Exhibit 10.13
PATENT SECURITY AGREEMENT
AGREEMENT dated as of February ___, 1999 made by EVERCEL, INC., a
Delaware corporation with its chief executive office located at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"), in favor of ENERGY RESEARCH
CORPORATION, a New York corporation with a place of business at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Secured Party").
W I T N E S S E T H:
WHEREAS, Borrower and Secured Party are parties to a Loan Agreement,
dated as of the date hereof (the "Loan Agreement"), and certain agreements,
documents and instruments entered into pursuant thereto, (collectively, with the
Loan Agreement, the "Loan Documents"), pursuant to which Secured Party has
agreed to make certain loans to Borrower; and
WHEREAS, Secured Party's willingness to enter into the Loan Documents
and make the loans and credit accommodations available thereunder is subject to
the condition, among others, that Borrower execute and deliver this Patent
Security Agreement;
NOW, THEREFORE, in consideration of the premises and for one dollar
($1.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in addition to, and not in limitation of,
any rights of the Secured Party under the Loan Documents, Borrower hereby agrees
for the benefit of Secured Party as follows:
1. DEFINITIONS.
1.1 All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided therefore in the Loan Agreement. In
addition, the following terms shall have the meanings set forth in this Section
1 or elsewhere in this Security Agreement referred to below:
"PTO" shall mean the United States Patent and Trademark Office.
"PATENTS" shall mean all of the following now or hereafter owned by the
Borrower:
(a) all letters patent of the United States or any other country,
and all applications for letters patent of the United States or any other
country;
(b) all re-issues, continuations, divisions,
continuations-in-part, renewals or extensions thereof;
(c) the inventions disclosed or claimed therein, including the
right to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
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(d) the right (but not the obligation) to make and prosecute
applications for such Patents.
Patents shall include but not be limited to those set forth on SCHEDULE
A attached hereto.
"PATENT COLLATERAL" shall mean all of the Borrower's right, title and
interest in and to all of the Patents, the Patent License Rights, and the Patent
Rights, and all additions, improvements, and accessions to, all substitutions
for and replacements of, and all products and Proceeds (including insurance
proceeds) of any and all of the foregoing, and all books and records and
technical information and data describing or used in connection with any and all
such rights, interests, assets or property.
"PATENT LICENSE RIGHTS" shall mean any and all past, present or future
rights and interests of the Borrower pursuant to any and all past, present and
future licensing agreements in favor of the Borrower, or to which the Borrower
is a party, pertaining to any Patents or Patent Rights, owned or used by third
parties in the past, present or future, including the right to enforce, ▇▇▇ and
recover for, any past, present or future breach or violation of any such
agreements but only to the extent that the inclusion thereof in this Agreement
does not and will not cause a default under the terms of any agreement (except
that all payment rights of Borrower shall be included in this Agreement).
"PATENT RIGHTS" shall mean any and all past, present or future rights
in, to and associated with the Patents throughout the world, whether arising
under federal law, state law, common law, foreign law, or otherwise, including
but not limited to the following: all such rights arising out of or associated
with the Patents; the right (but not the obligation) to register claims under
any federal, state or foreign patent law or regulation; the right (but not the
obligation) to ▇▇▇ or bring opposition or bring cancellation proceedings for any
and all past, present and future infringements of or any other damages or injury
to the Patents or the Patent Rights, and the rights to damages or profits due or
accrued arising out of or in connection with any such past, present or future
infringement, damage or injury; and the Patent License Rights.
"PROCEEDS" shall mean any consideration received from the sale,
exchange, license, lease or other disposition or transfer of any right,
interest, asset or property which constitutes Patent Collateral, any value
received as a consequence of the ownership, possession, use or practice of any
Patent Collateral, and any payment received from any insurer or other person or
entity as a result of the destruction or the loss, theft or other involuntary
conversion, of whatever nature, of any right, interest, asset or property which
constitutes Patent Collateral.
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2. GRANT OF SECURITY; COLLATERAL ASSIGNMENT.
2.1 GRANT OF SECURITY INTEREST. As collateral security for the
complete and timely performance and satisfaction of all Obligations (as defined
in the Security Agreement from Borrower to Secured Party dated the date hereof),
the Borrower hereby unconditionally grants to Secured Party, a continuing
security interest in and lien on the Patent Collateral, and pledges, mortgages
and hypothecates the Patent Collateral to Secured Party.
2.2 SUPPLEMENTAL TO LOAN DOCUMENTS. The parties expressly acknowledge
and agree that they have executed and delivered the Loan Documents pursuant to
which the Borrower unconditionally granted to Secured Party, a continuing
security interest in and lien on the Collateral (including the Patent
Collateral). In no event shall this Security Agreement, or the recordation of
this Security Agreement (or any document hereunder) with the PTO, or any other
governmental or public office or agency, adversely affect or impair, in any way
or to any extent, the other Loan Documents, the security interest of Secured
Party in the Collateral (including the Patent Collateral) pursuant to the other
Loan Documents, the attachment and perfection of such security interest under
the Code (as defined herein), or the present or future rights and interests of
Secured Party in and to the Collateral under or in connection with this Security
Agreement, the other Loan Documents, and/or the Code. Any and all rights and
interests of Secured Party in and to the Patent Collateral (and any and all
obligations of the Borrower with respect to the Patent Collateral) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of Secured Party
(and the obligations of the Borrower) in, to or with respect to the Collateral
(including the Patent Collateral) provided in or arising under or in connection
with the other Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. The
Borrower represents and warrants to, and covenants and agrees with, Secured
Party, as follows:
3.1 TITLE. The Borrower will, subject to its reasonable business
judgment, take all actions as it shall determine to defend its right, title and
interests in and to the Patents and the Patent Collateral against claims of any
third parties.
3.2 MAINTENANCE OF PATENT COLLATERAL. The Borrower shall take such
actions (including but not limited to institution and maintenance of suits,
proceedings or actions) it determines to be appropriate to maintain, protect,
preserve, care for and enforce the Patent Collateral.
3.3 NO INFRINGEMENTS. The Borrower shall use reasonable efforts
consistent with past practices to protect against any infringement or
unauthorized or improper use of the Patents. In the event any such infringement
or unauthorized or improper use by any third party has been reasonably
established by the Borrower, the Borrower shall promptly notify Secured Party.
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3.4 FILING FOR PERFECTION OF INTEREST. Borrower acknowledges that
Secured Party may cause this Security Agreement to be recorded with the PTO.
4. REMEDIES UPON AN EVENT OF DEFAULT. During the continuance of an
Event of Default:
(a) Secured Party may declare all Obligations secured hereby
immediately due and payable and shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as now in effect in the State of
Connecticut ("Code") or under other applicable law.
(b) Secured Party may notify any obligors with respect to the Patent
Collateral of Secured Party's security interest and that such obligors are to
make payments directly to Secured Party. Secured Party may send this notice in
Borrower's name or in Secured Party's name, and at Secured Party's request
Borrower will join in Secured Party's notice, provide written confirmation of
Secured Party's security interest and request that payment be sent to Secured
Party. Secured Party may enforce this obligation by specific performance.
Secured Party may collect all amounts due from such obligors. Upon and after
notification by Secured Party to Borrower, Borrower shall hold any proceeds and
collections of any of the Patent Collateral in trust for Secured Party and shall
not commingle such proceeds or collections with any other of Borrower's funds,
and Borrower shall deliver all such proceeds to Secured Party immediately upon
Borrower's receipt thereof in the identical form received and duly endorsed or
assigned to Secured Party.
(c) Secured Party will give to the Borrower reasonable notice of the
time and place of any public sale of Patent Collateral or of the time after
which any private sale or other intended disposition thereof is to be made. Such
requirement of reasonable notice shall be met if such notice is delivered to the
address of the Borrower set forth in this Agreement at least ten (10) days
before the time of the proposed sale or disposition. Any such sale may take
place from Borrower's location or such other location as Secured Party may
designate. Borrower shall remain liable for any deficiency in payment of the
Obligations after any such sale.
Borrower hereby irrevocably appoints Secured Party as its true and
lawful attorney-in-fact with full power of substitution to take any of the
foregoing actions in the name of the Borrower or Secured Party to carry out the
terms of this Agreement and to protect, enforce, preserve or perfect Secured
Party's rights hereunder. Such power of attorney is irrevocable and shall be
deemed to be coupled with an interest.
(d) NO OBLIGATION OF SECURED PARTY. Nothing herein shall be construed
as obligating Secured Party to take any of the foregoing actions at any time.
5. LIABILITIES, INDEMNITY AND COSTS.
5.1 LIABILITY FOR USES OF PATENT COLLATERAL. The Borrower shall be
liable for any and all uses or misuses of and the practice, manufacture, sales
(or other transfers or dispositions) of
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any of the Patent Collateral by the Borrower and its affiliates. The Borrower
shall also be exclusively liable for any claim, suit, loss, damage, expense or
liability arising out of or in connection with the fault, negligence, acts or
omissions of the Borrower (regardless of whether such fault, negligence, acts or
omissions occurred or occur prior to or after such license termination).
5.2 LICENSE AGREEMENT OBLIGATIONS. Nothing in this Security Agreement
shall relieve the Borrower from any performance of any covenant, agreement or
obligation of the Borrower under any license agreement now or hereafter in
effect licensing any part of the Patent Collateral, or from any liability to any
licensee or licensor under any such license agreement or to any other party, or
shall impose any liability on Secured Party for any act or omission of the
Borrower in connection with any such license agreement.
6. POWER OF ATTORNEY. The provisions of this Section 6 shall be
subject in all events to the terms and conditions of the Loan Agreement.
6.1 GRANT. The Borrower hereby grants to Secured Party, and any
officer or agent of Secured Party as Secured Party may designate in its sole
discretion, a power of attorney, thereby constituting and appointing Secured
Party (and Secured Party's designee) its true and lawful attorney-in-law and
attorney-in-fact, effective upon the occurrence and during the continuation of
an Event of Default, for the purpose of assigning, selling, licensing or
otherwise transferring or disposing of all right, title and interest of the
Borrower in and to any of the Patent Collateral in accordance with the terms
hereof. The Borrower hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof.
6.2 IRREVOCABLE. The foregoing power of attorney is coupled with an
interest and is irrevocable until this Security Agreement shall terminate.
7. GENERAL PROVISIONS.
7.1 LOAN AGREEMENT CONTROLS. This Security Agreement is supplemental
to the Loan Agreement, the terms of which, including, without limitation, the
notice and governing law provisions, consent to service of process and
jurisdiction and prohibition on non-written waivers, the Borrower expressly
accepts, confirms and acknowledges are incorporated herein by reference. In the
event of any irreconcilable conflict between the provisions of this Security
Agreement and the Loan Agreement the provisions of the Loan Agreement shall
control.
7.2 SPECIFIC ENFORCEMENT. Due to the unique nature of the Patent
Collateral, and in order to preserve its value, the Borrower agrees that the
Borrower's agreements, duties and obligations under this Security Agreement
shall be subject to specific enforcement and other appropriate equitable orders
and remedies.
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IN WITNESS WHEREOF, Borrower has caused this Security Agreement to be
executed by its duly authorized officer as of the date first written above.
WITNESS: EVERCEL, INC.
By:
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Name:
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Title:
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STATE OF CONNECTICUT
COUNTY: , 1999
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Then personally appeared the above-named ______________ and stated that
he is a duly authorized _______________ of Evercel, Inc. (the "Corporation") and
acknowledged the foregoing instrument to be his free act and deed, and the free
act and deed of said Corporation, before me,
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Notary Public
My Commission Expires:
SCHEDULE A TO
PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
PATENTS
A. PATENTS
Patent No. Issue Date File No.
4,415,636 November 11, 1983 30512
4,546,058 October 8, 1985 32984
4,661,759 April 28, 1987 40006
4,810,598 March 7, 1987 40067
4,976,904 December 11, 1990 40066
5,023,155 June 11, 1991 40110
5,264,305 November 23, 1993 B429-001
5,460,899 October 24, 1995 B429-010
5,556,720 September 17, 1996 B429-010 CIP
5,658,694 August 19, 1997 B429-021
B. PATENT APPLICATIONS
Patent Application No. Filing Date File No.
08/722,605 September 27, 1996 B429-019
08/828,801 March 27, 1997 B429-026
09/148,451 September 4, 1998 B429-029
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C. LICENSES
1. Technology Transfer and License Contract for Nickel Zinc Battery
Technology among Xiamen ERC Battery Corporation Ltd., Xiamen Three
Circles Company Ltd. (formerly known as Xiamen Daily-Use Chemical
Company), and Energy Research Corporation dated, May 29, 1998.
2. Technology Transfer and License Contract for Nickel Zinc Battery
Technology between Xiamen Three Circles Company Ltd. (formerly known as
Xiamen Daily-Use Chemical Company), Nan Ya Plastics Corporation, and
Energy Research Corporation, dated February 21, 1998.
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