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EXHIBIT 10.3.1.i
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PATENT AND TRADEMARK SECURITY AGREEMENT
PATENT AND TRADEMARK SECURITY AGREEMENT, dated as of March 26, 1999,
made by TELXON CORPORATION ("TELXON" or the "BORROWER") the Persons listed on
the signature pages under the caption "Grantors" (the "GRANTORS") and the
Additional Grantors (as defined in Section 13(b)) to THE BANK OF NEW YORK, with
an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as agent (the "AGENT")
for the benefit of the Issuer, The Swing Line Lender and the Lenders (as such
terms are defined in the Credit Agreement referred to below)(the "SECURED
PARTIES").
W I T N E S S E T H :
WHEREAS, Telxon, the Lenders from time-to-time party to the Credit
Agreement, the Issuer, the Swing Line Lender and the Agent, on behalf of the
Lenders, the Issuer and the Swing Line Lender, entered into that certain Credit
Agreement dated as of March 8, 1996, as amended by that certain Amendment No. 1
to the Credit Agreement dated as of August 6, 1996, Amendment No. 2 to the
Credit Agreement dated as of December 16, 1996 and Amendment No. 3 to the Credit
Agreement dated as of December 12, 1997 (as further amended, amended and
restated, modified or supplemented from time to time, the "CREDIT AGREEMENT");
WHEREAS, Telxon, the Agent, the Issuer, the Swing Line Lender and the
Lenders have heretofore entered into a Waiver and Agreement, dated as of
December 29, 1998 (the "ORIGINAL WAIVER") and a Waiver Extension and Agreement,
dated as of February 12, 1999 (the "ORIGINAL WAIVER EXTENSION"), with respect to
certain matters relating to the compliance by Telxon with certain provisions of
the Agreement;
WHEREAS, Telxon has requested that the Agent, the Issuer, the Swing
Line Lender and the Lenders agree to a further waiver of compliance by Telxon
with certain provision of the Credit Agreement, including an extension of the
waiver granted in the Original Waiver as extended by the Original Waiver
Extension and to amend certain other provisions of the Credit Agreement;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Agent, the Issuer, the Swing Line Lender, the Lenders and Telxon
are entering into that certain Second Waiver Extension Agreement and Amendment
No. 4 to the Credit Agreement dated as of the date hereof (the "SECOND WAIVER");
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined;
WHEREAS, it is a condition precedent to the effectiveness of the Second
Waiver, and the continuance of the making of Loans and the issuance of Letters
of Credit under the Credit Agreement, that the Grantors shall have granted to
the Agent, for the ratable benefit of the Lenders,
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the Issuer and the Swing Line Lender, a security interest, pledge and lien upon
the Grantors' assets and property contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises, the covenants and
conditions set forth herein and in the Second Waiver, and for other good and
valuable consideration, the receipt and sufficiency are hereby acknowledged,
each of the Grantors hereby agrees with the Agent as follows:
SECTION 1. GRANT OF SECURITY. Each Grantor hereby assigns and pledges
to the Agent for its benefit and for the ratable benefit of the Lenders, the
Issuer and the Swing Line Lender, and hereby grants to the Agent for its benefit
and for the ratable benefit of the Lenders, the Issuer and the Swing Line
Lender, a lien on and security interest in (except to the extent such
assignment, pledge or grant would violate the terms of any license agreement
with any other person in connection with any of the Patents and Trademarks, as
defined below, whether such Grantor is a licensee or licensor under any such
license agreement), the entire right, title and interest of such Grantor in and
to the following, whether now owned or hereafter acquired (the "PATENT AND
TRADEMARK COLLATERAL"):
(a) All trademarks, service marks, trade names and trade dress
and all trademark and service ▇▇▇▇ registrations and applications for
trademark or service ▇▇▇▇ registration in the United States (except for
"intent to use" applications for trademark or service ▇▇▇▇
registrations filed pursuant to Section l(b) of the ▇▇▇▇▇▇ Act, unless
and until an Amendment to Allege Use or a Statement of Use under
Sections l(c) and l(d) of said Act has been filed) and throughout the
world (including, without limitation, each trademark and service ▇▇▇▇
registration and application for trademark and service ▇▇▇▇
registration identified on Schedule I attached hereto and made a part
hereof), and (i) all renewals thereof, (ii) all income, royalties,
damages and payments now and hereafter due and/or payable with respect
thereto (including, without limitation, payments under all licenses
entered into in connection therewith, and damages and payments for past
or future infringements thereof), (iii) the right to ▇▇▇ or otherwise
recover for all past, present and future infringements thereof, and
(iv) all rights corresponding thereto throughout the world (but only
such rights as now exist or may come to exist under applicable local
law), together, in each case, with the goodwill of the business
connected with the use of, and symbolized by each such trademark,
service ▇▇▇▇, trade name and trade dress (all of the foregoing and
other rights being, collectively, the "TRADEMARKS");
(b) All letters patent of the United States or any other
country, and all registrations and recordings thereof, including,
without limitation, applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or
any political subdivision thereof, all whether now owned or hereafter
acquired by the Company, including, but not limited to, those described
in Schedule I annexed hereto and made a part hereof, and all reissues,
continuations, continuations-in-part or extensions thereof and all
licenses thereof (all of the foregoing being herein referred to as the
"PATENTS"); and
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(c) All license agreements with any other Person in connection
with any of the Patents and Trademarks or such other Person's names or
marks, whether such Grantor is a licensor or licensee under any such
license agreement (subject, in each case, to the terms of such license
agreements), and the right to prepare for sale, sell and advertise for
sale, all inventory (as defined in the Uniform Commercial Code in
effect in the State of New York (the "NYUCC"), to the extent now or
hereafter owned by each Grantor and now or hereafter covered by such
licenses (the "LICENSES").
SECTION 2. SECURITY FOR OBLIGATIONS. The assignment and pledge of and
grant of a security interest in the Patent and Trademark Collateral by each
Grantor pursuant to this Agreement (collectively, the "SECURITY INTERESTS")
secures the payment of all obligations of such Grantor to the Agent, the
Lenders, the Issuer and the Swing Line Lender now or hereafter existing (and any
other documents in respect of such obligations) under the Loan Documents (as the
same may be amended, amended and restated, modified or supplemented from
time-to-time), whether for principal, interest, fees, expenses or otherwise (all
such obligations being the "SECURED OBLIGATIONS").
The Security Interests granted by this Agreement are granted in
conjunction with the security interests granted to the Agent in other assets of
the Grantors, as set forth in the Credit Agreement and the other Loan Documents.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants on the date hereof and on each date that representations and warranties
are deemed made by any Grantor or the Borrower under the Credit Agreement as
follows:
(a) Such Grantor is the sole, legal and beneficial
owner of the entire right, title and interest in and to the federal
registrations and applications for registration of the Patents and
Trademarks listed on Schedules I and II hereto and the Licenses free
and clear of any lien, security interest, option, charge, pledge,
registered user agreement, assignment (whether conditional or not), or
covenant, or any other encumbrance, except for the Security Interests
and Liens created or permitted by this Agreement or the Credit
Agreement, and except for any such encumbrances which do not have a
material adverse impact on the economic value of any of the federal
registrations and applications for registration of the Patents and
Trademarks listed on Schedules I and II hereto, and except as permitted
by Section 5 of this Agreement. No effective financing statement or
other instrument similar in effect covering all or any part of the
federal registrations and applications for registration of the Patents
and Trademarks listed on Schedules I and II hereto or the Licenses
purported to be granted by such Grantor hereunder is on file in any
recording office, including, without limitation, the United States
Patent and Trademark Office, except such as may have been filed in
favor of the Agent relating to this Agreement. No Grantor owns any
material copyrights of the United States, or any country (including,
without limitation, applications or registrations) which have been
recorded or registered (or are currently the subject of a pending
application) in the United States Copyright Office or in any similar
office or agency of the United States, any State thereof, or any
country or political subdivision thereof.
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(b) Set forth on Schedules I and II below the name
of such Grantor is a complete and accurate list of all of the federal
registrations and applications for federal registration of the Patents
and Trademarks owned by such Grantor.
(c) Each federal patent and trademark and service ▇▇▇▇
registration and application for registration of such Grantor
identified on Schedules I and II is subsisting and, to the best of such
Grantor's knowledge, has not been adjudged invalid, unregistrable or
unenforceable, in whole or in part, and is, to the best of such
Grantor's knowledge, valid, registrable and enforceable. Each License
of such Grantor, to the best of such Grantor's knowledge, is subsisting
and has not been adjudged invalid or unenforceable, in whole or in
part, and is, to the best of such Grantor's knowledge, valid and
enforceable. Such Grantor has notified the Agent in writing of all
prior uses of any federal registrations and applications for
registration of the Patents and Trademarks listed on Schedules I and II
hereto of which such Grantor is aware, which would in the reasonable
judgment of such Grantor lead to such Patents and Trademarks becoming
invalid or unenforceable, including prior unauthorized uses by third
parties and uses which were not supported by the goodwill of the
business connected with such item.
(d) Such Grantor has not granted any license,
release, covenant not to ▇▇▇, or non-assertion assurance to any third
person with respect to any part of the federal registrations and
applications for registration of the Patents and Trademarks listed on
Schedules I and II hereto which would materially interfere with its
business as currently carried on under any such registrations or
applications for registrations.
(e) Such Grantor has used reasonable and proper statutory
notice in connection with its use of each registered patent and
trademark and service ▇▇▇▇ listed on Schedules I and II, except
inadvertent omissions thereof.
(f) Such Grantor has the unqualified right to
enter into this Agreement and to perform its terms.
(g) Except for (i) the appropriate filings with the United
States Patent and Trademark Office, and (ii) the appropriate filings
under Article 9 of the Uniform Commercial Code, no consent of any other
Person (other than licensors of any License to which any Grantor is a
licensee), no authorization, consent, approval or other action by, and
no notice to or filing or recording with, any governmental,
administrative or judicial authority or regulatory body is required in
the United States either (x) for the granting by such Grantor of the
Security Interests granted hereby or for the execution, delivery or
performance of this Agreement by such Grantor, or (y) for the
perfection of or the exercise by the Agent of its rights and remedies
hereunder, except where the failure to obtain, take, give or make such
authorizations, consents, approvals, actions, notices or filings would
not, and would not be reasonably likely to, have a material adverse
effect on the financial condition, operations, business, properties or
assets of the Grantors taken as a whole.
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(h) The consummation of actions contemplated under or in
connection with the Loan Documents to be performed by such Grantor,
will not impair the legal right of such Grantor to use any of the
federal registrations and applications for registration of the Patents
and Trademarks listed on Schedules I and II hereto.
(i) Such Grantor has no knowledge of the existence of any
patent, trademark, service ▇▇▇▇, trade name or trade dress, or license
agreement held or claimed by any other Person that, if upheld, would
preclude such Grantor from distributing, marketing, selling or
providing any product or service currently distributed, marketed, sold
or provided by it, as the case may be, under or in connection with any
of the federal registrations and applications for registration of the
Patents and Trademarks listed on Schedules I and II hereto (except, in
each case, to the extent that such Grantor has granted an exclusive
license to another person), and that would have a material adverse
effect on the financial condition, operations, business, properties or
assets of the Grantors taken as a whole, and such Grantor has no
knowledge of any claim that is likely to be made that if upheld would
have a material adverse effect on the financial condition, operations,
business, properties or assets of the Grantors taken as a whole.
(j) No material claim in any court or in the United States
Patent and Trademark Office has been made (and, as to any trademark,
service ▇▇▇▇, trade name, or trade dress with respect to which such
Grantor is a licensee, to the best knowledge of such Grantor, no
material claim has been made against the third party licensor), and
such Grantor has no knowledge of any material claim that has been made
or is likely to be made, that the use by such Grantor of any Patent and
Trademark Collateral does or may violate the rights of any Person.
(k) Such Grantor, to the best of its knowledge, has used
consistent standards of quality in manufacturing, distribution and
marketing of each product sold and provision of each service provided
under or in connection with any Patent and Trademark Collateral, and
has taken whatever steps necessary to ensure that all licensed users of
any Patent and Trademark Collateral use such consistent standards of
quality.
SECTION 4. FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense
of such Grantor, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Agent may reasonably
request, in order to (i) continue, perfect and protect any Security
Interest granted or purported to be granted hereby, or (ii) enable the
Agent to exercise and enforce its rights and remedies hereunder with
respect to any part of the Patent and Trademark Collateral. Without
limiting the generality of the foregoing, each Grantor will execute and
file such financing or continuation statements, or amendments thereto,
and such other instruments or notices, as
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may be necessary or desirable, or as the Agent may reasonably request,
in order to perfect and preserve the Security Interests granted or
purported to be granted hereby.
(b) Each Grantor hereby authorizes the Agent to
file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Patent and Trademark
Collateral without the signature of such Grantor where permitted by
law. A carbon, photographic or other reproduction of this Agreement or
any financing statement covering the Patent and Trademark Collateral or
any part thereof shall be sufficient as a financing statement where
permitted by law.
(c) Each Grantor will furnish to the Agent from
time to time statements and schedules further identifying and
describing the Patent and Trademark Collateral and such other reports
in connection with the Patent and Trademark Collateral as the Agent may
reasonably request, all in reasonable detail.
(d) Each Grantor agrees that, if, before the
Secured Obligations have been satisfied in full, it (i) obtains an
ownership interest in any new patent, trademark, service ▇▇▇▇, trade
name and trade dress, or patent, trademark or service ▇▇▇▇ registration
or application for patent, trademark or service ▇▇▇▇ registration which
is not now identified on Schedules I and II, (ii) enters into any new
license agreement, subject, in each case, to the terms of the license
agreements, or (iii) becomes entitled to the benefit of any patent,
trademark, service ▇▇▇▇, trade name and trade dress (which is
materially important to the business of such Grantor), patent,
trademark or service ▇▇▇▇ registration, application for patent,
trademark or service ▇▇▇▇ registration, license agreement or license
agreement renewal, (x) the provisions of Section 1 shall automatically
apply thereto, and (y) any such patent, trademark, ▇▇▇▇, registration,
application, or license agreement, together with the goodwill of the
business connected with the use of the ▇▇▇▇ or symbolized by it, shall
automatically become part of the Patent and Trademark Collateral. Each
Grantor shall give prompt written notice to the Agent of each new
patent, trademark or service ▇▇▇▇ registration or application for
registration. Each Grantor authorizes the Agent to modify this
Agreement by amending Schedules I and II to include any such new
patent, trademark or service ▇▇▇▇ registration, or application for
patent, trademark or service ▇▇▇▇ registration which becomes part of
the Patent and Trademark Collateral under this Section, or which, in
the reasonable business judgment of each such Grantor, is a material
patent, trademark or service ▇▇▇▇ registration or application for
patent, trademark or service ▇▇▇▇ registration. Each Grantor shall,
where consistent with prudent business practices, use best efforts to
negotiate new license agreements subject to the grant of the security
interest created by this Agreement. Each Grantor agrees that, if,
before the Secured Obligations have been satisfied in full, it obtains
an ownership interest in any recorded copyright or pending copyright
application before the United States Copyright Office or in any similar
office or agency of the United States, any State thereof, or any other
country or political subdivision thereof ("COPYRIGHTS"), then the
provisions of this subsection shall be equally applicable to such
copyrights and each
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Grantor authorizes the Agent to modify this Agreement by, among other
things, adding a new Schedule III to include any such Copyrights under
this Agreement.
(e) Each Grantor agrees (i) to prosecute diligently any
patent, trademark or service ▇▇▇▇ application that is part of Schedules
I and II, (ii) to file applications for registration of any patent,
trademark or service ▇▇▇▇ which is or becomes material to its business,
(iii) to take all necessary steps in any proceeding before the United
States Patent and Trademark Office or in any court, to maintain and
protect each material patent, trademark, service ▇▇▇▇, trade name,
trade dress and patent, trademark or service ▇▇▇▇ registration, and
each license agreement, and (iv) to participate in opposition,
cancellation and infringement proceedings in each case, such actions
under clauses (i) through (iv) above, to be taken as and to the extent
Grantor, in the exercise of its reasonable commercial judgment, deems
necessary or desirable. Any expenses incurred in connection with such
activities shall be borne by such Grantor. If any Grantor fails to
comply with any of the foregoing duties, the Agent shall have the
right, but not the obligation, to effect compliance in the name of the
Grantor to the extent permitted by law, at the Grantor's expense.
(f) Except as may be permitted by the Credit Agreement, no
Grantor shall (i) abandon any patent, trademark or service ▇▇▇▇
registration or application for patent, trademark or service ▇▇▇▇
registration, or any patent, trademark, service ▇▇▇▇ or trade name,
without the written consent of the Agent, which consent shall not be
unreasonably withheld, except where such abandonment would not be
reasonably likely to have a material adverse effect on the financial
condition, operations, business, properties or assets of the Grantors
taken as a whole, or (ii) take any action, or permit any action to be
taken by any other Persons to the extent such Persons are subject to
its control, or fail to take any action, which would materially and
adversely affect the validity, perfection, priority or enforcement of
the rights transferred herein to the Agent under this Agreement, and
any such action or agreement if it shall be entered into or taken,
shall be null and void and of no effect whatsoever. Each Grantor agrees
to notify the Agent immediately and in writing if such Grantor learns
(i) that any material item of the Patent and Trademark Collateral may
become abandoned, or (ii) of any adverse determination or any
development (including, without limitation, the institution of any
proceeding in the United States Patent and Trademark Office or any
court) regarding any material part of the Patent and Trademark
Collateral.
(g) In the event that any material item of the Patent and
Trademark Collateral is infringed or misappropriated by a third party,
any Grantor having any right, title or interest in such Patent and
Trademark Collateral shall promptly notify the Agent and shall, unless
such Grantor shall reasonably determine that such Patent and Trademark
Collateral is of immaterial economic value to such Grantor, take all
reasonable steps and actions to defend against and enjoin the
infringement or misappropriation, and shall take such other actions as
such Grantor shall reasonably deem appropriate under the circumstances
to protect and enforce such Patent and Trademark Collateral. Any
expense incurred in connection with such activities shall be borne by
such Grantor.
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(h) Each Grantor shall continue to use reasonable and proper
statutory notice in connection with its use of each registered patent,
trademark or service ▇▇▇▇.
(i) Each Grantor agrees (i) to maintain the quality of any and
all products or services of such Grantor used or provided in connection
with the Patent and Trademark Collateral, consistent with the quality
of said products and services as of the date hereof and (ii) to take
all reasonable steps to ensure that all licensees of any Patent and
Trademark Collateral maintain consistent standards of quality,
consistent with the standards in effect on the date hereof.
SECTION 5. TRANSFERS AND OTHER LIENS. Each Grantor shall not, except as
otherwise permitted under the Credit Agreement:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of, or grant any option with respect to, the
Patent and Trademark Collateral, except that any Grantor may license
the Patent and Trademark Collateral (i) in the ordinary course of such
Grantor's business, provided that such Grantor, in the exercise of its
reasonable commercial judgment, determines that such license is
necessary or desirable in the conduct of such Grantor's business, or
(ii) in connection with a sale or transfer of assets as provided in the
Credit Agreement, PROVIDED that such license shall be on terms
reasonably expected to maximize the gain to such Grantor resulting from
the granting of such license,
(b) create or suffer to exist any Lien upon or with respect to
any of the Patent and Trademark Collateral except for the Security
Interests created by this Agreement or permitted by the Credit
Agreement, or
(c) take any other action in connection with any of the Patent
and Trademark Collateral that would impair the value of the interest or
rights thereunder of such Grantor or that would impair the interest or
rights of the Agent or the Lenders, the Issuer and the Swing Line
Lender.
Nothing in this Section 5 will prevent licenses by any Grantor to another
Grantor.
SECTION 6. AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby
irrevocably appoints the Agent such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Agent's discretion upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Patent and Trademark Collateral,
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(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above, and
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any payments relating to the Patent and Trademark
Collateral or otherwise to enforce the rights of the Agent with respect
to any of the Patent and Trademark Collateral.
SECTION 7. AGENT MAY PERFORM.
(a) If any Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by such Grantor under Section 10(b).
(b) The Agent or its designated representatives shall have the
right, at any reasonable time during normal business hours and from
time to time, upon reasonable notice, and without undue interruption to
the business of such Grantor, to inspect the premises of any Grantor
and to examine the books, records and operations of any Grantor
(including, without limitation, any Grantor's quality control
processes) relating to the Patent and Trademark Collateral.
SECTION 8. THE AGENT'S DUTIES. The powers conferred on the Agent
hereunder are solely to protect its interest in the Patent and Trademark
Collateral and shall not impose any duty upon it to exercise any such powers.
SECTION 9. REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) The Agent may exercise in respect of the Patent and
Trademark Collateral, in addition to other rights and remedies provided
for herein or otherwise available to the Agent, all the rights and
remedies of The Lenders, the Issuer and the Swing Line Lender in
default under the NYUCC (whether or not the NYUCC applies to the
affected Patent and Trademark Collateral) and also may (i) exercise any
and all rights and remedies of any Grantor under or otherwise in
respect of the Patent and Trademark Collateral, (ii) require any
Grantor to, and each Grantor hereby agrees that it will at its expense
and upon request of the Agent forthwith, assemble all or any part of
the documents embodying the Patent and Trademark Collateral as directed
by the Agent and make such documents available to the Agent at a place
to be designated by the Agent which is reasonably convenient to both
the Agent and such Grantor, (iii) occupy, for a reasonable period and
without obligation to such Grantor in respect of such occupation, any
premises owned or leased by any Grantor where documents embodying the
Patent and Trademark Collateral or any part thereof are assembled in
order to effectuate the Agent's rights and remedies hereunder or under
law, and (iv) without notice except as specified below, sell the Patent
and Trademark Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Agent's offices or
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elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Agent may deem commercially reasonable. In the event
of any sale, assignment, or other disposition of any of the Patent and
Trademark Collateral by any Grantor, the goodwill of the business
connected with and symbolized by any Patent and Trademark Collateral
subject to such disposition shall be included, and such Grantor shall
supply to the Agent or its designee such Grantor's know-how and
expertise relating to the manufacture and sale of products or the
provision of services relating to any Patent and Trademark Collateral
subject to such disposition, and its customer lists and other records
relating to such Patent and Trademark Collateral and to the
distribution of such products and services. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten
days' notice to such Grantor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any
sale of Patent and Trademark Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) All payments received by any Grantor under or in
connection with any of the Patent and Trademark Collateral shall be
received in trust for the benefit of the Agent, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary
endorsement).
(c) All payments made under or in connection with or otherwise
in respect of the Patent and Trademark Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Patent and Trademark
Collateral may, in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to Section 10) in
whole or in part by the Agent for the ratable benefit of the Lenders,
the Issuer and the Swing Line Lender against, all or any part of the
Secured Obligations, in such order as the Agent shall elect. Any
surplus of such cash or cash proceeds held by the Agent and remaining
after payment in full of all the Secured Obligations shall be paid over
to the respective Grantors or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 10. INDEMNITY AND EXPENSES. Without duplicating any amounts
payable under Sections 10.7, 11.5 and 11.10 of the Credit Agreement:
(a) Each Grantor agrees to indemnify the Agent from and
against any and all claims, losses and liabilities arising out of, or
in connection with or resulting from this Agreement or the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities
result from the Agent's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction.
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(b) Each Grantor will upon demand pay to the Agent the amount
of any and all reasonable expenses, including, without limitation, the
reasonable fees and costs of its counsel and of any experts and agents,
that the 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, any of the
Patent and Trademark Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent or the Lenders hereunder or (iv) the
failure by any Grantor to perform or observe any of the provisions
hereof.
SECTION 11. SECURITY INTEREST ABSOLUTE. All rights of the Agent and
Security Interests granted hereunder, and each of the Grantor's Obligations,
shall, to the extent permitted by law, be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any other Loan Document, or any
agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver
of or any consent to departure from, the Credit
Agreement or any other Loan Document (other than this
Agreement), including, without limitation, any
increase in the Secured Obligations resulting from
the extension of additional credit to the Borrower or
otherwise;
(iii) any taking and holding of Patent and Trademark
Collateral or guarantees for all or any of the
Secured Obligations; or any amendment, alteration,
exchange, substitution, transfer, enforcement,
waiver, subordination, termination or release of any
Patent and Trademark Collateral or such guarantees,
or any nonperfection of any Patent and Trademark
Collateral, or any consent to departure from any such
guaranty;
(iv) any manner of application of Patent and Trademark
Collateral, or proceeds thereof, to all or any of the
Secured Obligations, or the manner of sale or other
disposition of any Patent and Trademark Collateral;
(v) any consent by any Lender, the Issuer, the Swing Line
Lender or the Agent to the change, restructuring or
termination of the corporate structure or existence
of any Grantor and any corresponding restructure of
the Secured Obligations, or any other restructure or
refinancing of the Secured Obligations or any portion
thereof;
(vi) any modification, compromise, settlement or release
by the Agent or any Lender, the Issuer or the Swing
Line Lender, by operation of law or otherwise (except
any of the foregoing with respect to this Agreement),
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collection or other liquidation of the Secured
Obligations or the liability of any Grantor, or of
the Patent and Trademark Collateral, in whole or in
part, and any refusal of payment by the Agent or any
Lender, the Issuer or the Swing Line Lender, in whole
or in part, from any obligor, any Grantor in
connection with any of the Secured Obligations,
whether or not with notice to, or further assent by,
or any reservation of rights against, any Grantor; or
(vii) any other circumstance (other than by operation of
law) that might otherwise constitute a defense
available to, or a discharge of, the Grantor.
The granting of a Security Interest in the Patent and Trademark Collateral shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment of any of the Secured Obligations is rescinded or must
otherwise be returned by the Agent or any Lender, the Issuer or the Swing Line
Lender upon the insolvency, bankruptcy or reorganization of any Grantor or
otherwise, all as though such payment had not been made.
SECTION 12. WAIVER. Each Grantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Secured
Obligations (as that term is defined in this Agreement) and this Agreement and
any requirement that the Agent or any Lender, the Issuer or the Swing Line
Lender protect, secure, perfect or insure any Security Interest or any property
subject thereto or exhaust any right or take any action against any Grantor or
any other Person or any collateral.
SECTION 13. AMENDMENTS, ETC.
(a) Except as provided in subsection (b) to this Section 13,
no amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Agent,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure to
exercise nor any delay in exercising, on the part of the Agent, any of
the Lenders, the Issuer or the Swing Line Lender, any right, power or
privilege under this Agreement shall operate as a waiver thereof;
further, no single or partial exercise of any right, power or privilege
under this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b) Any patent and trademark security agreement supplement
hereto shall be in substantially the form of Exhibit A hereto (each a
"PATENT AND TRADEMARK SECURITY AGREEMENT SUPPLEMENT"), and upon the
execution and delivery thereof by any Person (i) such Person shall be
referred to as an "ADDITIONAL GRANTOR" and shall be and become a
Grantor and each reference in this Agreement to "GRANTOR" shall also
mean and be a reference to such Additional Grantor, and (ii) the
supplements attached to each Patent and Trademark Security Agreement
Supplement shall be incorporated into and become a part of and
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supplement Schedules I and II hereto, and the Agent may attach such
supplements to such Schedule as supplemented pursuant hereto.
SECTION 14. ADDRESSES FOR NOTICES. All notices and other communications
to any party provided for hereunder shall be in writing (including telegraphic,
telecopy, telex or cable communication) and mailed, telegraphed, telecopied,
telexed, cabled or delivered, addressed to such party, in the case of any
Telxon, at its address referred to in Section 11.2 of the Credit Agreement, in
the case of a Grantor other than Telxon, at its address referred to on Schedule
I to the Subsidiary Guaranty or next to its signature in any Supplement to the
Subsidiary Guaranty, in the case of the Agent, at the address of the Agent
referred to in Section 11.2 of the Credit Agreement, or as to any party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section. All such
notices and other communications shall be effective (a) when received, if mailed
or delivered, or (b) when delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid.
SECTION 15. CONTINUING SECURITY INTEREST; RELEASE AND REASSIGNMENT OF
COLLATERAL.
(a) This Agreement shall create a continuing Security Interest
in the Patent and Trademark Collateral and shall (i) remain in full
force and effect until the cash payment in full of the Secured
Obligations, the repayment of all Loans, the expiration or cancellation
of all Letters of Credit and the termination of the Revolving
Commitments, (ii) be binding upon each Grantor, its successors and
assigns, and (iii) inure, together with the rights and remedies of the
Agent hereunder, to the benefit of the Agent, the Lenders, the Issuer,
and the Swing Line Lender and each of their respective successors,
transferees and assigns, including, but not limited to, those provided
in the Credit Agreement. Upon the payment in full of the Secured
Obligations, the repayment of all Loans, the expiration or cancellation
of all Letters of Credit and the termination of the Revolving
Commitments, this Agreement and the Liens granted to the Agent
hereunder, shall terminate. Without limiting the generality of the
foregoing clause (iii), any Lender may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit Agreement
(in accordance with the terms of the Credit Agreement) to any other
Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to such Lender, Issuer or Swing
Line Lender herein or otherwise, in each case subject to and as
provided for in Section 11.7 of the Credit Agreement.
(b) In the case of any Patent and Trademark Collateral pledged
or assigned, or in which a security interest is granted hereunder by
any Grantor, upon any sale, lease, transfer or other disposition of any
item of Patent and Trademark Collateral in accordance with the terms of
the Credit Agreement (other than sales of Inventory in the ordinary
course of business), the Agent will, at such Grantor's expense, execute
and deliver to any Grantor, any such documents as such Grantor shall
reasonably request to evidence the release of such item of Patent and
Trademark Collateral from the assignment and security interest granted
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hereby; provided, however, as to clause (a)(ii) above, that (x) at the
time of such request and such release no Event of Default (or event or
condition which upon notice or lapse of time or both would constitute
an Event of Default) shall have occurred and be continuing, (y) such
Grantor shall have delivered to the Agent, at least 10 Business Days
prior to the date of the proposed release, or such shorter period
acceptable to the Agent under this Agreement, a written request for
release describing the item of Patent and Trademark Collateral and the
terms of the sale, lease, transfer or other disposition in reasonable
detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Agent
and a certification by such Grantor to the effect that the transaction
is in compliance with the Credit Agreement and as to such other matters
as the Agent may request, and (z) any proceeds of any such sale, lease,
transfer or other disposition required to be applied to the prepayment
of Loans or reduction in Revolving Commitments in accordance with the
Credit Agreement shall be so applied.
(c) Upon the cash payment in full of the Secured Obligations,
the Security Interests granted hereby shall terminate and all rights to
the Patent and Trademark Collateral shall revert and be reassigned to
the respective Grantors. Upon any such termination, the Agent will, at
such Grantor's expense, execute and deliver to each Grantor such
documents as such Grantor shall reasonably request to evidence such
termination and reassignment.
SECTION 16. TRANSACTIONS PERMITTED UNDER THE CREDIT AGREEMENT. Nothing
contained in this Agreement shall in any manner prohibit or restrict any Grantor
or any of its Subsidiaries from consummating any transaction, entering into any
agreement or otherwise taking any action expressly permitted under the Credit
Agreement.
SECTION 17. SEVERABILITY. If any term or provision of this Agreement is
or shall become illegal, invalid or unenforceable in any jurisdiction, all other
terms and provisions of this Agreement shall remain legal, valid and enforceable
in such jurisdiction and such illegal, invalid or unenforceable provision shall
be legal, valid and enforceable in any other jurisdiction.
SECTION 18. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PATENT AND TRADEMARK
COLLATERAL ARE GOVERNED BY THE LAWS OF THE UNITED STATES OR ANY OTHER
JURISDICTION OTHER THAN THE STATE OF NEW YORK. UNLESS OTHERWISE DEFINED HEREIN
OR IN THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 8 OR 9 OF THE UCC ARE USED
HEREIN AS THEREIN DEFINED.
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SECTION 20. WAIVER OF TRIAL BY JURY. EACH GRANTOR HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES TO THE EXTENT PERMITTED BY LAW ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
GRANTORS:
TELXON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Senior Vice President
-----------------------------
TELETRANSACTION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
PENRIGHT! CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
META HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
AGENT:
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name:
Title:
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