless there is a change in
the policy or the insurer), a report of a reputable insurance broker with
respect to such insurance. Further, and in accordance with the Intercreditor
Agreement, Subsidiary Guarantor shall, at the request of Agent, duly execute and
deliver instruments of assignment of such insurance policies to comply with the
requirements of Section 5(a) and cause the respective insurers to acknowledge
notice of such assignment.
(b) Payments for claims issued by any liability insurance
maintained by Subsidiary Guarantor pursuant to this Section 8 may be paid
directly to the Person who shall have incurred liability covered by such
insurance. In case of any loss involving damage to Equipment or Inventory when
subsection (c) of this Section 8 is not applicable, Subsidiary Guarantor shall
make or cause to be made the necessary repairs to or replacements of such
Equipment or Inventory, and any proceeds of insurance maintained by Subsidiary
Guarantor pursuant to this Section 8 shall be paid to Subsidiary Guarantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon (i) the occurrence and during the continuation of any
Event of Default or (ii) the actual or constructive loss (in excess of $100,000
per occurrence) of any Equipment or Inventory, all insurance payments in respect
of such Equipment or Inventory shall be paid to and applied by Agent as
specified in Section 18.
SECTION 9. Special Covenants with respect to Accounts and Related
Contracts.
(a) Subsidiary Guarantor shall keep its chief place of business
and chief executive office and the office where it keeps its records concerning
the Accounts and Related Contracts at the location specified in Section 4 or,
upon thirty (30) days' prior written notice to Agent, at such other location in
a jurisdiction where all action that may be necessary or desirable, or that
Agent may request, in order to perfect and protect any security interest granted
or purported to be granted hereby, or to enable Agent to exercise and enforce
its rights and remedies hereunder, with respect to such Accounts and Related
Contracts shall have been taken. Subsidiary Guarantor will hold and preserve
such records and, subject to the terms of the Credit Agreement, will permit
representatives
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of Agent during normal business hours to inspect and make abstracts from such
records, and Subsidiary Guarantor agrees to render to Agent, at Subsidiary
Guarantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Promptly upon the request of Agent,
Subsidiary Guarantor shall deliver to Agent complete and correct copies of each
Related Contract.
(b) Subsidiary Guarantor shall, for not less than three (3) years
from the date on which such Account arose, maintain (i) complete records of each
Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all material documentation relating thereto.
(c) Except as otherwise provided in this subsection (c),
Subsidiary Guarantor shall continue to collect, at its own expense, all amounts
due or to become due Subsidiary Guarantor under the Accounts and Related
Contracts. In connection with such collections, Subsidiary Guarantor may take
such action as Subsidiary Guarantor or Agent may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that Agent shall have the right, subject to the Intercreditor
Agreement, at any time, upon the occurrence and during the continuation of an
Event of Default, and upon written notice to Subsidiary Guarantor of its
intention to do so, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to Agent, and to direct such account debtors
or obligors to make payment of all amounts due or to become due to Subsidiary
Guarantor thereunder directly to Agent, to notify each person maintaining a
lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lock box or other arrangement directly to Agent and, upon such
notification and at the expense of Subsidiary Guarantor, to enforce collection
of any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Subsidiary Guarantor might
have done. After receipt by Subsidiary Guarantor of the notice from Agent
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Subsidiary
Guarantor in respect of the Accounts and the Related Contracts shall be received
in trust for the benefit of Agent hereunder, shall be segregated from other
funds of Subsidiary Guarantor and shall be forthwith paid over or delivered to
Agent in the same form as so received (with any necessary endorsement) to be
held as cash Collateral and applied as provided by Section 18, and (ii)
Subsidiary Guarantor shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon. If the Event of
Default giving rise to the exercise of such remedies by Agent shall be cured or
waived, then Agent shall reinstate the Subsidiary Guarantor's collection rights
with respect to such Accounts.
SECTION 10. Special Provisions with Respect to Investment Property.
(a) Subsidiary Guarantor hereby pledges, assigns, grants and
delivers to Agent, for the benefit of Banks and grants to Agent, for the benefit
of Banks a security interest in the shares of stock listed on Schedule II hereto
(the "Shares"), together with all proceeds and substitutions thereof, all cash,
stock and other moneys, investment property and property paid thereon, all
rights to subscribe for securities declared or granted in connection therewith,
including, but not limited to, those arising from or paid in connection with a
stock dividend, stock split, reclassification,
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reorganization, merger, consolidation, sale of assets or other exchange of
securities or any dividends or other distributions of any kind and all other
cash and noncash proceeds of the foregoing (all of which shall be part of the
"Pledged Collateral"), as security for the Secured Obligations.
(b) The certificate or certificates for the securities included
in the Pledged Collateral, accompanied by an instrument of assignment duly
executed in blank by Subsidiary Guarantor have been, or will be immediately upon
the subsequent receipt thereof by Subsidiary Guarantor, delivered by Subsidiary
Guarantor to Agent. Subsidiary Guarantor shall cause the books of each
corporation whose stock is part of the Collateral to reflect the pledge of the
Shares. Upon the occurrence of an Event of Default hereunder, Agent may effect
the transfer of any securities included in the Pledged Collateral into its name
and cause new certificates representing such securities to be issued in its
name, but such action shall not be a strict foreclosure of its Lien therein.
Subsidiary Guarantor will execute and deliver such documents, and take or cause
to be taken such actions, as Agent may reasonably request to perfect or continue
the perfection of Agent's security interest in the Collateral.
(c) Subsidiary Guarantor represents and warrants to and covenants
with Agent, for the benefit of Agent and Banks, that there are no subscriptions,
warrants or other options exercisable with respect to the Shares; the Shares
represent the percentage of the issued and outstanding stock of the Subsidiaries
listed on Schedule II; there are no agreements that require any Subsidiaries to
issue any additional shares of such Subsidiaries, and there are no outstanding
options to purchase such additional shares; the Shares have been duly authorized
and validly issued, and are fully paid and non-assessable; and the Pledged
Collateral is not the subject of any present or, to the best knowledge of the
Subsidiary Guarantor, threatened suit, action, arbitration, administrative or
other proceeding, and Subsidiary Guarantor knows of no reasonable grounds for
the institution of any such proceedings.
(d) Unless an Event of Default shall have occurred and be
continuing, Subsidiary Guarantor shall be entitled to exercise any voting rights
with respect to the Pledged Collateral and to give consents, waivers and
ratifications in respect thereof, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights of Subsidiary
Guarantor to vote and give consents, waivers and ratifications shall upon notice
to Subsidiary Guarantor cease in case an Event of Default hereunder shall occur
and be continuing. If the Event of Default giving rise to such exercise of
remedies by Agent shall be cured or waived, then Subsidiary Guarantor shall
again have the voting rights with respect to the stock of any of its
Subsidiaries.
(e) Subsidiary Guarantor recognizes that Agent may be unable to
effect a public sale of all or a part of the Pledged Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended ("Act")
or other applicable securities laws, so that Agent may be compelled to resort to
one or more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire the Pledged Collateral for
their own account, for investment and without a view to the distribution or
resale thereof. Subsidiary Guarantor understands that private sales so made may
be at prices and on other terms less favorable to the seller than if the Pledged
Collateral were sold at public sales, and agrees that Agent has no obligation to
delay the sale of any of the Pledged Collateral for the period of time necessary
(even if Agent would
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agree), to register such securities for sale under the Act. Subsidiary Guarantor
agrees that private sales made under the foregoing circumstances shall be deemed
to have been made in a commercially reasonable manner.
(f) Subsidiary Guarantor shall:
(i) not, except as permitted by the Credit Agreement,
(a) sell assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Shares (b) create or suffer to
exist any Lien upon or with respect to any of the Shares except for the security
interest under this Agreement and the Permitted Liens, or (c) permit any issuer
of Shares to merge or consolidate unless all the outstanding capital stock of
the surviving or resulting corporation is, upon such merger or consolidation,
pledged hereunder;
(ii) (a) cause each issuer of Shares not to issue any
stock or other securities in addition to or in substitution for the Shares
issued by such issuer, except to Subsidiary Guarantor, (b) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of Shares to the
extent necessary to cause the percentage of shares of such issuer pledged
hereunder to equal the percentage of the issued and outstanding shares of all
classes of capital stock of each Subsidiary of Subsidiary Guarantor set forth on
Schedule II hereto, and (c) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Subsidiary Guarantor.
SECTION 11. Special Provisions with Respect to Brokerage and Deposit
Accounts.
(a) All deposit and brokerage accounts of Subsidiary Guarantor existing
on the date hereof are accurately listed on Schedule III hereto (which shall be
deemed to be an addendum to the Schedules to the Credit Agreement). Subsidiary
Guarantor shall notify Agent within five (5) days of the opening or creating of
any new deposit or brokerage accounts, and shall provide Agent with such
information as Agent may require in order to perfect or protect its security
interest in such deposit or brokerage accounts.
(b) Upon the occurrence and during the continuation of an Event of
Default, Agent may exercise dominion and control over, and refuse to permit
further withdrawals, issuance of entitlement orders or other directions to
effect transactions by Subsidiary Guarantor (whether of money, securities,
instruments or other property) from any brokerage or deposit accounts
constituting part of the Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc. Subsidiary
Guarantor hereby assigns, transfers and conveys to Agent, for the benefit of
Agent and Banks, effective upon the occurrence of any Event of Default, the
nonexclusive right and license to use all trademarks, trade names, copyrights,
patents or technical processes owned or used (to the extent that the Subsidiary
Guarantor has the right to assign such property not owned by it) by Subsidiary
Guarantor that relate to the Collateral and any other collateral granted by
Subsidiary Guarantor as security for the Secured Obligations, together with any
goodwill associated therewith, all to the extent necessary to enable Agent to
use, possess and realize on the Collateral for the benefit of Agent and Banks
and to enable any successor or assign to enjoy the benefits of the Collateral.
This right and license shall
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inure to the benefit of all successors, assigns and transferees of Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license is granted in consideration of the extension
of credit by the Banks under the Credit Agreement, without requirement that any
monetary payment whatsoever be made to Subsidiary Guarantor.
SECTION 13. Transfers and Other Liens. Subsidiary Guarantor shall not:
(a) except to the extent permitted in the Credit Agreement and
the Intercreditor Agreement, sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral; or
(b) except for the security interest created by this Agreement,
and except to the extent permitted in the Credit Agreement and the Intercreditor
Agreement, create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person.
SECTION 14. Agent Appointed Attorney-in-Fact. Subsidiary Guarantor
hereby irrevocably appoints Agent as Subsidiary Guarantor's attorney-in-fact,
with full authority in the place and stead of Subsidiary Guarantor and in the
name of Subsidiary Guarantor, Agent or otherwise, from time to time in Agent's
discretion to take any action and to execute any instrument that Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation: (a) to sign and file on behalf of Subsidiary Guarantor any
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral; (b) upon the occurrence and during the continuation
of an Event of Default, to obtain and adjust insurance required to be maintained
by Subsidiary Guarantor or paid to Agent pursuant to Section 8; (c) upon the
occurrence and during the continuation of an Event of Default, to ask, demand,
collect, ▇▇▇ for, recover, compound, receive and give acquittance and receipts
for monies due and to become due under or in respect of any of the Collateral;
(d) upon the occurrence and during the continuation of an Event of Default, to
receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clauses (a) and (b) above; (e) upon the
occurrence and during the continuation of an Event of Default, to file any
claims or take any action or institute any proceedings that Agent may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Agent with respect to any of the Collateral; (f) upon
the occurrence and during the continuation of an Event of Default, to pay or
discharge taxes or liens levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Agent in its sole discretion, any such
payments made by Agent to become obligations of Subsidiary Guarantor to Agent,
due and payable immediately without demand; (g) upon the occurrence and during
the continuation of an Event of Default, to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
Accounts and other documents relating to the Collateral; and (h) upon the
occurrence and during the continuation of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Agent were the
absolute owner thereof for all purposes, and to do, at Agent's option and
Subsidiary Guarantor's expense, at any time or from time to time, all acts and
things that Agent deems necessary to protect, preserve or realize upon the
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Collateral and Agent's security interest therein in order to effect the intent
of this Agreement, all as fully and effectively as Subsidiary Guarantor might
do.
SECTION 15. Agent May Perform. If Subsidiary Guarantor fails to perform
any agreement contained herein, Agent may itself perform, or cause performance
of, such agreement, and the expenses of Agent incurred in connection therewith
shall be payable by Subsidiary Guarantor under Section 19.
SECTION 16. Standard of Care. The powers conferred on Agent hereunder
are solely to protect its interest and the interest of the Banks in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder
and other duties imposed by applicable law, Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Agent shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Agent accords its own property.
SECTION 17. Remedies. Subject to the terms of the Intercreditor
Agreement, if any Event of Default shall have occurred and be continuing, Agent
may exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code as in
effect in any relevant jurisdiction (the "Code") (whether or not the Code
applies to the affected Collateral), and also may (a) require Subsidiary
Guarantor to, and Subsidiary Guarantor hereby agrees that it will at its expense
and upon request of Agent forthwith, assemble all or part of the Collateral as
directed by Agent and make it available to Agent at a place to be designated by
Agent that is reasonably convenient to both parties, (b) enter onto the property
where any Collateral is located and take possession thereof with or without
judicial process, (c) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Agent deems appropriate,
(d) take possession of Subsidiary Guarantor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same and any of
Subsidiary Guarantor's equipment for the purpose of completing any work in
process, taking any actions described in the preceding clause (c) and collecting
any Secured Obligation, and (e) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any of Agent's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Agent may deem commercially reasonable. Agent may be the purchaser of
any or all of the Collateral at any such sale and Agent shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at any such public sale, to use
and apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Agent at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of Subsidiary Guarantor, and Subsidiary Guarantor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Subsidiary Guarantor agrees
that, to the extent notice of sale shall be required by law, at least ten (10)
days' notice to Subsidiary Guarantor of (i) the time and place of any public
sale or (ii) the time after which any private sale is to be made shall
constitute
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reasonable notification. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed there for, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Subsidiary Guarantor hereby waives any
claims against Agent arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Agent accepts the first
offer received and does not offer such Collateral to more than one offeree,
provided Agent acted in a commercially reasonable manner. If the proceeds of any
sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, Subsidiary Guarantor shall be liable to the maximum extent
permitted by applicable law for the deficiency and the fees of any attorneys
employed by Agent to collect such deficiency.
SECTION 18. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement and the Intercreditor Agreement, all proceeds
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may in the discretion of
Agent, be held by Agent for the benefit of Agent and Banks as Collateral for,
and/or then, or at any other time thereafter, applied in full or in part by
Agent against, the Secured Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale, collection
or other realization, including reasonable compensation to Agent and its agents
and counsel, and all other expenses, liabilities and advances made or incurred
by Agent in connection therewith, and all amounts for which Agent is entitled to
indemnification hereunder and all advances made by Agent hereunder for the
account of Subsidiary Guarantor, and to the payment of all costs and expenses
paid or incurred by Agent in connection with the exercise of any right or remedy
hereunder, all in accordance with Section 19;
SECOND: To the payment of all other Secured Obligations (for the ratable
benefit of the holders thereof) in such order as Agent shall elect; and
THIRD: To the payment to or upon the order of Subsidiary Guarantor, or
to whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 19. Indemnity and Expenses.
(a) Subsidiary Guarantor agrees to indemnify Agent and Banks from
and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Agent's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction.
(b) Subsidiary Guarantor will pay to Agent upon demand the amount
of any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
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any of the Collateral, (iii) the exercise or enforcement of any of the rights of
Agent hereunder, or (iv) the failure by Subsidiary Guarantor to perform or
observe any of the provisions hereof.
SECTION 20. Appointment of Agent. Agent has been appointed to act as
Agent hereunder by Banks as provided in the Credit Agreement. Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including without limitation the substitution of Collateral)
solely in accordance with this Agreement and the Credit Agreement. As provided
in Section 8.01 of the Credit Agreement, the Agent shall not be required to
exercise any discretion or take any action hereunder, but subject to Section
9.01 of the Credit Agreement, shall be required to act or refrain from acting
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all Banks. Upon the resignation or removal of the Agent under
Section 8.06 of the Credit Agreement, the successor agent shall be entitled to
exercise rights, refrain from exercising rights, take such actions, and refrain
from taking actions, as provided to the Agent hereunder and under the Credit
Agreement.
SECTION 21. Amendments, etc. No amendment or waiver of any provision of
this Agreement, or consent to any departure by Subsidiary Guarantor here from,
shall in any event be effective unless the same shall be in writing and signed
by Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 22. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraph, telex or facsimile
communication) and mailed or telegraphed or telexed or sent by facsimile or
delivered, if to Subsidiary Guarantor or Agent, at its address set forth on the
signature pages hereof; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall be effective three (3) Business Days after
deposit in the U.S. mail, postage prepaid, when sent by telex or sent by
facsimile, or when delivered, respectively.
SECTION 23. Failure or Indulgence Not Waiver. Remedies Cumulative. No
failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 24. Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 25. Headings. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 26. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
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LAWS OF THE STATE OF CALIFORNIA, EXCEPT AS REQUIRED BY MANDATORY PROVISION OF
LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA.
SECTION 27. Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COUNTY OF
SAN FRANCISCO, STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT SUCH PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
SECTION 28. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH SUCH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may he filed as a written consent to a trial by the
court.
SECTION 29. Confidentiality. Any information provided in connection
herewith to the Agent, Co-Agent, Designated Issuer, or any Bank shall be subject
to the confidentiality provisions of Section 9.06(e) of the Credit Agreement.
SECTION 30. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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IN WITNESS WHEREOF, Subsidiary Guarantor and Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
AKASHIC MEMORIES CORPORATION
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
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CANADIAN IMPERIAL BANK OF
COMMERCE, New York Agency,
as Agent for the Banks
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
S-2
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EXHIBIT A
TO
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
(Akashic)
Collateral
The Collateral shall consist of all right, title and interest of
Subsidiary Guarantor in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Subsidiary Guarantor's custody or possession
or in transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Subsidiary Guarantor's books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Subsidiary
Guarantor arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Subsidiary Guarantor, whether or not earned by
performance, and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Subsidiary
Guarantor and Subsidiary Guarantor's books relating to any of the foregoing (any
and all such accounts, contract rights, royalties, license rights and other
forms of obligations being the "Accounts," and any and all such credit
insurance, guaranties and security agreements, being the "Related Contracts");
(e) All documents, cash, deposit accounts, investment property,
securities, letters of credit, certificates of deposit, instruments and chattel
paper now owned or hereafter acquired and Subsidiary Guarantor's books relating
to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or
A-1
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unpublished, now owned or hereafter acquired; all trade secret rights, including
all rights to unpatented inventions, know-how, operating manuals, license rights
and agreements and confidential information, now owned or hereafter acquired;
all mask work or similar rights available for the protection of semiconductor
chips, now owned or hereafter acquired; all claims for damages by way of any
past, present and future infringement of any of the foregoing; and
(g) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
A-2
20
EXHIBIT B
TO
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
(Akashic)
Form of Collateral Assignment, Patent Mortgage
and Security Agreement
Attached.
B-1
21
SCHEDULE I
TO
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
(Akashic)
Locations of Equipment:
▇▇▇/▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Locations of Inventory:
▇▇▇/▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
I-1
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SCHEDULE II
TO
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
(Akashic)
Pledged Shares
Pledged Percentage
Subsidiaries of Akashic Pledged Certificate of ownership
Memories Corporation Shares Number Pledged
-------------------- ------ ------ -------
Strates Sdn. Bhd., f/k/a
Akashic Kubota Technologies
Sdn. Bhd. 37,499,997 4 100%
3 5 100%
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SCHEDULE III
TO
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
(Akashic)
Brokerage and Deposit Accounts
None, except:
Institution Type Account No.
Bank of America Deposit 14952-00222
III-1