Exhibit 10.2
JAPANESE SECURITY AGREEMENT
THIS AGREEMENT, made and entered into this 23rd day of April, 1998 by
and between Tower Records Kabushiki Kaisha, a Japanese corporation having its
principal office at 15-9, Minami Shinagawa 2-chome, Shinagawa-ku, Tokyo,
Japan ("TRKK"), and The Chase Manhattan Bank, a New York banking corporation
("Chase"), as collateral agent (the "Collateral Agent") for the Secured
Parties (as defined below).
WITNESSETH:
WHEREAS, a Credit Agreement dated as of April 23, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement")
has been entered into by and among MTS, Incorporated, a California
corporation ("MTS"), TRKK (MTS and TRKK being hereinafter collectively
referred to as the "Borrowers"), the lenders from time to time party thereto
(the "Lenders") and Chase, as administrative agent for the Lenders;
WHEREAS, a Guarantee Agreement dated as of April 23, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee
Agreement") has been entered into by and among MTS, the other Guarantors
named therein and the Collateral Agent;
WHEREAS, the Lenders have agreed to make Loans to the Borrowers upon
the terms and subject to the conditions set forth in the Credit Agreement,
and each of the Guarantors has agreed to guarantee, among other things, all
the obligations of the Borrowers under the Credit Agreement; and
WHEREAS, the obligations of the Lenders to make Loans are conditional
upon, among other things, the execution and delivery by TRKK of a security
agreement in the form hereof to secure the Obligations (as defined below).
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1. DEFINITION OF CERTAIN TERMS USED HEREIN
As used herein, the following terms shall have the following meanings:
"ACCOUNTS RECEIVABLE" means the accounts receivable set forth in
Schedule III hereto.
"DESIGNATED LOCATIONS" means the locations set forth in Schedule II
hereto, provided that TRKK hereby represents and warrants that, as of the
date hereof, the locations set forth in Schedule II hereto constitute all
locations at which any compact discs and other goods of TRKK are located, and
provided further that if TRKK shall, after the date hereof, locate any
compact discs or other goods at any location other than a Designated Location
set forth in such Schedule II, TRKK shall forthwith notify in writing the
Collateral Agent thereof, and such location shall henceforth constitute a
Designated Location for all purposes of this Agreement.
"EVENT OF DEFAULT" means any Event of Default as defined in Section
7.01 of the Credit Agreement.
"INVENTORY" means the goods set forth in Schedule I hereto.
"JAPANESE LOANS" means any and all loans made by the Lenders to TRKK
pursuant to the Credit Agreement.
"OBLIGATIONS" means (a) the due and punctual payment of (i) the
principal of and interest (including interest accruing during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the
Japanese Loans, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, and (ii) all other
monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of TRKK to the Secured Parties under
the Credit Agreement, the Guarantee Agreement and the other Loan
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Documents and (b) all obligations of TRKK, monetary or otherwise, under each
Hedging Agreement entered into to fix or limit interest rate or exchange rate
risk associated with the Japanese Loans under the Credit Agreement with a
counterparty that was a Lender at the time such Hedging Agreement was entered
into, but only if such Lender and TRKK expressly agree that such obligations
referred to in (b) above shall constitute "Obligations".
"SECURED PARTIES" means (a) the Lenders, (b) the Administrative Agent,
(c) the Collateral Agent, (d) each counterparty to a Hedging Agreement
entered into with any Borrower if such counterparty was a Lender at the time
the Hedging Agreement was entered into, (e) the beneficiaries of each
indemnification obligation undertaken by TRKK under any Loan Document and (f)
the successors and assignees of each of the foregoing.
Capitalized terms used herein without definition shall have the
meanings assigned thereto in the Credit Agreement.
ARTICLE II
ASSIGNMENT OF INVENTORY AS SECURITY
SECTION 2. ASSIGNMENT OF INVENTORY
2.1 TRKK hereby assigns to the Collateral Agent and its successors
and assignees, for the ratable benefit of the Secured Parties, all Inventory
which is currently located at the Designated Locations, as security (JOHTO
TAMPO) for the payment in full of the present and future Obligations. TRKK
hereby delivers all Inventory currently located at the Designated Locations
to the Collateral Agent by way of SENYU KAITEI within the meaning of Article
183 of the Civil Code of Japan.
2.2 All goods henceforth placed in each Designated Location shall,
forthwith upon such placement, be automatically added to the Inventory and
assigned by TRKK to the Collateral Agent and its successors and assignees,
for the ratable benefit of the Secured Parties, as security (JOHTO TAMPO) for
the payment or performance, as the case may be, in full of the present and
future Obligations, without any action to be taken by either TRKK or the
Collateral Agent. Thereupon, such goods shall be deemed to have been
delivered by TRKK to the Collateral Agent by way of SENYU KAITEI within the
meaning of Section 183 of the Civil Code of Japan.
2.3 For the purpose of creation of security (JOHTO TAMPO) provided
in Sections
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2.1 and 2.2 hereof, title to the Inventory shall pass from TRKK to the
Collateral Agent and its successors and assignees, for the ratable benefit of
the Secured Parties, forthwith upon assignment thereof pursuant to Section
2.1 or 2.2 hereof, not only VIS-A-VIS third parties but also as between TRKK
and the Collateral Agent.
2.4 TRKK hereby warrants and covenants that the Inventory is, and
will be, free from any and all lien, pledge, mortgage or other encumbrance
which may be prejudicial to the interests of the Secured Parties subject only
to Liens permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 3. POSSESSION AND MANAGEMENT OF INVENTORY
TRKK, on behalf of the Collateral Agent, shall retain possession of
the Inventory assigned by it to the Collateral Agent as security (JOHTO
TAMPO) hereunder, and shall hold such Inventory in custody with the care of a
good manager.
SECTION 4. DISPOSITION OF INVENTORY
4.1 TRKK shall not sell, transfer, process, lease or otherwise
dispose of any Inventory, except as permitted under Section 4.2 hereof.
4.2 TRKK may sell, transfer, process, lease or otherwise dispose of
the Inventory held by it in the ordinary course of its business; provided,
however, that upon the occurrence of any Event of Default, the Collateral
Agent may prohibit such disposition by TRKK by giving a written notice to
that effect to TRKK.
SECTION 5. INDICATION
TRKK shall place at all the Designated Locations, and/or affix to all
the Inventory, such signs, labels or other appropriate indications as may be
instructed by the Collateral Agent, stating, so as to be clearly apparent and
understandable to any third party viewing such signs, labels or other
indications, that the Inventory has been assigned as security to the
Collateral Agent; provided, however, that such signs, labels or other
indications placed at TRKK's shops shall not be visible to any retail
customers of TRKK or to other tenants of the buildings where its shops are
located.
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SECTION 6. REPORTS AND INSPECTION CONCERNING INVENTORY
6.1 TRKK shall maintain daily records of the types, amounts and
quantities of all goods added to or removed from the Inventory at each of the
Designated Locations.
6.2 On or prior to the 10th day of each month, TRKK shall submit to
the Collateral Agent copies of the records showing the additions to and
removals from the Inventory held by TRKK during the immediately preceding
month, together with a report setting forth a breakdown of the Inventory held
by it at each of the Designated Locations as of the end of such immediately
preceding month.
6.3 The Collateral Agent and its directors, officers, employees and
agents shall have the right at any time (i) to have access to any Designated
Location to inspect the Inventory and (ii) to peruse, and makes copies of,
the records referred to in Section 6.2 hereof and the books and accounts of
TRKK for the purpose of verification of the status and condition of the
Inventory. TRKK shall extend full cooperation to the Collateral Agent and
its directors, officers, employees and agents in exercising their rights
under this Section 6.3. The Collateral Agent shall have the right to share
any information it gains from such inspection with any Secured Party (it
being understood that any such information shall be deemed to be
AInformation@ subject to the provisions of Section 9.12 of the Credit
Agreement).
SECTION 7. INSURANCE
7.1 TRKK shall, at its expense, maintain, with financially sound
and reputable insurance companies, insurance on the Inventory in such amounts
and against such risks as are customarily maintained by companies engaged in
the same or similar businesses operating in the same or similar locations.
7.2 TRKK shall deliver to the Collateral Agent the insurance policy
in respect of its insurance as provided under Section 7.1 above and shall
take all steps necessary for the Collateral Agent to receive the full amount
of the insurance money receivable under such insurance.
7.3 If TRKK fails to enter into or continue or renew an agreement
relating to insurance as provided under Section 7.1 above (an "Insurance
Agreement"), the Collateral Agent, on behalf of TRKK, shall be entitled to
enter into or continue or renew such Insurance Agreement on behalf of TRKK.
In such case, TRKK shall reimburse the
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Collateral Agent for all insurance premiums and other costs and expenses
incurred by the Collateral Agent in connection therewith, together with a
delinquency charge thereon at a rate of 14% per annum (computed on the basis
of a 365-day year) for the period from (and including) the date of
disbursement thereof by the Collateral Agent to (and including) the date of
reimbursement thereof by TRKK to the Collateral Agent.
7.4 TRKK shall comply with such instructions as may be given by the
Collateral Agent in connection with any continuance, renewal or amendment of,
or change in, any Insurance Agreement of TRKK, and in connection with the
treatment of any loss of or damage to the Inventory.
7.5 The Collateral Agent shall be entitled to apply any insurance
money received by it under the Insurance Agreements to the payment of any
Obligations, regardless of the due date thereof.
SECTION 8. COMPENSATION
If any goods contained in the Inventory cause damage to any third
party, TRKK shall be responsible for resolving any dispute arising therefrom
and pay any required compensation in connection therewith.
SECTION 9. COSTS AND EXPENSES RELATING TO INVENTORY
All costs, expenses, taxes and charges for storage, maintenance,
management, transfer and repair of the Inventory shall be for the account of,
and borne by, TRKK.
SECTION 10. REMEDY
10.1 Upon the occurrence of any Event of Default, the Collateral
Agent shall be free to dispose of the Inventory in such manner and order, on
such schedule and at such price as may be reasonably determined by it, and
without taking any legal action against TRKK. TRKK shall not be entitled to
make any objection to the manner, schedule or price of, or other matters
pertaining to, such disposition by the Collateral Agent.
10.2 The Collateral Agent shall apply all amounts acquired by it
through the disposal of the Inventory under Section 10.1 hereof, less all
costs and expenses of such disposal, to the payment of all or part of the
Obligations in such manner and order, and on such schedule, as may be
determined by the Collateral Agent in its sole discretion.
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10.3 Any surplus remaining after the application of proceeds of the
disposition of the Inventory under Section 10.2 hereof shall be paid over by
the Collateral Agent to TRKK, its successors or assigns.
ARTICLE III
ASSIGNMENT OF ACCOUNTS RECEIVABLE AS SECURITY
SECTION 11. AGREEMENT OF ASSIGNMENT OF ACCOUNTS RECEIVABLE
TRKK hereby agrees that, forthwith upon request by the Collateral
Agent, all the Accounts Receivable which are currently held, or will in the
future be acquired, by TRKK shall automatically be assigned to the Collateral
Agent and its successors and assignees, for the ratable benefit of the
Secured Parties, as security (JOHTO TAMPO) for the payment in full of the
present and future Obligations, without any action to be taken by either TRKK
or the Collateral Agent.
SECTION 12. REPORTS AND INSPECTION CONCERNING ACCOUNTS RECEIVABLE
12.1 On or prior to the 10th day of each month, TRKK shall submit to
the Collateral Agent a report, substantially in the form attached as Schedule
IV hereto, setting forth a breakdown of the Accounts Receivable held by it at
the end of the immediately preceding month. TRKK shall also promptly submit
such report to the Collateral Agent at any time, if so requested by the
Collateral Agent. In addition, TRKK shall promptly submit to the Collateral
Agent such other documents and materials with respect to the Accounts
Receivable as may be requested by the Collateral Agent.
12.2 The Collateral Agent and its directors, officers, employees and
agents shall have the right at any time, during ordinary business hours, to
have access to, and to peruse and make copies of, the Pertinent Documents (as
defined below) and the books and accounts of TRKK for the purpose of
verification of the status and condition of its Accounts Receivable. TRKK
shall fully cooperate with the Collateral Agent and its directors, officers,
employers and agents in connection with the foregoing.
SECTION 13. NOTICE OR CONSENT
13.1 Forthwith upon receipt by TRKK of a request from the Collateral
Agent under Section 11 hereof, TRKK shall (i) give notice of the assignment
of the Accounts
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Receivable to the debtors thereof or (ii) obtain consents without objection
from the debtors thereof, in either such case expressed in an instrument
certified as to date (KAKUTEI HIZUKE). In such case, TRKK shall promptly
submit to the Collateral Agent (x) documents verifying the giving or receipt
of all such notices or consents, (y) the executed originals of the
agreements, contracts or other instruments under which such Accounts
Receivable were created and (z) such other documents as may be legally or
practically necessary for the Collateral Agent to collect all amounts payable
under such Accounts Receivable (such agreements, contracts, instruments and
documents being hereinafter referred to as the "Pertinent Documents").
13.2 Notwithstanding the provisions of Section 13.1 hereof, the
Collateral Agent may, whenever it deems necessary, require TRKK to deliver
the Pertinent Documents to it forthwith.
13.3 As soon as practicable, but in any event within 30 days, after
execution of this Agreement, TRKK shall deposit with the Collateral Agent
forms of notice of assignment of the Accounts Receivable from TRKK to the
debtors thereof (executed and sealed by TRKK) substantially in the form
attached hereto (together with an English translation thereof) as Schedule V
and in such number as may be designated by the Collateral Agent. If the
Collateral Agent deems it necessary for the protection of the interests of
the Secured Parties due to TRKK's financial difficulties, it may fill in all
pertinent matters on such deposited forms on behalf of TRKK and give notices
of assignment of the Accounts Receivable under the name of TRKK to debtors
using the completed forms, and may also, as agent of TRKK, give notices of
assignment of the Accounts Receivable to the debtors thereof in any other
manner permitted by law.
13.4 Without prejudice to the generality of the provisions of
Section 5.09 (c) and (d) of the Credit Agreement, in the event that the new
Japanese law, the bill of which was entitled "the Bill of Special Rules of
the Civil Code regarding Method of Perfection of Assignment of Credit" and
approved by the Cabinet meeting and submitted to the Diet in 1998, comes into
effect as a new law, TRKK shall take any and all steps deemed necessary or
advisable by the Collateral Agent and/or the Lenders to perfect the security
interests created hereunder in accordance with such new law.
SECTION 14. INFRINGEMENT
14.1 TRKK shall not take any action with respect to the Accounts
Receivable which may be prejudicial to the interests of the Secured Parties,
including, without
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limitation, assignment, sale or other disposition of the Accounts Receivable
(other than that contemplated hereby) and the creation of any lien, pledge,
mortgage or other encumbrance on the Accounts Receivable for the benefit of
any third party.
14.2 TRKK shall give notice to the Collateral Agent forthwith upon
the occurrence of any event which causes, or may cause, adverse effects to
the Accounts Receivable.
SECTION 15. CONSENT FROM GUARANTOR
Forthwith upon request by the Collateral Agent to TRKK, TRKK shall
obtain from each of the guarantors (if any) of the Accounts Receivable a
consent to the assignment (or TRKK's agreement to the assignment) of the
Accounts Receivable hereunder.
SECTION 16. CHANGE IN ACCOUNTS RECEIVABLE
If there has been any change in the address, trade name or the
representatives of the debtor or the guarantor of any Account Receivable held
by TRKK, TRKK shall immediately notify the Collateral Agent thereof.
SECTION 17. ADMINISTRATION AND COLLECTION OF ACCOUNTS RECEIVABLE
17.1 The Collateral Agent hereby entrusts TRKK with, and TRKK hereby
undertakes, the administration and collection of the Accounts Receivable
assigned by TRKK to the Collateral Agent hereunder. TRKK shall, at its
expense and free of charge, administer and collect the Accounts Receivable
with the care of a good manager; provided, however, that TRKK shall be free
to use any money collected by it under the Accounts Receivable for its own
business until the occurrence of any Event of Default, whereupon TRKK shall
immediately transfer all the collected moneys held by it to the Collateral
Agent.
17.2 Forthwith upon the occurrence of any Event of Default, TRKK
shall submit to the Collateral Agent a report setting forth the status of the
collection of the Accounts Receivable which have been entrusted by the
Collateral Agent to TRKK under Section 17.1 hereof. TRKK shall comply with
such instructions as may be given by the Collateral Agent in connection with
the administration or collection of the Accounts Receivable.
17.3 Upon the occurrence of any Event of Default, the Collateral
Agent may
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revoke its entrustment to TRKK under Section 17.1 hereof. Forthwith upon
revocation of such entrustment, TRKK shall deliver to the Collateral Agent
all the Pertinent Documents, and shall notify the debtors of the Accounts
Receivable to that effect. TRKK shall, upon request by the Collateral Agent,
give assistance to it, as may be necessary for its collection of the Accounts
Receivable.
17.4 Upon collection of any Account Receivable by the Collateral
Agent, or upon receipt by the Collateral Agent of any amount collected by
TRKK under Section 17.1 hereof, the Collateral Agent shall apply the amount
so collected or received by it to the payment of all or part of the
Obligations in such manner and order, and on such schedule, as may be
determined by the Collateral Agent in its sole discretion.
SECTION 18. DISPOSITION OF ACCOUNTS RECEIVABLE
Upon the occurrence of any Event of Default, the Collateral Agent may
sell, transfer or otherwise dispose of any Accounts Receivable, and TRKK
shall not be entitled to make any objection to such disposition. The
provisions of Section 17.4 hereof shall be applicable to the proceeds of any
such disposition.
SECTION 19. TRANSFER OF SECURITY
If any Account Receivable held by TRKK is secured by a pledge,
mortgage (including, without limitation, NETEITO) or other charge, TRKK
shall, upon request by the Collateral Agent, take any and all action
necessary for perfection of such pledge, mortgage or other charge VIS-A-VIS
third parties (including, without limitation, application for registration of
the assignment of such pledge, mortgage or other charge to the Collateral
Agent).
ARTICLE IV
MISCELLANEOUS
SECTION 20. NOTICE
If any of the following events occurs with respect to TRKK, TRKK shall
forthwith notify the Collateral Agent thereof:
(i) transfer outside the Designated Locations, destruction, loss or
theft of a
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material portion of the Inventory;
(ii) assertion by any third party to TRKK of title or other rights
relating to the Inventory or the Accounts Receivable; or
(iii) filing of any petition for attachment, provisional attachment,
provisional disposition or other enforcement against the Inventory or the
Accounts Receivable.
SECTION 21. COSTS AND EXPENSE
Except as otherwise provided herein, all reasonable costs and expenses
relating hereto, including, without limitation, costs and expenses for
execution hereof and performance of obligations hereunder, and all reasonable
costs and expenses for resolution of disputes relating to the Inventory or
the Accounts Receivable to which the Collateral Agent is involved, shall be
for the account of, and borne by, TRKK.
SECTION 22. CONFIDENTIALITY
Neither party hereto may disclose to a third party any information
regarding the other party's business which may be acquired by the first party
under this Agreement, except that such information may be disclosed (a) to
its directors, officers, employees and agents, including accountants, legal
counsel and other advisors or (b) to the Secured Parties by the Collateral
Agent or (c) with the written consent of such other party or (d) to the
extent such information becomes (i) publicly available other than as a result
of a breach of this Section or (ii) available to the first party on a
nonconfidential basis from a source other than such other party or (e) if the
Collateral Agent or a Secured Party is required to disclose such information
by any competent governmental authority or agency thereof pursuant to any
applicable law or regulation or administrative guidance.
SECTION 23. CONCLUSION
23.1 This Agreement shall continue in full force and effect until
all the present and future Obligations have been paid or performed, as the
case may be, in full (other than inchoate indemnity Obligations), and the
Commitments have terminated whereupon this Agreement shall terminate, and
title to the Inventory and the Accounts Receivable (if assigned to the
Collateral Agent) shall revert from the Collateral Agent to TRKK.
23.2 If at any time when no Default shall have occurred and be
continuing TRKK
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shall have outstanding any senior, unsecured, non-credit enhanced long-term
Indebtedness for borrowed money that shall be rated BBB- or better by
Standard & Poor's Ratings Group and Baa3 or better by Moody's Investors
Service, Inc., the security interests granted hereby shall be automatically
released.
SECTION 24. ENTIRE AGREEMENT
24.1 This Agreement constitutes the entire agreement between the
parties hereto relating to the subject matter hereof and shall supersede all
previous communications, oral or written, between the parties hereto with
respect to the subject matter hereof.
24.2 If there is in effect at any time an Agreement on Bank
Transactions between TRKK and any of the Secured Parties, the provisions of
such Agreement on Bank Transactions shall not apply to any Japanese Loan or
other transaction contemplated by this Agreement, nor shall they apply to any
security established by TRKK hereunder in favor of the Secured Parties,
notwithstanding anything to the contrary contained in such Agreement on Bank
Transactions.
SECTION 25. AMENDMENT
This Agreement may not be amended or supplemented except by written
agreement executed by the parties hereto.
SECTION 26. WAIVER
No waiver of any provision, right or remedy under this Agreement on
one or more occasions shall constitute a waiver of the same or any other
provision, right or remedy under this Agreement on any other occasion.
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SECTION 27. GOVERNING LAW AND JURISDICTION
27.1 This Agreement shall be governed by, and construed in
accordance with, the laws of Japan.
27.2 Any legal action against TRKK relating to this Agreement may be
instituted in the Tokyo District Court, to the jurisdiction of which TRKK
hereby expressly and irrevocably agrees to submit. Such action may also be
instituted in any other competent court.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TOWER RECORDS KABUSHIKI KAISHA
by [SIG]
---------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Collateral Agent
by /s/ Marian N. Schulman
---------------------------
Name: Marian N. Schulman
Title: Vice President
Schedule I
INVENTORY
Compact discs (CDs) and all other goods located at the shops, warehouses,
offices and any other space in the Designated Locations.
Schedule II
Designated Locations
Name Address
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Tower Records Sapporo Privy Privy 2F, 3F
Nishi 2-chome, Minami Nijo, Chuo-ku, Sapporo,
Hokkaido, 060-0062
Tower Records Shibuya 1-22-14, Jinnan, Shibuya-ku, Tokyo, 150-0041
Tower Records Yokohama Casa Montomachi 2F,
1-1, Ishikawa-cho, Naka-ku, Yokohama, Kanagawa,
231-0868
Tower Records Sendai Forus 8F,
3-11-15, Ichiban-cho, Aoba-ku, Sendai, Miyagi,
980-0811
Tower Records Kyoto Kawarmachi Vivre 6F,
595-1, Takoyakushi, Nishiiru Uradera-cho,
Kawarmachi-dori, Nakakyo-ku, Kyoto, 604-8041
Tower Records Hiroshima Hiroshima Parco 10F
10-1, Hon Dori, Naka-ku, Hiroshima, 730-0035
Tower Records Ikebukuro Ikebukuro P'Parco 5F, 6F
1-50-35, Higashi Ikebukuro, Toshima-ku, Tokyo,
170-0013
Tower Records Nagoya Parco Nagoya Parco East 6F,
3-29-1, Sakae, Naka-ku, Nagoya, Aichi, 460-0008
Tower Records Hachioji Sigma Game Fantasia Bldg. 5F
11-3, Azuma-cho, Hachioji, Tokyo, 192-0082
Tower Records Shinsaibashi 2-9-22, Nishi Shinsaibashi, Chuo-ku, Osaka,
542-0086
Tower Records Himeji Himeji Forus West 5F,
100 Higashi Ekimae-cho, Himeji, Hyogo, 670-0926
Tower Records Kawasaki Cine Citta Kawasaki 1F,
1-15, Ogawa-cho, Kawasaki-ku, Kawasaki,
Kanagawa, 210-0023
Tower Records Niigata Kamino Furumachi 5F,
7-938, Furumachi-dori, Niigata, 951-8063
Tower Records Shinjuku Lumine Shinjuku Lumine 2 6F,
3-38-2, Shinjuku, Shinjuku-ku, Tokyo 160-0022
Name Address
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Tower Records Chiba Chiba Parco 7F,
2-2-2, Chuo, Chuo-ku, Chiba, 260-0013
Tower Records Fukuoka Shoppers Fukuoka 7F,
4-4-11, Tenjin, Chuo-ku, Fukuoka 810-0001
Tower Records Kobe Sannomiya Vivre 6P,
1-5-26, Sannomiya-cho, Chuo-ku, Kobe, Hyogo,
650-0021
Tower Records Shinjuku East Musashino-Kan 2F,
3-27-10, Shinjuku, Shinjuku-ku, Tokyo 160-0022
Tower Records Hamamatsu Act Plaza 4F,
111-2, Itaya-cho, Hamamatsu, Shizuoka, 430-7704
Tower Records Kichijoji May's One Bldg. 2F, 3F,
2-12-12, Kichijoji Honcho, Musashino, Tokyo
180-0004
Tower Records Nagoya Chubu Kintetsu Dept. Store 9F,
Kintetsu Pas, se 1-2-2, Naeki, Nakamura-ku, Nagoya, Aichi, 450-0002
Tower Records Okayama Okayama Opa 4F,
6-30, Hon-cho, Okayama, 700-0901
Tower Records Nagano K's Square 4F, 5F,
1-3-6, Minami Chitose-cho, Nagano, 380-0822
Tower Records Kokura Lafore Harajuku Kokura 6F,
2-14-5, Asano, Kokura Kita-ku, Kitakyushu Fukuoka,
802-0001
Tower Records Kumamoto The Fine Bldg. 3F, 4F,
4-12, Tedorihoncho, Kumamoto, 860-0808
Tower Records Umeda Osaka Maru Bldg. B1,
1-9-20, Umeda, Kita-ku, Osaka, 530-0001
Tower Records Kanazawa Kanazawa Temisu, 4F,
1-4-20, Katamachi, Kanazawa, Ishikawa, 920-0981
Tower Records Naha Naha Opa 6F,
2-8-19, Matsuo, Naha, Okinawa, 900-0014
Tower Records Kagoshima Takapla 5F,
1-12, Sennichi-cho, Kagoshima, 892-0843
Tower Records Sagamiono Regaro 4F,
3498-87, Kamitsuruma, Sagamihara, Kanagawa,
228-0802
Tower Records Matsuyama Lafore Harajuku Matsuyama 4F,
2-3, Ichibancho, Matsuyama, Ehime, 790-0001
2
Name Address
- ---------------------------- ---------------------------------------------
Tower Records Minamikoshigaya Minamikoshigaya Opa 5F,
1-15-1, Minamikoshigaya, Koshigaya, Saitama,
343-0845
Tower Records Sapporo Pivot Pivot 7F, 8F,
Nishi 4-chome, Minami Nijo, Chuo-ku, Sapporo
Hokkaido, 060-0062
Tower Records Oita Oita Forus, B1F,
1-chome 2-7, Chuo-cho, Oita, 870-0035
Tower Records Wakayama Wakayama Vivre 8F,
1-73, Motodara-cho, Wakayama, 640-8024
Tower Records Takasaki Takasaki Vivre B1F,
46-1, Yajima-cho, Takasaki, Gunma, 370-0849
Tower Records Otsu Otsu Parco 5F,
14-30, Utsidehama, Otsu, Shiga, 520-0806
Tower Records Machida Be me Machidadaimaru 8F,
6-2-6, Haramachida, Machida, Tokyo, 194-0013
Tower Records Akita Akita Forus, B1F
4-2, Senshu Kubota-machi, Akita, 010-0874
Tower Records Utsunomiya Utsunomiya Parco 9F,
3-1-1, Baba-dori, Utsunomiya, Tochigi, 320-0026
Tower Records Fujisawa Fujisawa Opa 8F,
22-3, Minami Fujisawa, Fujisawa, Kanagawa, 251-0055
Tower Records Return Warehouse Tokyo SRC Bldg., A-5F
1-1-1 Katsujima Shinagawa-ku, Tokyo 140-0012
Tower Records Warehouse 2-15-9, Minami Shinagawa, Shinagawa-ku,
Tokyo, 140-8667
3
Schedule III
ACCOUNTS RECEIVABLE
GENERAL DESCRIPTION OF
ACCOUNTS RECEIVABLE: All accounts receivable arising from the business
of TRKK, including, without limitation, (i)
accounts receivable from retailers for the
wholesale by TRKK of CDs or any other goods, (ii)
accounts receivable from department stores for
services rendered by TRKK and (iii) accounts
receivable from credit companies in respect of
the sale by TRKK of CDs or any other goods.
ACCOUNTS RECEIVABLE OUTSTANDING
AS OF THE DATE OF THIS AGREEMENT:
(i) Accounts receivable from retailers for the wholesale by TRKK of
CDs and other goods for month of February 1998.
(ii) Accounts receivable for March 1998 sales at the stores payable in
April 1998.
(iii) Accounts receivable from credit companies (Visa/JCB/Diners/Amex)
in respect of the sale by TRKK of CDs and other goods for month of
March 1998.
(ii) Accounts receivable for March sales at the stores payable in April 1998.
---------------------------------------------------------------------------------------
TENANTO NAME STORE NAME DEPOSIT ESTIMATE (YEN)
---------------------------------------------------------------------------------------
Wanda SAPPORO PRIVY 22,270,524
---------------------------------------------------------------------------------------
Forus SENDAI 24,601,515
---------------------------------------------------------
HIMEJI 22,951,436
---------------------------------------------------------
OITA 23,150,386
---------------------------------------------------------
AKITA 27,313,323
---------------------------------------------------------
Forus Total 98,016,660
---------------------------------------------------------------------------------------
MYCAL KYOTO 14,072,252
---------------------------------------------------------
KOBE 37,502,082
---------------------------------------------------------
WAKAYAMA 8,031,862
---------------------------------------------------------
TAKASAKI 17,801,632
---------------------------------------------------------
MYCAL Total 77,407,828
---------------------------------------------------------------------------------------
Parco HIROSHIMA 69,471,185
---------------------------------------------------------
IKEBUKURO 87,524,315
---------------------------------------------------------
NAGOYA PARCO 117,254,822
---------------------------------------------------------
CHIBA 44,931,434
---------------------------------------------------------
OTSU 44,057,207
---------------------------------------------------------
UTSUNOMIYA 25,534,705
---------------------------------------------------------
Parco Total 388,773,668
----------------------------------------------------------------------------------------
Daisyo Kaihatsu NIGATA 11,423,514
----------------------------------------------------------------------------------------
LUMINE SHINJYUKU LUMINE 70,536,412
----------------------------------------------------------------------------------------
Daiei Leasing Company FUKUOKA 30,291,650
----------------------------------------------------------------------------------------
San-ai SHINJUKU EAST 51,112,018
----------------------------------------------------------------------------------------
ACT CITY Co. Ltd. HAMAMATSU 9,718,634
----------------------------------------------------------------------------------------
Chuba Kintetsu Hyakkaten NAGOYA KINTETSU PAS,SE 57,440,895
----------------------------------------------------------------------------------------
OPA OKAYAMA 25,456,157
---------------------------------------------------------
MINAMIKOSHIGAYA 16,134,406
---------------------------------------------------------
FUJISAWA 13,222,052
---------------------------------------------------------
NAHA 12,542,950
---------------------------------------------------------
OPA Total 67,355,564
----------------------------------------------------------------------------------------
LAFORET KOKURA 44,978,353
---------------------------------------------------------
MATSUYAMA 22,082,823
---------------------------------------------------------
LAFORET Total 1,582,962,264
----------------------------------------------------------------------------------------
Niko Niko Do KUMAMOTO 24,415,088
----------------------------------------------------------------------------------------
Osaka Maru Bldg UMEDA 93,111,446
----------------------------------------------------------------------------------------
Takashimaya Kaihatsu KAGOSHIMA 8,353,045
----------------------------------------------------------------------------------------
PIVOT SAPPORO PIVOT 34,246,524
----------------------------------------------------------------------------------------
Citu's Meito SAGAMIONO 3,112,976
----------------------------------------------------------------------------------------
Machidadaimaru MACHIDA 8,444,714
----------------------------------------------------------------------------------------
(iii) Accounts receivable from credit companies in respect of the sale by TRKK
of CDs and other goods for month of March 1998.
Y71,890,728
CREDIT CARD COMPANY ADDRESS
Customer Name Address
1 Sumitomo Credit Service 1-15-10 Shimura Itabashi-ku,
(Visa/Master) Tokyo, 174-0056
2 JCB Card 1-6 Surugadai Chiyoda-ku,
Tokyo 101-0062
3 Diners Club 1-13-7 Shibuya Shibuya-ku,
Tokyo 150-0002
4 American Express 4-30-6 Ogikubo Suginami-ku,
Tokyo 167-0051
Schedule IV
FORM OF REPORT
MONTH:
ACCOUNTS RECEIVABLE:
Outstanding
Amount of
Brief Account Due Date for
Date of Accrual Name and Description of Receivable at Payment of
of Account Address of Account the End of the Account
Receivable Debtor Receivable Relevant Month Receivable
---------------- ---------- --------------- -------------- ------------
Schedule V
NOTICE
Ladies and gentleman:
We hereby notify you that we have assigned as security to The Chase
Manhattan Bank our accounts receivable from you as specified in the following
list as of _________________.
List of Accounts Receivable
Creditor:
Debtor:
Amount:
Date of Accrual:
Due Date for Payment:
Kind:
Date:_____________________
Vey Truly Yours,
[Signature and seal]