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EXHIBIT 10.19
TRADEMARK SECURITY AGREEMENT
(BORROWER)
THIS TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
May 29, 1998 is made by STORMEDIA INCORPORATED, a Delaware corporation and
AKASHIC MEMORIES CORPORATION, a California corporation (collectively,
"Debtors"), on the one hand, and, on the other hand, FOOTHILL CAPITAL
CORPORATION, a California corporation, as agent for the Lenders from time to
time party to the Loan Agreement, (in such capacity "Foothill").
RECITALS
A. Debtors and Foothill have entered into that certain Loan and Security
Agreement, of even date herewith (as amended, restated, modified, renewed or
extended from time to time, the "Loan Agreement"), pursuant to which Foothill
has agreed to make certain financial accommodations to Debtors, and pursuant to
which Debtors have granted to Foothill security interests in (among other
things) all of the general intangibles of Debtors.
B. Pursuant to the Loan Agreement and as one of the
conditions precedent to the obligations of Foothill under the Loan Agreement,
Debtors have agreed to execute and deliver this Agreement to Foothill for filing
with the PTO and with any other relevant recording systems in any domestic
jurisdiction, and as further evidence of and to effectuate Foothill's existing
security interests in the trademarks and other general intangibles described
herein.
ASSIGNMENT
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Debtors hereby agree in favor of
Foothill as follows:
1. Definitions; Interpretation.
(a) Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Debtors" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
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"Other Obligations" means the Obligations other than the Bridge
Term Loan Obligations.
"Proceeds" means whatever is receivable or received from or upon
the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Trademark Collateral, including
"proceeds" as defined at UCC Section 9306, all insurance proceeds and all
proceeds of proceeds. Proceeds shall include (i) any and all accounts, chattel
paper, instruments, general intangibles, cash and other proceeds, payable to or
for the account of Debtors, from time to time in respect of any of the Trademark
Collateral, (ii) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of Debtors from time to time with respect
to any of the Trademark Collateral, (iii) any and all claims and payments (in
any form whatsoever) made or due and payable to Debtors from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Trademark Collateral by any Person acting
under color of governmental authority, and (iv) any and all other amounts from
time to time paid or payable under or in connection with any of the Trademark
Collateral or for or on account of any damage or injury to or conversion of any
Trademark Collateral by any Person.
"PTO" means the United States Patent and Trademark Office and any
successor thereto.
"Trademark Collateral" has the meaning set forth in Section 2.
"Trademarks" has the meaning set forth in Section 2.
"United States" and "U.S." each mean the United States of
America.
(b) Terms Defined in UCC. Where applicable and except
as otherwise defined herein, terms used in this Agreement shall have the
meanings assigned to them in the UCC.
(c) Interpretation. In this Agreement, except to the
extent the context otherwise requires:
(i) Any reference to a Section or a Schedule is
a reference to a section hereof, or a schedule hereto, respectively, and
to a subsection or a clause is, unless otherwise stated, a reference to
a subsection or a clause of the Section or subsection in which the
reference appears.
(ii) The words "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a whole and
not merely to the specific Section, subsection, paragraph or clause in
which the respective word appears.
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(iii) The meaning of defined terms shall be
equally applicable to both the singular and plural forms of the terms
defined.
(iv) The words "including," "includes" and
"include" shall be deemed to be followed by the words "without
limitation."
(v) References to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto.
(vi) References to statutes or regulations are to
be construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation referred
to.
(vii) Any captions and headings are for
convenience of reference only and shall not affect the construction of
this Agreement.
(viii) Terms defined in the Loan Agreement and not
otherwise defined herein shall have the respective meanings assigned to
them in the Loan Agreement and the rules of construction set forth in
Section 1 of the Loan Agreement shall likewise govern this Agreement.
(ix) In the event of any actual, irreconcilable
conflict between the terms and provisions of this Agreement and the Loan
Agreement, the terms and provisions of the Loan Agreement shall control
and govern; provided, however, that the inclusion herein of additional
obligations on the part of Debtors and supplemental rights and remedies
in favor of Foothill (whether under federal law or applicable California
law), in each case in respect of the Trademark Collateral, shall not be
deemed a conflict in the Loan Agreement.
2. Security Interests.
(a) Assignment and Grant of Security Interests.
(i) To secure the Bridge Term Loan Obligations,
Debtors hereby grant, assign, transfer and convey to Foothill continuing
security interests in all of Debtors' right, title and interest in and to the
following property, whether now existing or hereafter acquired or arising and
whether registered or unregistered (collectively, the "Trademark Collateral"):
(a) all state (including common law) and
federal trademarks, service marks and trade names, corporate names,
company names, business names, fictitious business names, trade styles,
trade dress, logos, other source
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or business identifiers, designs and general intangibles of like nature,
now existing or hereafter adopted or acquired, together with and
including all licenses therefor held by Debtors (unless otherwise
prohibited by any license or related licensing agreement under
circumstances where the granting of the security interests would have
the effect under applicable law of terminating or permitting termination
of the license for breach (unless the licensor has consented to such
grant or waived such termination remedy)), and all registrations and
recordings thereof, and all applications filed or to be filed in
connection therewith, including registrations and applications in the
PTO, any State of the United States and all extensions or renewals
thereof, including without limitation any of the foregoing identified on
Schedule A hereto (as the same may be amended, modified or supplemented
from time to time), and the right (but not the obligation) to register
claims under any state or federal trademark law or regulation and to
apply for, renew and extend any of the same, to ▇▇▇ or bring opposition
or cancellation proceedings in the name of Debtors or in the name of
Foothill for past, present or future infringement or unconsented use
thereof, and all rights arising therefrom throughout the world
(collectively, the "Trademarks");
(b) all claims, causes of action and
rights to ▇▇▇ for past, present or future infringement or unconsented
use of any Trademarks and all rights arising therefrom and pertaining
thereto;
(c) all general intangibles related to or
arising out of any of the Trademarks and all the goodwill of Debtors'
businesses symbolized by the Trademarks or associated therewith and
associated product lines to the extent embodying the Trademarks; and
(d) all products and Proceeds of any and
all of the foregoing.
(ii) To secure the Other Obligations, Debtors
hereby grant, assign, transfer and convey to Foothill continuing security
interests in all of Debtors' right, title and interest in and to the following
property, whether now existing or hereafter acquired or arising and whether
registered or unregistered (collectively, the "Trademark Collateral"):
(a) all state (including common law) and
federal trademarks, service marks and trade names, corporate names,
company names, business names, fictitious business names, trade styles,
trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, together with and including all licenses therefor held by
Debtors (unless otherwise prohibited by any license or related licensing
agreement under circumstances where the granting of the security
interests would have the effect under applicable law of terminating or
permitting termination of the license for breach
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(unless the licensor has consented to such grant or waived such
termination remedy)), and all registrations and recordings thereof, and
all applications filed or to be filed in connection therewith, including
registrations and applications in the PTO, any State of the United
States and all extensions or renewals thereof, including without
limitation any of the foregoing identified on Schedule A hereto (as the
same may be amended, modified or supplemented from time to time), and
the right (but not the obligation) to register claims under any state or
federal trademark law or regulation and to apply for, renew and extend
any of the same, to ▇▇▇ or bring opposition or cancellation proceedings
in the name of Debtors or in the name of Foothill for past, present or
future infringement or unconsented use thereof, and all rights arising
therefrom throughout the world (collectively, the "Trademarks");
(b) all claims, causes of action and
rights to ▇▇▇ for past, present or future infringement or unconsented
use of any Trademarks and all rights arising therefrom and pertaining
thereto;
(c) all general intangibles related to or
arising out of any of the Trademarks and all the goodwill of Debtors'
businesses symbolized by the Trademarks or associated therewith; and
(d) all products and Proceeds of any and
all of the foregoing.
(b) Continuing Security Interests. Debtors agree that
this Agreement shall create continuing security interests in the Trademark
Collateral which shall remain in effect until terminated in accordance with
Section 17.
3. Further Assurances; Appointment of Foothill as
Attorney-in-Fact. Debtors at their expense shall execute and deliver, or cause
to be executed and delivered, to Foothill any and all documents and instruments,
in form and substance reasonably satisfactory to Foothill, and take any and all
action, which Foothill may reasonably request from time to time, to perfect and
continue perfected, maintain the priority of or provide notice of Foothill's
security interests in the Trademark Collateral and to accomplish the purposes of
this Agreement. Foothill shall have the right, in the name of Debtors, or in the
name of Foothill or otherwise, without notice to or assent by Debtors, and
Debtors hereby irrevocably constitute and appoint Foothill (and any of
Foothill's officers or employees or agents designated by Foothill) as Debtors'
true and lawful attorney-in-fact with full power and authority, (i) to sign the
names of Debtors on all or any of such documents or instruments and perform all
other acts that Foothill reasonably deems necessary or advisable in order to
perfect or continue perfected, maintain the priority or enforceability of or
provide notice of Foothill's security
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interests in, the Trademark Collateral, and (ii) to execute any and all other
documents and instruments, and to perform any and all acts and things for and on
behalf of Debtors, which Foothill reasonably may deem necessary or advisable to
maintain, preserve and protect the Trademark Collateral and to accomplish the
purposes of this Agreement, including (A) after the occurrence and during the
continuance of any Event of Default, to defend, settle, adjust or institute any
action, suit or proceeding with respect to the Trademark Collateral, (B) to
assert or retain any rights under any license agreement for any of the Trademark
Collateral, and (C) after the occurrence and during the continuance of any Event
of Default, to execute any and all applications, documents, papers and
instruments for Foothill to use the Trademark Collateral, to grant or issue any
exclusive or non-exclusive license with respect to any Trademark Collateral, and
to assign, convey or otherwise transfer title in or dispose of the Trademark
Collateral. The power of attorney set forth in this Section 3, being coupled
with an interest, is irrevocable so long as this Agreement shall not have
terminated in accordance with Section 17.
4. Representations and Warranties. Debtors represent and
warrant to Foothill, in each case to the best of its knowledge, information, and
belief, as follows:
(a) No Other Trademarks. Schedule A sets forth, as of
the Closing Date, a true and correct list of all of the existing Trademarks that
are registered, or for which any application for registration has been filed
with the PTO or any corresponding or similar trademark office of any other U.S.
jurisdiction, and that are owned or held (whether pursuant to a license or
otherwise) and used by Debtors.
(b) Trademarks Subsisting. Each of the Trademarks
listed in Schedule A is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and, to the best of Debtors's knowledge,
each of the Trademarks is valid and enforceable.
(c) Ownership of Trademark Collateral; No Violation.
(i) Debtors have rights in and good and defensible title to the existing
Trademark Collateral, (ii) with respect to the Trademark Collateral shown on
Schedule A hereto as owned by it, Debtors are the sole and exclusive owners
thereof, free and clear of any Liens and rights of others (other than the
security interests created hereunder and the interests of the Bank Group
Financing Documents as contemplated by the Intercreditor Agreement), including
licenses, registered user agreements and covenants by Debtors not to ▇▇▇ third
persons, and (iii) with respect to any Trademarks for which either Debtor is
either a licensor or a licensee pursuant to a license or licensee agreement
regarding such Trademark, each such license or licensing agreement is in full
force and effect, Debtors are not in default of any of its obligations
thereunder and, other than the parties to such licenses or licensing agreements,
no other Person has any rights in or to any of the Trademark Collateral. To the
best of Debtors' knowledge, the past, present
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and contemplated future use of the Trademark Collateral by Debtors has not, does
not and will not infringe upon or violate any right, privilege or license
agreement of or with any other Person.
(d) No Infringement. To the best of Debtors' knowledge,
no material infringement or unauthorized use presently is being made of any of
the Trademark Collateral by any Person.
(e) Powers. Debtors have the unqualified right, power
and authority to pledge and to grant to Foothill security interests in all of
the Trademark Collateral pursuant to this Agreement, and to execute, deliver and
perform their obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person except as already obtained.
5. Covenants. So long as any of the Obligations remain
unsatisfied, Debtors agree that they will comply with all of the covenants,
terms and provisions of this Agreement, the Loan Agreement and the other Loan
Documents, and Debtors will promptly give Foothill written notice of the
occurrence of any event that could have a material adverse effect on any of the
Trademarks or the Trademark Collateral, including any petition under the
Bankruptcy Code filed by or against any licensor of any of the Trademarks for
which either Debtor is a licensee.
6. Future Rights. Except as otherwise expressly agreed to in
writing by Foothill, for so long as any of the Obligations shall remain
outstanding, or, if earlier, until Foothill shall have released or terminated,
in whole but not in part, its interest in the Trademark Collateral, if and when
either Debtor shall obtain rights to any new Trademarks, or any reissue, renewal
or extension of any Trademarks, the provisions of Section 2 shall automatically
apply thereto and Debtors shall give to Foothill prompt notice thereof. Debtors
shall do all things reasonably deemed necessary or advisable by Foothill to
ensure the validity, perfection, priority and enforceability of the security
interests of Foothill in such future acquired Trademark Collateral. Debtors
hereby authorize Foothill to modify, amend or supplement the Schedules hereto
and to re-execute this Agreement from time to time on Debtors' behalf and as its
attorney-in-fact to include any future Trademarks which are or become Trademark
Collateral and to cause such re-executed Agreement or such modified, amended or
supplemented Schedules to be filed with the PTO.
7. Foothill's Duties. Notwithstanding any provision contained
in this Agreement, Foothill shall have no duty to exercise any of the rights,
privileges or powers afforded to it and shall not be responsible to Debtors or
any other Person for any failure to do so or delay in doing so. Except for the
accounting for moneys actually received by Foothill
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hereunder or in connection herewith, Foothill shall have no duty or liability to
exercise or preserve any rights, privileges or powers pertaining to the
Trademark Collateral.
8. Remedies. Subject to the terms of the Loan Agreement and
Intercreditor Agreement, from and after the occurrence and during the
continuation of an Event of Default, Foothill shall have all rights and remedies
available to it under the Loan Agreement and applicable law (which rights and
remedies are cumulative) with respect to the security interests in any of the
Trademark Collateral or any other Collateral. Debtors agree that such rights and
remedies include the right of Foothill as a secured party to sell or otherwise
dispose of its Collateral after default, pursuant to UCC Section 9504. Debtors
agree that Foothill shall at all times have such royalty-free licenses, to the
extent permitted by law, for any Trademark Collateral that is reasonably
necessary to permit the exercise of any of Foothill's rights or remedies upon or
after the occurrence of (and during the continuance of) an Event of Default with
respect to (among other things) any tangible asset of Debtors in which Foothill
has security interests, including Foothill's rights to sell inventory, tooling
or packaging which is acquired by Debtors (or its successors, assignees or
trustees in bankruptcy). In addition to and without limiting any of the
foregoing, upon the occurrence and during the continuance of an Event of
Default, Foothill shall have the right but shall in no way be obligated to bring
suit, or to take such other action as Foothill deems necessary or advisable, in
the name of either Debtor or Foothill, to enforce or protect any of the
Trademark Collateral, in which event Debtors shall, at the request of Foothill,
do any and all lawful acts and execute any and all documents required by
Foothill in aid of such enforcement. To the extent that Foothill shall elect not
to bring suit to enforce such Trademark Collateral, Debtors, in the exercise of
their reasonable business judgment, agree to use all reasonable measures and its
diligent efforts, whether by action, suit, proceeding or otherwise, to prevent
the infringement, misappropriation or violation thereof by others and for that
purpose agrees diligently to maintain any action, suit or proceeding against any
Person necessary to prevent such infringement, misappropriation or violation.
9. Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by Debtors and Foothill and their
respective successors and assigns.
10. Notices. All notices and other communications hereunder
shall be in writing and shall be mailed, sent or delivered in accordance with
the Loan Agreement.
11. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the federal laws of the United States
of America and the laws of the State of California.
12. Amendment. Neither this Agreement nor any provision hereof
may be modified, amended or waived except by the written agreement of the
parties as provided in
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the Loan Agreement. Notwithstanding the foregoing, Foothill may re-execute this
Agreement or modify, amend or supplement the Schedules hereto as provided in
Section 6 hereof.
13. Severability. If one or more provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to any party, such invalidity, illegality or
unenforceability in such jurisdiction or with respect to such party shall, to
the fullest extent permitted by applicable law, not invalidate or render illegal
or unenforceable any such provision in any other jurisdiction or with respect to
any other party, or any other provisions of this Agreement.
14. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
15. Loan Agreement. Debtors acknowledge that the rights and
remedies of Foothill with respect to the security interests in the Trademark
Collateral granted hereby are more fully set forth in the Loan Agreement and all
such rights and remedies are cumulative.
16. No Inconsistent Requirements. Debtors acknowledge that
this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
Debtors agree that all such covenants, terms and provisions are cumulative and
all shall be performed and satisfied in accordance with their respective terms.
To the extent of any conflict between the provisions of this Agreement and the
Loan Agreement, however, the provisions of the Loan Agreement shall govern.
17. Termination. Upon the payment in full of the Obligations,
including the cash collateralization, expiration, or cancellation of all
Obligations, if any, consisting of letters of credit, and the full and final
termination of any commitment to extend any financial accommodations under the
Loan Agreement, this Agreement shall terminate, and Foothill shall execute and
deliver such documents and instruments and take such further action reasonably
requested by Debtors, at Debtors' expense, as shall be necessary to evidence
termination of the security interests granted by Debtors to Foothill hereunder,
including cancellation of this Agreement by written notice from Foothill to the
PTO.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
STORMEDIA INCORPORATED,
a Delaware corporation
By: /s/
------------------------------------
Title:
---------------------------------
AKASHIC MEMORIES CORPORATION,
a California corporation
By: /s/
------------------------------------
Title:
---------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/
------------------------------------
Title:
---------------------------------
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On May ___, 1998, before me, ____________________________, Notary
Public, personally appeared ____________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/
---------------------------
Signature
[SEAL]
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On May ___, 1998, before me, _____________________________, Notary
Public, personally appeared _____________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
___________________________
Signature
[SEAL]
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SCHEDULE A
to the Trademark Security Agreement
Trademarks of Debtors
Registration/
Registration/ Application
Type Jurisdiction ▇▇▇▇ Application Date No.
---- ------------ ---- ---------------- -------------
A-1.