[Form of Subsidiary Patent Security Agreement]
SUBSIDIARY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
This SUBSIDIARY PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
(this "AGREEMENT") is dated as of April 21, 1998 and entered into by and between
[SUBSIDIARY], a ____________________ corporation ("ASSIGNOR"), and ▇▇▇▇▇ FARGO
BANK, N.A., as administrative agent for and representative of (in such capacity
herein called "ASSIGNEE") the financial institutions ("LENDERS") party to the
Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Assignee and Lenders have entered into a Credit Agreement dated as
of April 21, 1998 with Diamond Brands Operating Corp., a Delaware corporation
("COMPANY"), DLJ Capital Funding, Inc., as Syndication Agent, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Funding Inc., as Documentation Agent (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), pursuant to which Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "LENDER
INTEREST RATE AGREEMENTS") with one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS").
C. Assignor has executed and delivered the Subsidiary Guaranty dated
as of April 21, 1998 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "SUBSIDIARY
GUARANTY") in favor of Assignee for the benefit of Lenders and Interest Rate
Exchangers pursuant to which Assignor has guarantied the prompt payment and
performance when due of all Obligations of the Company under the Credit
Agreement and under any Lender Interest Rate Agreements.
D. Assignor has and may in the future have rights, title and
interests in and to various Patents and other related Collateral (as such terms
are hereinafter defined).
E. Assignor is willing to grant to Assignee (i) a security interest
in all such Collateral for the purpose of securing the complete and timely
satisfaction of all of the Secured Obligations (as hereinafter defined) and (ii)
effective upon the occurrence and during
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the continuation of an Event of Default, an assignment of Assignor's entire
rights, title and interest in and to all such Collateral.
F. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Assignor shall have granted the security
interests and made the conditional assignment and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into Lender Interest Rate
Agreements and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor hereby agrees with Assignee
as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby assigns to Assignee,
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and hereby grants to Assignee a security interest in, all of Assignor's right,
title and interest in and to the following, in each case whether now or
hereafter existing or in which Assignor now has or hereafter acquires an
interest and wherever the same may be located (the "COLLATERAL"):
(a) all patents and patent applications and rights and interests in
patents and patent applications under any domestic law that are presently, or in
the future may be, owned by Assignor and all patents and patent applications and
rights and interests in patents and patent applications under any domestic law
that are presently, or in the future may be, held or used by Assignor in whole
or in part (including, without limitation, the patents and patent applications
listed in Schedule A annexed hereto, as the same may be amended pursuant hereto
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from time to time), all rights (but not obligations) corresponding thereto
(including without limitation the right (but not the obligation) to ▇▇▇ for
past, present and future infringements in the name of Assignor or in the name of
Assignee or Lenders or Interest Rate Exchangers), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all of
the foregoing being collectively referred to as the "PATENTS"); it being
understood that the rights and interest assigned hereby shall include, without
limitation, all rights and interests pursuant to licensing or other contracts in
favor of Assignor pertaining to patent applications and patents presently or in
the future owned or used by third parties but, in the case of third parties
which are not Affiliates of Assignor, only to the extent permitted by such
licensing or other contracts and, if not so permitted, only with the consent of
such third parties;
(b) all general intangibles relating to the Patents;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(d) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing
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Collateral and, to the extent not otherwise included, all payments under
insurance (whether or not Assignee is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral. For purposes of this Agreement, the
term "PROCEEDS" includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
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limitation of, the granting of a security interest in the Collateral pursuant to
Section 1, Assignor hereby, effective upon the occurrence of an Event of Default
and upon written notice from Assignee, grants, sells, conveys, transfers,
assigns and sets over to Assignee, for its benefit and the ratable benefit of
Lenders and Interest Rate Exchangers, all of Assignor's right, title and
interest in and to the Collateral, including without limitation Assignor's
right, title and interest in and to the Patents identified in Schedule A annexed
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hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
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Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and liabilities of
every nature of Assignor now or hereafter existing under or arising out of or in
connection with the Subsidiary Guaranty, the other Loan Documents and the Lender
Interest Rate Agreements and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Assignor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
payments for early termination of Lender Interest Rate Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Assignee or any
Lender or Interest Rate Exchanger as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Assignor now or hereafter existing under
this Agreement (all such obligations of Assignor, together with the Underlying
Debt, being the "SECURED OBLIGATIONS").
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained herein to the
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contrary notwithstanding, (a) Assignor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Assignee of any of its
rights hereunder shall not release Assignor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Assignee shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Assignee be obligated to
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perform any of the obligations or duties of Assignor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor represents and
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warrants as follows:
(a) Description of Collateral. A true and complete list of all Patents
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owned, held (whether pursuant to a license or otherwise) or used by Assignor, in
whole or in part, as of the date of this Agreement is set forth in Schedule A
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annexed hereto.
(b) Validity and Enforceability of Collateral. Each Patent that is
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material to Assignor's business is valid, subsisting and enforceable and
Assignor is not aware of any pending or threatened claim by any third party that
any such material Patent is invalid or unenforceable or that the use of any such
material Patent violates the rights of any third person or of any basis for any
such claim.
(c) Ownership of Collateral. Except for the security interest and
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conditional assignment created by this Agreement, Assignor owns each material
Patent free and clear of any Lien. Except such as may have been filed in favor
of Assignee relating to this Agreement and of Foothill Capital Corporation (a
release of which has been delivered to Administrative Agent), (i) no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the Collateral is on file in the
United States Patent and Trademark Office.
(d) Office Locations; Other Names. The chief place of business, the
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chief executive office and the office where Assignor keeps its records regarding
the Collateral is, and has been for the four month period preceding the date
hereof, located at ___________________________________. Assignor has not in
the past done, and does not now do, business under any other name (including any
trade-name or fictitious business name).
(e) Governmental Authorizations. No authorization, approval or other
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action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Assignor of the security
interest and conditional assignment granted hereby, (ii) the execution, delivery
or performance of this Agreement by Assignor, or (iii) the perfection of or the
exercise by Assignee of its rights and remedies hereunder (except as may have
been taken by or at the direction of Assignor).
(f) Perfection. This Agreement, together with the filing of a
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financing statement describing the Collateral with the Secretary of State of the
State of ______________ and the recording of this Agreement with the United
States Patent and Trademark Office, which will be made, creates a valid,
perfected and first priority security interest in the Collateral, securing the
payment of the Secured Obligations, and all filings and other actions necessary
or desirable to perfect and protect such security interest have been or will be
duly made or taken.
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(g) Other Information. All information heretofore, herein or hereafter
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supplied to Assignee by or on behalf of Assignor with respect to the Collateral
is accurate and complete in all material respects.
SECTION 6. FURTHER ASSURANCES; NEW PATENTS AND PATENT APPLICATIONS.
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(a) Assignor agrees that from time to time, at the expense of Assignor,
Assignor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Assignee may request, in order to perfect and protect any security interest
or conditional assignment granted or purported to be granted hereby or to enable
Assignee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral. Without limiting the generality of the foregoing, Assignor
will: (i) at the request of Assignee, ▇▇▇▇ conspicuously each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to Assignee, indicating that such Collateral is subject to the security interest
granted hereby, (ii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Assignee may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iii)
use its best efforts to obtain any necessary consents of third parties to the
grant and perfection of a security interest and assignment to Assignee with
respect to any Collateral, (iv) subject to the terms of the Credit Agreement, at
any reasonable time and upon request by Assignee, exhibit the Collateral to and
allow inspection of the Collateral by Assignee, or persons designated by
Assignee, and (v) at Assignee's request, appear in and defend any action or
proceeding that may affect Assignor's title to or Assignee's security interest
in all or any part of the Collateral.
(b) Assignor hereby authorizes Assignee to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of Assignor. Assignor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Assignor shall be sufficient as a financing statement and
may be filed as a financing statement in any and all jurisdictions.
(c) Assignor hereby authorizes Assignee to modify this Agreement
without obtaining Assignor's approval of or signature to such modification by
amending Schedule A annexed hereto to include reference to any right, title or
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interest in any existing Patent or any Patent acquired or developed by Assignor
after the execution hereof or to delete any reference to any right, title or
interest in any Patent in which Assignor no longer has or claims any right,
title or interest.
(d) Assignor will furnish to Assignee from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Assignee may reasonably request,
all in reasonable detail.
(e) If Assignor shall hereafter obtain rights to any patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division,
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continuation, renewal, extension, or continuation-in-part of any Patent or any
improvement on any Patent, the provisions of this Agreement shall automatically
apply thereto. Assignor shall promptly notify Assignee in writing of any of
the foregoing rights or benefits acquired by Assignor after the date hereof.
Concurrently with the filing of an application for any Patent, Assignor shall
execute, deliver and record in all places where this Agreement is recorded an
appropriate Subsidiary Patent Collateral Assignment and Security Agreement,
substantially in the form hereof, with appropriate insertions, or an amendment
to this Agreement, in form and substance satisfactory to Assignee, pursuant to
which Assignor shall grant a security interest and conditional assignment to the
extent of its interest in such Patent as provided herein to Assignee unless so
doing would, in the reasonable judgment of Assignor, after due inquiry, result
in the grant of a patent in the name of Assignee, in which event Assignor shall
give written notice to Assignee as soon as reasonably practicable and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
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(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Assignee of any change in Assignor's name, identity or
corporate structure within 15 days of such change;
(c) give Assignee 30 days' prior written notice of any change in
Assignor's chief place of business or chief executive office or the office where
Assignor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against, the Collateral, except to the extent
permitted under the Credit Agreement;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
(f) except for the security interest and conditional assignment created
by this Agreement, not create or suffer to exist any Lien upon or with respect
to any of the Collateral to secure the indebtedness or other obligations of any
Person;
(g) diligently keep reasonable records respecting the Collateral and at
all times keep at least one complete set of its records concerning substantially
all of the Patents at its chief executive office or principal place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way impair or prevent the
creation of a security
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interest in, or the assignment of, Assignor's rights and interests in any
property included within the definition of any Patents acquired under such
contracts;
(i) take all steps necessary to protect the secrecy of all trade
secrets relating to the products and services sold or delivered under or in
connection with the Patents, including without limitation entering into
confidentiality agreements with employees and labeling and restricting access to
secret information and documents;
(j) use proper statutory notice in connection with its use of each
material Patent;
(k) use consistent standards of high quality (which may be consistent
with Assignor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the Patents,
including, to the extent applicable, in the operation and maintenance of its
retail stores and other merchandising operations; and
(l) upon any officer of Assignor obtaining knowledge thereof, promptly
notify Assignee in writing of any event that may materially and adversely affect
the value of the Collateral or any portion thereof, the ability of Assignor or
Assignee to dispose of the Collateral or any portion thereof, or the rights and
remedies of Assignee in relation thereto, including without limitation the levy
of any legal process against the Collateral or any portion thereof.
SECTION 8. CERTAIN INSPECTION RIGHTS. Subject to the terms of the
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Credit Agreement, Assignor hereby grants to Assignee and any and all of its
employees, representatives and agents the right to visit Assignor's and any of
its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under any
of the Patents (or which were so utilized during the prior six month period),
and to inspect the quality control and all other records relating thereto upon
reasonable notice to Assignor and as often as may be reasonably requested.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
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otherwise provided in this Section 9, Assignor shall continue to collect, at its
own expense, all amounts due or to become due to Assignor in respect of the
Collateral or any portion thereof. In connection with such collections,
Assignor may take (and, at Assignee's direction, shall take) such action as
Assignor or Assignee may deem necessary or advisable to enforce collection of
such amounts; provided, however, that Assignee shall have the right at any time,
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upon the occurrence and during the continuation of an Event of Default and upon
written notice to Assignor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created, and the conditional assignment effected hereby, and to direct such
obligors to make payment of all such amounts directly to Assignee, and, upon
such notification and at the expense of Assignor, to enforce collection of any
such amounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as Assignor might have done. After
receipt by Assignor of the notice from Assignee referred to in the proviso to
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the preceding sentence,
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(i) all amounts and proceeds (including checks and other instruments) received
by Assignor in respect of amounts due to Assignor in respect of the Collateral
or any portion thereof shall be received in trust for the benefit of Assignee
hereunder, shall be segregated from other funds of Assignor and shall be
forthwith paid over or delivered to Assignee in the same form as so received
(with any necessary endorsement) to be held as cash Collateral and applied as
provided by Section 17, and (ii) Assignor shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
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(a) Assignor shall have the duty diligently to prosecute any patent
application relating to any of the Patents specifically identified in Schedule A
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annexed hereto that is pending as of the date of this Agreement, to make
application on any existing or future unpatented but patentable invention that
is material to Assignor's business, and to do any and all acts which are
necessary or desirable to preserve and maintain all rights in all material
Patents. Any expenses incurred in connection therewith shall be borne solely by
Assignor. Assignor shall not abandon any right to file a patent application or
any pending patent application or any material Patent without the prior written
consent of Assignee.
(b) Except as provided in Section 10(d) and notwithstanding Section 2,
Assignor shall have the right to commence and prosecute in its own name, as real
party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, or other
damage or reexamination or reissue proceedings as are in its reasonable business
judgment necessary to protect the Collateral. Assignee shall provide, at
Assignor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party.
(c) Assignor shall promptly, following its becoming aware thereof,
notify Assignee of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office or any
federal, state, local or foreign court) described in Section 10(a) or 10(b) or
regarding Assignor's interests in any material Collateral. Assignor shall
provide to Assignee any information with respect thereto requested by Assignee.
(d) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, Assignee shall
have the right (but not the obligation) to bring suit, in the name of Assignor,
Assignee or otherwise, to enforce any Patent and any license thereunder, in
which event Assignor shall, at the request of Assignee, do any and all lawful
acts and execute any and all documents required by Assignee in aid of such
enforcement and Assignor shall promptly, upon demand, reimburse and indemnify
Assignee as provided in Section 18 in connection with the exercise of its rights
under this Section 10. To the extent that Assignee shall elect not to bring
suit to enforce any Patent or any license thereunder as provided in this Section
10(d), Assignor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the
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infringement of any of the Patents by others and for that purpose agrees to
diligently maintain any action, suit or proceeding against any Person so
infringing necessary to prevent such infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent
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that Assignor is permitted to license the Collateral, Assignee shall enter into
a non-disturbance agreement or other similar arrangement, at Assignor's request
and expense, with Assignor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Assignee pursuant to which (a)
Assignee shall agree not to disturb or interfere with such licensee's rights
under its license agreement with Assignor so long as such licensee is not in
default thereunder and (b) such licensee shall acknowledge and agree that the
Collateral licensed to it is subject to the security interest and conditional
assignment created in favor of Assignee and the other terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of Default
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shall have occurred and, by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall have
occurred and be continuing, (c) an assignment to Assignee of any rights, title
and interests in and to the Collateral shall have been previously made and shall
have become absolute and effective pursuant to Section 2, Section 13(f) or
Section 16(b), and (d) the Secured Obligations shall not have become immediately
due and payable, upon the written request of Assignor and the written consent of
Assignee, Assignee shall promptly execute and deliver to Assignor such
assignments as may be necessary to reassign to Assignor any such rights, title
and interests as may have been assigned to Assignee as aforesaid, subject to any
disposition thereof that may have been made by Assignee pursuant hereto;
provided that, after giving effect to such reassignment, Assignee's security
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interest and conditional assignment granted pursuant to Section 1 and Section 2,
as well as all other rights and remedies of Assignee granted hereunder, shall
continue to be in full force and effect; and provided, further that the rights,
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title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Assignee and Permitted Liens.
SECTION 13. ASSIGNEE APPOINTED ATTORNEY-IN-FACT. Assignor hereby
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irrevocably appoints Assignee as Assignor's attorney-in-fact, with full
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion to take any
action and to execute any instrument that Assignee may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) while an Event of Default exists, to endorse Assignor's name on all
applications, documents, papers and instruments necessary for Assignee in the
use or maintenance of the Collateral;
(b) while an Event of Default exists, to ask for, demand, collect, ▇▇▇
for, recover, compound, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral;
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(c) while an Event of Default exists, to receive, endorse and collect
any drafts or other instruments, documents and chattel paper in connection with
clause (b) above;
(d) while an Event of Default exists, to file any claims or take any
action or institute any proceedings that Assignee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Assignee with respect to any of the Collateral;
(e) while an Event of Default exists, to pay or discharge taxes or
Liens (other than Liens permitted under this Agreement or the Credit Agreement)
levied or placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by Assignee in its sole discretion, any such payments made by
Assignee to become obligations of Assignor to Assignee, due and payable
immediately without demand; and
(f) upon the occurrence and during the continuation of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Assignee pursuant to Section 16(b), (ii) to grant or issue an
exclusive or non-exclusive license to the Collateral or any portion thereof to
any Person, and (iii) otherwise generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Assignee were the absolute owner thereof for all
purposes, and to do, at Assignee's option and Assignor's expense, at any time or
from time to time, all acts and things that Assignee deems necessary to protect,
preserve or realize upon the Collateral and Assignee's security interest therein
in order to effect the intent of this Agreement, all as fully and effectively as
Assignor might do.
SECTION 14. ASSIGNEE MAY PERFORM. If Assignor fails to perform any
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agreement contained herein, Assignee may itself perform, or cause performance
of, such agreement, and the expenses of Assignee incurred in connection
therewith shall be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Assignee
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hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Assignee shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
Assignee shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Assignee accords its own property.
SECTION 16. REMEDIES. If any Event of Default shall have occurred and
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be continuing:
(a) Assignee may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it,
all the rights and
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remedies of a secured party on default under the Uniform Commercial Code as in
effect in any relevant jurisdiction (the "CODE") (whether or not the Code
applies to the affected Collateral), and also may (i) require Assignor to, and
Assignor hereby agrees that it will at its expense and upon request of Assignee
forthwith, assemble all or part of the Collateral as directed by Assignee and
make it available to Assignee at a place to be designated by Assignee that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the Collateral
or otherwise prepare the Collateral for disposition in any manner to the extent
Assignee deems appropriate, (iv) take possession of Assignor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same for the purpose of taking any actions described in the preceding clause
(iii) and collecting any Secured Obligation, (v) exercise any and all rights and
remedies of Assignor under or in connection with the contracts related to the
Collateral or otherwise in respect of the Collateral, including without
limitation any and all rights of Assignor to demand or otherwise require payment
of any amount under, or performance of any provision of, such contracts, and
(vi) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Assignee's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Assignee may
deem commercially reasonable. Assignee or any Lender or any Interest Rate
Exchanger may be the purchaser of any or all of the Collateral at any such sale
and Assignee, as administrative agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Assignee at such sale. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of Assignor, and Assignor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Assignor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Assignor
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. Assignee shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. Assignee 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.
Assignor hereby waives any claims against Assignee arising by reason of the fact
that the price at which any Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
Assignee accepts the first offer received and does not offer such Collateral to
more than one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Assignor shall
be liable for the deficiency and the fees of any attorneys employed by Assignee
to collect such deficiency.
11
(b) Upon written demand from Assignee, Assignor shall execute and
deliver to Assignee an assignment or assignments of the Patents and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; provided that the failure of Assignor to comply with such
--------
demand will not impair or affect the validity of the conditional assignment
effected by Section 2 or its effectiveness upon notice by Assignee as specified
in Section 2. Assignor agrees that such an assignment (including without
limitation the conditional assignment effected by Section 2) and/or recording
shall be applied to reduce the Secured Obligations outstanding only to the
extent that Assignee (or any Lender or any Interest Rate Exchanger) receives
cash proceeds in respect of the sale of, or other realization upon, the
Collateral.
SECTION 17. APPLICATION OF PROCEEDS. All proceeds received by
-----------------------
Assignee in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied as provided in subsection
2.4D of the Credit Agreement.
SECTION 18. INDEMNITY AND EXPENSES.
----------------------
(a) Assignor agrees to indemnify Assignee and each Lender and Interest
Rate Exchanger from and against any and all claims, losses and liabilities in
any way relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Assignee's or such Lender's or such Interest Rate Exchanger's gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Assignor shall pay to Assignee upon demand the amount of any and
all reasonable out-of-pocket costs and expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that Assignee 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 Collateral, (iii) the exercise or enforcement
of any of the rights of Assignee hereunder, or (iv) the failure by Assignor to
perform or observe any of the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST; TRANSFER OF
--------------------------------------------------------
LOANS. This Agreement shall create a continuing security interest in, and
-----
conditional assignment of, the Collateral and shall (a) remain in full force and
effect until the payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, (b) be binding upon Assignor, its successors and
assigns, and (c) inure, together with the rights and remedies of Assignee
hereunder, to the benefit of Assignee and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the
12
security interest and conditional assignment granted hereby shall terminate and
all rights to the Collateral shall revert to Assignor. Upon any such
termination Assignee will, at Assignor's expense, execute and deliver to
Assignor such documents as Assignor shall reasonably request to evidence such
termination.
SECTION 20. ASSIGNEE AS ADMINISTRATIVE AGENT.
--------------------------------
(a) Assignee has been appointed to act as Assignee hereunder by Lenders
and, by their acceptance of the benefits hereof, Interest Rate Exchangers.
Assignee shall be obligated, and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking any action (including the release or substitution
of Collateral), solely in accordance with this Agreement and the Credit
Agreement; provided that Assignee shall exercise, or refrain from exercising,
--------
any remedies provided for in Section 16 in accordance with the instructions of
(i) Requisite Lenders or (ii) after payment in full of all Obligations under the
Credit Agreement and the other Loan Documents, the holders of a majority of the
aggregate notional amount (or, with respect to any Lender Interest Rate
Agreement that has been terminated in accordance with its terms, the amount then
due and payable (exclusive of expenses and similar payments but including any
early termination payments then due) under such Lender Interest Rate Agreement)
under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable,
such holders being referred to herein as "REQUISITE OBLIGEES"). In furtherance
of the foregoing provisions of this Section 20(a), each Interest Rate Exchanger,
by its acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Assignee for the benefit of
Lenders and Interest Rate Exchangers in accordance with the terms of this
Section 20(a).
(b) Assignee shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Assignee under this Agreement; removal
of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute removal as Assignee under this Agreement; and appointment of a
successor Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute appointment of a successor Assignee under this
Agreement. Upon the acceptance of any appointment as Administrative Agent under
subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Assignee under this Agreement, and the retiring or removed Assignee under this
Agreement shall promptly (i) transfer to such successor Assignee all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Assignee under this Agreement, and
(ii) execute and deliver to such successor Assignee such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Assignee of the security
interests created hereunder, whereupon such retiring or removed Assignee shall
be discharged from its duties and obligations under this Agreement. After any
13
retiring or removed Administrative Agent's resignation or removal hereunder as
Assignee, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Assignee hereunder.
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
---------------
or waiver of any provision of this Agreement, and no consent to any departure by
Assignor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Assignee and, in the case of any such amendment or
modification, by Assignor. Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be given as provided in the Credit
Agreement. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
-----------------------------------------------------
failure or delay on the part of Assignee in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise
14
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Assignor
hereby agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
Assignor at its address provided in Section 22, such service being hereby
acknowledged by Assignor to be sufficient for personal jurisdiction in any
action against Assignor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Assignee to bring proceedings against Assignor in the courts of any other
jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY AGREE
--------------------
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Assignor and Assignee each acknowledge
that this waiver is a material inducement for Assignor and Assignee to enter
into a business relationship, that Assignor and Assignee have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Assignor and Assignee further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
15
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16
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
[NAME OF SUBSIDIARY],
as Assignor
By: __________________________
Name: __________________________
Title: __________________________
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ FARGO BANK, N.A.,
as Administrative Agent
By: __________________________
Name: __________________________
Title: __________________________
Notice Address:
Attention:
S-1
SCHEDULE A
TO PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
PATENTS ISSUED
--------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
PATENTS PENDING
---------------
Applicant's Date Application
Name Filed No. Invention Inventor
----------- ----- ----------- --------- --------
STATE OF CALIFORNIA )
) SS.:
COUNTY OF ____________ )
On ___________, 19___, before me, ____________________, a Notary Public
in and for said State, 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)
SUBSIDIARY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
This SUBSIDIARY PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
(this "AGREEMENT") is dated as of April 21, 1998 and entered into by and between
EMPIRE CANDLE, INC., a Kansas corporation ("ASSIGNOR"), and ▇▇▇▇▇ FARGO
BANK, N.A., as administrative agent for and representative of (in such capacity
herein called "ASSIGNEE") the financial institutions ("LENDERS") party to the
Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Assignee and Lenders have entered into a Credit Agreement dated as
of April 21, 1998 with Diamond Brands Operating Corp., a Delaware corporation
("COMPANY"), DLJ Capital Funding, Inc., as Syndication Agent, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Funding Inc., as Documentation Agent (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), pursuant to which Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "LENDER
INTEREST RATE AGREEMENTS") with one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS").
C. Assignor has executed and delivered the Subsidiary Guaranty dated
as of April 21, 1998 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "SUBSIDIARY
GUARANTY") in favor of Assignee for the benefit of Lenders and Interest Rate
Exchangers pursuant to which Assignor has guarantied the prompt payment and
performance when due of all Obligations of the Company under the Credit
Agreement and under any Lender Interest Rate Agreements.
D. Assignor has and may in the future have rights, title and
interests in and to various Patents and other related Collateral (as such terms
are hereinafter defined).
E. Assignor is willing to grant to Assignee (i) a security interest
in all such Collateral for the purpose of securing the complete and timely
satisfaction of all of the Secured Obligations (as hereinafter defined) and (ii)
effective upon the occurrence and during the continuation of an Event of
Default, an assignment of Assignor's entire rights, title and interest in and to
all such Collateral.
1
F. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Assignor shall have granted the security
interests and made the conditional assignment and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into Lender Interest Rate
Agreements and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor hereby agrees with Assignee
as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby assigns to Assignee,
-----------------
and hereby grants to Assignee a security interest in, all of Assignor's right,
title and interest in and to the following, in each case whether now or
hereafter existing or in which Assignor now has or hereafter acquires an
interest and wherever the same may be located (the "COLLATERAL"):
(a) all patents and patent applications and rights and interests in
patents and patent applications under any domestic law that are presently, or in
the future may be, owned by Assignor and all patents and patent applications and
rights and interests in patents and patent applications under any domestic law
that are presently, or in the future may be, held or used by Assignor in whole
or in part (including, without limitation, the patents and patent applications
listed in Schedule A annexed hereto, as the same may be amended pursuant hereto
----------
from time to time), all rights (but not obligations) corresponding thereto
(including without limitation the right (but not the obligation) to ▇▇▇ for
past, present and future infringements in the name of Assignor or in the name of
Assignee or Lenders or Interest Rate Exchangers), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all of
the foregoing being collectively referred to as the "PATENTS"); it being
understood that the rights and interest assigned hereby shall include, without
limitation, all rights and interests pursuant to licensing or other contracts in
favor of Assignor pertaining to patent applications and patents presently or in
the future owned or used by third parties but, in the case of third parties
which are not Affiliates of Assignor, only to the extent permitted by such
licensing or other contracts and, if not so permitted, only with the consent of
such third parties;
(b) all general intangibles relating to the Patents;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(d) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Assignee is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral.
2
For purposes of this Agreement, the term "PROCEEDS" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------------------
limitation of, the granting of a security interest in the Collateral pursuant to
Section 1, Assignor hereby, effective upon the occurrence of an Event of Default
and upon written notice from Assignee, grants, sells, conveys, transfers,
assigns and sets over to Assignee, for its benefit and the ratable benefit of
Lenders and Interest Rate Exchangers, all of Assignor's right, title and
interest in and to the Collateral, including without limitation Assignor's
right, title and interest in and to the Patents identified in Schedule A annexed
----------
hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and liabilities of
every nature of Assignor now or hereafter existing under or arising out of or in
connection with the Subsidiary Guaranty, the other Loan Documents and the Lender
Interest Rate Agreements and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Assignor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
payments for early termination of Lender Interest Rate Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Assignee or any
Lender or Interest Rate Exchanger as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Assignor now or hereafter existing under
this Agreement (all such obligations of Assignor, together with the Underlying
Debt, being the "SECURED OBLIGATIONS").
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained herein to the
-----------------------
contrary notwithstanding, (a) Assignor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Assignee of any of its
rights hereunder shall not release Assignor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Assignee shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Assignee be obligated to perform any of the obligations or duties of Assignor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
3
SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor represents and
------------------------------
warrants as follows:
(a) Description of Collateral. A true and complete list of all
-------------------------
Patents owned, held (whether pursuant to a license or otherwise) or used by
Assignor, in whole or in part, as of the date of this Agreement is set forth in
Schedule A annexed hereto.
----------
(b) Validity and Enforceability of Collateral. Each Patent that is
-----------------------------------------
material to Assignor's business is valid, subsisting and enforceable and
Assignor is not aware of any pending or threatened claim by any third party that
any such material Patent is invalid or unenforceable or that the use of any such
material Patent violates the rights of any third person or of any basis for any
such claim.
(c) Ownership of Collateral. Except for the security interest and
-----------------------
conditional assignment created by this Agreement, Assignor owns each material
Patent free and clear of any Lien. Except such as may have been filed in favor
of Assignee relating to this Agreement and of Foothill Capital Corporation (a
release of which has been delivered to Administrative Agent), (i) no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the Collateral is on file in the
United States Patent and Trademark Office.
(d) Office Locations; Other Names. The chief place of business, the
-----------------------------
chief executive office and the office where Assignor keeps its records regarding
the Collateral is, and has been for the four month period preceding the date
hereof, located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇. Assignor
has not in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name).
(e) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Assignor of the security
interest and conditional assignment granted hereby, (ii) the execution, delivery
or performance of this Agreement by Assignor, or (iii) the perfection of or the
exercise by Assignee of its rights and remedies hereunder (except as may have
been taken by or at the direction of Assignor).
(f) Perfection. This Agreement, together with the filing of a
----------
financing statement describing the Collateral with the Secretary of State of the
State of Kansas, Missouri and Nevada and the recording of this Agreement with
the United States Patent and Trademark Office, which will be made, creates a
valid, perfected and first priority security interest in the Collateral,
securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been or will be duly made or taken.
4
(g) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Assignee by or on behalf of Assignor with respect to the
Collateral is accurate and complete in all material respects.
SECTION 6. FURTHER ASSURANCES; NEW PATENTS AND PATENT APPLICATIONS.
-------------------------------------------------------
(a) Assignor agrees that from time to time, at the expense of
Assignor, Assignor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Assignee may request, in order to perfect and protect any security interest
or conditional assignment granted or purported to be granted hereby or to enable
Assignee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral. Without limiting the generality of the foregoing, Assignor
will: (i) at the request of Assignee, ▇▇▇▇ conspicuously each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to Assignee, indicating that such Collateral is subject to the security interest
granted hereby, (ii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Assignee may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iii)
use its best efforts to obtain any necessary consents of third parties to the
grant and perfection of a security interest and assignment to Assignee with
respect to any Collateral, (iv) subject to the terms of the Credit Agreement, at
any reasonable time and upon request by Assignee, exhibit the Collateral to and
allow inspection of the Collateral by Assignee, or persons designated by
Assignee, and (v) at Assignee's request, appear in and defend any action or
proceeding that may affect Assignor's title to or Assignee's security interest
in all or any part of the Collateral.
(b) Assignor hereby authorizes Assignee to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of Assignor. Assignor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Assignor shall be sufficient as a financing statement and
may be filed as a financing statement in any and all jurisdictions.
(c) Assignor hereby authorizes Assignee to modify this Agreement
without obtaining Assignor's approval of or signature to such modification by
amending Schedule A annexed hereto to include reference to any right, title or
----------
interest in any existing Patent or any Patent acquired or developed by Assignor
after the execution hereof or to delete any reference to any right, title or
interest in any Patent in which Assignor no longer has or claims any right,
title or interest.
(d) Assignor will furnish to Assignee from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Assignee may reasonably request,
all in reasonable detail.
(e) If Assignor shall hereafter obtain rights to any patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division,
5
continuation, renewal, extension, or continuation-in-part of any Patent or any
improvement on any Patent, the provisions of this Agreement shall automatically
apply thereto. Assignor shall promptly notify Assignee in writing of any of
the foregoing rights or benefits acquired by Assignor after the date hereof.
Concurrently with the filing of an application for any Patent, Assignor shall
execute, deliver and record in all places where this Agreement is recorded an
appropriate Subsidiary Patent Collateral Assignment and Security Agreement,
substantially in the form hereof, with appropriate insertions, or an amendment
to this Agreement, in form and substance satisfactory to Assignee, pursuant to
which Assignor shall grant a security interest and conditional assignment to the
extent of its interest in such Patent as provided herein to Assignee unless so
doing would, in the reasonable judgment of Assignor, after due inquiry, result
in the grant of a patent in the name of Assignee, in which event Assignor shall
give written notice to Assignee as soon as reasonably practicable and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
-----------------------------
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Assignee of any change in Assignor's name, identity or
corporate structure within 15 days of such change;
(c) give Assignee 30 days' prior written notice of any change in
Assignor's chief place of business or chief executive office or the office where
Assignor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent permitted under the Credit Agreement;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
(f) except for the security interest and conditional assignment
created by this Agreement, not create or suffer to exist any Lien upon or with
respect to any of the Collateral to secure the indebtedness or other obligations
of any Person;
(g) diligently keep reasonable records respecting the Collateral and
at all times keep at least one complete set of its records concerning
substantially all of the Patents at its chief executive office or principal
place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way impair or prevent the
creation of a security
6
interest in, or the assignment of, Assignor's rights and interests in any
property included within the definition of any Patents acquired under such
contracts;
(i) take all steps necessary to protect the secrecy of all trade
secrets relating to the products and services sold or delivered under or in
connection with the Patents, including without limitation entering into
confidentiality agreements with employees and labeling and restricting access to
secret information and documents;
(j) use proper statutory notice in connection with its use of each
material Patent;
(k) use consistent standards of high quality (which may be consistent
with Assignor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the Patents,
including, to the extent applicable, in the operation and maintenance of its
retail stores and other merchandising operations; and
(l) upon any officer of Assignor obtaining knowledge thereof, promptly
notify Assignee in writing of any event that may materially and adversely affect
the value of the Collateral or any portion thereof, the ability of Assignor or
Assignee to dispose of the Collateral or any portion thereof, or the rights and
remedies of Assignee in relation thereto, including without limitation the levy
of any legal process against the Collateral or any portion thereof.
SECTION 8. CERTAIN INSPECTION RIGHTS. Subject to the terms of the
-------------------------
Credit Agreement, Assignor hereby grants to Assignee and any and all of its
employees, representatives and agents the right to visit Assignor's and any of
its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under any
of the Patents (or which were so utilized during the prior six month period),
and to inspect the quality control and all other records relating thereto upon
reasonable notice to Assignor and as often as may be reasonably requested.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
--------------------------------------------
otherwise provided in this Section 9, Assignor shall continue to collect, at its
own expense, all amounts due or to become due to Assignor in respect of the
Collateral or any portion thereof. In connection with such collections,
Assignor may take (and, at Assignee's direction, shall take) such action as
Assignor or Assignee may deem necessary or advisable to enforce collection of
such amounts; provided, however, that Assignee shall have the right at any time,
-------- -------
upon the occurrence and during the continuation of an Event of Default and upon
written notice to Assignor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created, and the conditional assignment effected hereby, and to direct such
obligors to make payment of all such amounts directly to Assignee, and, upon
such notification and at the expense of Assignor, to enforce collection of any
such amounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as Assignor might have done. After
receipt by Assignor of the notice from Assignee referred to in the proviso to
-------
the preceding sentence,
7
(i) all amounts and proceeds (including checks and other instruments) received
by Assignor in respect of amounts due to Assignor in respect of the Collateral
or any portion thereof shall be received in trust for the benefit of Assignee
hereunder, shall be segregated from other funds of Assignor and shall be
forthwith paid over or delivered to Assignee in the same form as so received
(with any necessary endorsement) to be held as cash Collateral and applied as
provided by Section 17, and (ii) Assignor shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
----------------------------------
(a) Assignor shall have the duty diligently to prosecute any patent
application relating to any of the Patents specifically identified in Schedule A
----------
annexed hereto that is pending as of the date of this Agreement, to make
application on any existing or future unpatented but patentable invention that
is material to Assignor's business, and to do any and all acts which are
necessary or desirable to preserve and maintain all rights in all material
Patents. Any expenses incurred in connection therewith shall be borne solely by
Assignor. Assignor shall not abandon any right to file a patent application or
any pending patent application or any material Patent without the prior written
consent of Assignee.
(b) Except as provided in Section 10(d) and notwithstanding Section 2,
Assignor shall have the right to commence and prosecute in its own name, as real
party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, or other
damage or reexamination or reissue proceedings as are in its reasonable business
judgment necessary to protect the Collateral. Assignee shall provide, at
Assignor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party.
(c) Assignor shall promptly, following its becoming aware thereof,
notify Assignee of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office or any
federal, state, local or foreign court) described in Section 10(a) or 10(b) or
regarding Assignor's interests in any material Collateral. Assignor shall
provide to Assignee any information with respect thereto requested by Assignee.
(d) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, Assignee
shall have the right (but not the obligation) to bring suit, in the name of
Assignor, Assignee or otherwise, to enforce any Patent and any license
thereunder, in which event Assignor shall, at the request of Assignee, do any
and all lawful acts and execute any and all documents required by Assignee in
aid of such enforcement and Assignor shall promptly, upon demand, reimburse and
indemnify Assignee as provided in Section 18 in connection with the exercise of
its rights under this Section 10. To the extent that Assignee shall elect not to
bring suit to enforce any Patent or any license thereunder as provided in this
Section 10(d), Assignor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the
8
infringement of any of the Patents by others and for that purpose agrees to
diligently maintain any action, suit or proceeding against any Person so
infringing necessary to prevent such infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent
--------------------------------
that Assignor is permitted to license the Collateral, Assignee shall enter into
a non-disturbance agreement or other similar arrangement, at Assignor's request
and expense, with Assignor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Assignee pursuant to which (a)
Assignee shall agree not to disturb or interfere with such licensee's rights
under its license agreement with Assignor so long as such licensee is not in
default thereunder and (b) such licensee shall acknowledge and agree that the
Collateral licensed to it is subject to the security interest and conditional
assignment created in favor of Assignee and the other terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of Default
--------------------------
shall have occurred and, by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall have
occurred and be continuing, (c) an assignment to Assignee of any rights, title
and interests in and to the Collateral shall have been previously made and shall
have become absolute and effective pursuant to Section 2, Section 13(f) or
Section 16(b), and (d) the Secured Obligations shall not have become immediately
due and payable, upon the written request of Assignor and the written consent of
Assignee, Assignee shall promptly execute and deliver to Assignor such
assignments as may be necessary to reassign to Assignor any such rights, title
and interests as may have been assigned to Assignee as aforesaid, subject to any
disposition thereof that may have been made by Assignee pursuant hereto;
provided that, after giving effect to such reassignment, Assignee's security
--------
interest and conditional assignment granted pursuant to Section 1 and Section 2,
as well as all other rights and remedies of Assignee granted hereunder, shall
continue to be in full force and effect; and provided, further that the rights,
-------- -------
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Assignee and Permitted Liens.
SECTION 13. ASSIGNEE APPOINTED ATTORNEY-IN-FACT. Assignor hereby
-----------------------------------
irrevocably appoints Assignee as Assignor's attorney-in-fact, with full
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion to take any
action and to execute any instrument that Assignee may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) while an Event of Default exists, to endorse Assignor's name on
all applications, documents, papers and instruments necessary for Assignee in
the use or maintenance of the Collateral;
(b) while an Event of Default exists, to ask for, demand, collect, ▇▇▇
for, recover, compound, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral;
9
(c) while an Event of Default exists, to receive, endorse and collect
any drafts or other instruments, documents and chattel paper in connection with
clause (b) above;
(d) while an Event of Default exists, to file any claims or take any
action or institute any proceedings that Assignee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Assignee with respect to any of the Collateral;
(e) while an Event of Default exists, to pay or discharge taxes or
Liens (other than Liens permitted under this Agreement or the Credit Agreement)
levied or placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by Assignee in its sole discretion, any such payments made by
Assignee to become obligations of Assignor to Assignee, due and payable
immediately without demand; and
(f) upon the occurrence and during the continuation of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Assignee pursuant to Section 16(b), (ii) to grant or issue an
exclusive or non-exclusive license to the Collateral or any portion thereof to
any Person, and (iii) otherwise generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Assignee were the absolute owner thereof for all
purposes, and to do, at Assignee's option and Assignor's expense, at any time or
from time to time, all acts and things that Assignee deems necessary to protect,
preserve or realize upon the Collateral and Assignee's security interest therein
in order to effect the intent of this Agreement, all as fully and effectively as
Assignor might do.
SECTION 14. ASSIGNEE MAY PERFORM. If Assignor fails to perform any
--------------------
agreement contained herein, Assignee may itself perform, or cause performance
of, such agreement, and the expenses of Assignee incurred in connection
therewith shall be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Assignee
----------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Assignee shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
Assignee shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Assignee accords its own property.
SECTION 16. REMEDIES. If any Event of Default shall have occurred and
--------
be continuing:
(a) Assignee may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it,
all the rights and
10
remedies of a secured party on default under the Uniform Commercial Code as in
effect in any relevant jurisdiction (the "CODE") (whether or not the Code
applies to the affected Collateral), and also may (i) require Assignor to, and
Assignor hereby agrees that it will at its expense and upon request of Assignee
forthwith, assemble all or part of the Collateral as directed by Assignee and
make it available to Assignee at a place to be designated by Assignee that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the Collateral
or otherwise prepare the Collateral for disposition in any manner to the extent
Assignee deems appropriate, (iv) take possession of Assignor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same for the purpose of taking any actions described in the preceding clause
(iii) and collecting any Secured Obligation, (v) exercise any and all rights and
remedies of Assignor under or in connection with the contracts related to the
Collateral or otherwise in respect of the Collateral, including without
limitation any and all rights of Assignor to demand or otherwise require payment
of any amount under, or performance of any provision of, such contracts, and
(vi) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Assignee's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Assignee may
deem commercially reasonable. Assignee or any Lender or any Interest Rate
Exchanger may be the purchaser of any or all of the Collateral at any such sale
and Assignee, as administrative agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Assignee at such sale. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of Assignor, and Assignor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Assignor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Assignor
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. Assignee shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. Assignee 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.
Assignor hereby waives any claims against Assignee arising by reason of the fact
that the price at which any Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
Assignee accepts the first offer received and does not offer such Collateral to
more than one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Assignor shall
be liable for the deficiency and the fees of any attorneys employed by Assignee
to collect such deficiency.
11
(b) Upon written demand from Assignee, Assignor shall execute and
deliver to Assignee an assignment or assignments of the Patents and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; provided that the failure of Assignor to comply with such
--------
demand will not impair or affect the validity of the conditional assignment
effected by Section 2 or its effectiveness upon notice by Assignee as specified
in Section 2. Assignor agrees that such an assignment (including without
limitation the conditional assignment effected by Section 2) and/or recording
shall be applied to reduce the Secured Obligations outstanding only to the
extent that Assignee (or any Lender or any Interest Rate Exchanger) receives
cash proceeds in respect of the sale of, or other realization upon, the
Collateral.
SECTION 17. APPLICATION OF PROCEEDS. All proceeds received by
-----------------------
Assignee in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied as provided in subsection
2.4D of the Credit Agreement.
SECTION 18. INDEMNITY AND EXPENSES.
----------------------
(a) Assignor agrees to indemnify Assignee and each Lender and Interest
Rate Exchanger from and against any and all claims, losses and liabilities in
any way relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Assignee's or such Lender's or such Interest Rate Exchanger's gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Assignor shall pay to Assignee upon demand the amount of any and
all reasonable out-of-pocket costs and expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that Assignee 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 Collateral, (iii) the exercise or enforcement
of any of the rights of Assignee hereunder, or (iv) the failure by Assignor to
perform or observe any of the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST; TRANSFER OF
--------------------------------------------------------
LOANS. This Agreement shall create a continuing security interest in, and
-----
conditional assignment of, the Collateral and shall (a) remain in full force and
effect until the payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, (b) be binding upon Assignor, its successors and
assigns, and (c) inure, together with the rights and remedies of Assignee
hereunder, to the benefit of Assignee and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the
12
security interest and conditional assignment granted hereby shall terminate and
all rights to the Collateral shall revert to Assignor. Upon any such
termination Assignee will, at Assignor's expense, execute and deliver to
Assignor such documents as Assignor shall reasonably request to evidence such
termination.
SECTION 20. ASSIGNEE AS ADMINISTRATIVE AGENT.
--------------------------------
(a) Assignee has been appointed to act as Assignee hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Assignee shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Agreement; provided that Assignee shall exercise, or refrain from
--------
exercising, any remedies provided for in Section 16 in accordance with the
instructions of (i) Requisite Lenders or (ii) after payment in full of all
Obligations under the Credit Agreement and the other Loan Documents, the holders
of a majority of the aggregate notional amount (or, with respect to any Lender
Interest Rate Agreement that has been terminated in accordance with its terms,
the amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Lender Interest
Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or,
if applicable, such holders being referred to herein as "REQUISITE OBLIGEES").
In furtherance of the foregoing provisions of this Section 20(a), each Interest
Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Assignee for the benefit of
Lenders and Interest Rate Exchangers in accordance with the terms of this
Section 20(a).
(b) Assignee shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Assignee under this Agreement; removal
of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute removal as Assignee under this Agreement; and appointment of a
successor Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute appointment of a successor Assignee under this
Agreement. Upon the acceptance of any appointment as Administrative Agent under
subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Assignee under this Agreement, and the retiring or removed Assignee under this
Agreement shall promptly (i) transfer to such successor Assignee all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Assignee under this Agreement, and
(ii) execute and deliver to such successor Assignee such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Assignee of the security
interests created hereunder, whereupon such retiring or removed Assignee shall
be discharged from its duties and obligations under this Agreement. After any
13
retiring or removed Administrative Agent's resignation or removal hereunder as
Assignee, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Assignee hereunder.
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
---------------
or waiver of any provision of this Agreement, and no consent to any departure by
Assignor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Assignee and, in the case of any such amendment or
modification, by Assignor. Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be given as provided in the Credit
Agreement. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
-----------------------------------------------------
failure or delay on the part of Assignee in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise
14
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Assignor
hereby agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
Assignor at its address provided in Section 22, such service being hereby
acknowledged by Assignor to be sufficient for personal jurisdiction in any
action against Assignor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Assignee to bring proceedings against Assignor in the courts of any other
jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY AGREE
--------------------
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Assignor and Assignee each acknowledge
that this waiver is a material inducement for Assignor and Assignee to enter
into a business relationship, that Assignor and Assignee have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Assignor and Assignee further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
15
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16
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
EMPIRE CANDLE, INC.,
as Assignor
By: __________________________
Name: __________________________
Title: __________________________
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ FARGO BANK, N.A.,
as Administrative Agent
By: __________________________
Name: __________________________
Title: __________________________
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
S-1
SCHEDULE A
TO PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
PATENTS ISSUED
--------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
PATENTS PENDING
---------------
Applicant's Date Application
Name Filed No. Invention Inventor
----------- ----- ----------- --------- --------
STATE OF CALIFORNIA )
) SS.:
COUNTY OF ____________ )
On ___________, 19___, before me, ____________________, a Notary Public
in and for said State, 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)
SUBSIDIARY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
This SUBSIDIARY PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
(this "AGREEMENT") is dated as of April 21, 1998 and entered into by and between
▇▇▇▇▇▇▇ INC., a Maine corporation ("ASSIGNOR"), and ▇▇▇▇▇ FARGO BANK, N.A., as
administrative agent for and representative of (in such capacity herein called
"ASSIGNEE") the financial institutions ("LENDERS") party to the Credit Agreement
referred to below and any Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Assignee and Lenders have entered into a Credit Agreement dated
as of April 21, 1998 with Diamond Brands Operating Corp., a Delaware corporation
("COMPANY"), DLJ Capital Funding, Inc., as Syndication Agent, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Funding Inc., as Documentation Agent (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), pursuant to which Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to Company.
B. Company may from time to time enter, or may from time to time
have entered, into one or more Interest Rate Agreements (collectively, the
"LENDER INTEREST RATE AGREEMENTS") with one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS").
C. Assignor has executed and delivered the Subsidiary Guaranty dated
as of April 21, 1998 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "SUBSIDIARY
GUARANTY") in favor of Assignee for the benefit of Lenders and Interest Rate
Exchangers pursuant to which Assignor has guarantied the prompt payment and
performance when due of all Obligations of the Company under the Credit
Agreement and under any Lender Interest Rate Agreements.
D. Assignor has and may in the future have rights, title and
interests in and to various Patents and other related Collateral (as such terms
are hereinafter defined).
E. Assignor is willing to grant to Assignee (i) a security interest
in all such Collateral for the purpose of securing the complete and timely
satisfaction of all of the Secured Obligations (as hereinafter defined) and (ii)
effective upon the occurrence and during the continuation of an Event of
Default, an assignment of Assignor's entire rights, title and interest in and to
all such Collateral.
1
F. It is a condition precedent to the initial extensions of credit
by Lenders under the Credit Agreement that Assignor shall have granted the
security interests and made the conditional assignment and undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Interest Rate Exchangers to enter into Lender Interest
Rate Agreements and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor hereby agrees with Assignee
as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby assigns to Assignee,
-----------------
and hereby grants to Assignee a security interest in, all of Assignor's right,
title and interest in and to the following, in each case whether now or
hereafter existing or in which Assignor now has or hereafter acquires an
interest and wherever the same may be located (the "COLLATERAL"):
(a) all patents and patent applications and rights and interests in
patents and patent applications under any domestic law that are presently, or in
the future may be, owned by Assignor and all patents and patent applications and
rights and interests in patents and patent applications under any domestic law
that are presently, or in the future may be, held or used by Assignor in whole
or in part (including, without limitation, the patents and patent applications
listed in Schedule A annexed hereto, as the same may be amended pursuant hereto
----------
from time to time), all rights (but not obligations) corresponding thereto
(including without limitation the right (but not the obligation) to ▇▇▇ for
past, present and future infringements in the name of Assignor or in the name of
Assignee or Lenders or Interest Rate Exchangers), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof (all of
the foregoing being collectively referred to as the "PATENTS"); it being
understood that the rights and interest assigned hereby shall include, without
limitation, all rights and interests pursuant to licensing or other contracts in
favor of Assignor pertaining to patent applications and patents presently or in
the future owned or used by third parties but, in the case of third parties
which are not Affiliates of Assignor, only to the extent permitted by such
licensing or other contracts and, if not so permitted, only with the consent of
such third parties;
(b) all general intangibles relating to the Patents;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(d) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Assignee is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral.
2
For purposes of this Agreement, the term "PROCEEDS" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not by way
----------------------
of limitation of, the granting of a security interest in the Collateral pursuant
to Section 1, Assignor hereby, effective upon the occurrence of an Event of
Default and upon written notice from Assignee, grants, sells, conveys,
transfers, assigns and sets over to Assignee, for its benefit and the ratable
benefit of Lenders and Interest Rate Exchangers, all of Assignor's right, title
and interest in and to the Collateral, including without limitation Assignor's
right, title and interest in and to the Patents identified in Schedule A annexed
----------
hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and
------------------------
the Collateral is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and liabilities of
every nature of Assignor now or hereafter existing under or arising out of or in
connection with the Subsidiary Guaranty, the other Loan Documents and the Lender
Interest Rate Agreements and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Assignor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
payments for early termination of Lender Interest Rate Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Assignee or any
Lender or Interest Rate Exchanger as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Assignor now or hereafter existing under
this Agreement (all such obligations of Assignor, together with the Underlying
Debt, being the "SECURED OBLIGATIONS").
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained herein to
-----------------------
the contrary notwithstanding, (a) Assignor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Assignee
of any of its rights hereunder shall not release Assignor from any of its duties
or obligations under the contracts and agreements included in the Collateral,
and (c) Assignee shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Agreement, nor shall
Assignee be obligated to perform any of the obligations or duties of Assignor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
3
SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor represents and
------------------------------
warrants as follows:
(a) Description of Collateral. A true and complete list of all
-------------------------
Patents owned, held (whether pursuant to a license or otherwise) or used by
Assignor, in whole or in part, as of the date of this Agreement is set forth in
Schedule A annexed hereto.
----------
(b) Validity and Enforceability of Collateral. Each Patent that is
-----------------------------------------
material to Assignor's business is valid, subsisting and enforceable and
Assignor is not aware of any pending or threatened claim by any third party that
any such material Patent is invalid or unenforceable or that the use of any such
material Patent violates the rights of any third person or of any basis for any
such claim.
(c) Ownership of Collateral. Except for the security interest and
-----------------------
conditional assignment created by this Agreement, Assignor owns each material
Patent free and clear of any Lien. Except such as may have been filed in favor
of Assignee relating to this Agreement and of Foothill Capital Corporation (a
release of which has been delivered to Administrative Agent), (i) no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the Collateral is on file in the
United States Patent and Trademark Office.
(d) Office Locations; Other Names. The chief place of business, the
-----------------------------
chief executive office and the office where Assignor keeps its records regarding
the Collateral is, and has been for the four month period preceding the date
hereof, located at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Assignor has not in
the past done, and does not now do, business under any other name (including any
trade-name or fictitious business name).
(e) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Assignor of the security
interest and conditional assignment granted hereby, (ii) the execution, delivery
or performance of this Agreement by Assignor, or (iii) the perfection of or the
exercise by Assignee of its rights and remedies hereunder (except as may have
been taken by or at the direction of Assignor).
(f) Perfection. This Agreement, together with the filing of a
----------
financing statement describing the Collateral with the Secretary of State of the
State of Maine and Nevada and the recording of this Agreement with the United
States Patent and Trademark Office, which will be made, creates a valid,
perfected and first priority security interest in the Collateral, securing the
payment of the Secured Obligations, and all filings and other actions necessary
or desirable to perfect and protect such security interest have been or will be
duly made or taken.
(g) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Assignee by or on behalf of Assignor with respect to the
Collateral is accurate and complete in all material respects.
4
SECTION 6. FURTHER ASSURANCES; NEW PATENTS AND PATENT APPLICATIONS.
-------------------------------------------------------
(a) Assignor agrees that from time to time, at the expense of
Assignor, Assignor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Assignee may request, in order to perfect and protect any security interest
or conditional assignment granted or purported to be granted hereby or to enable
Assignee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral. Without limiting the generality of the foregoing, Assignor
will: (i) at the request of Assignee, ▇▇▇▇ conspicuously each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to Assignee, indicating that such Collateral is subject to the security interest
granted hereby, (ii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Assignee may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iii)
use its best efforts to obtain any necessary consents of third parties to the
grant and perfection of a security interest and assignment to Assignee with
respect to any Collateral, (iv) subject to the terms of the Credit Agreement, at
any reasonable time and upon request by Assignee, exhibit the Collateral to and
allow inspection of the Collateral by Assignee, or persons designated by
Assignee, and (v) at Assignee's request, appear in and defend any action or
proceeding that may affect Assignor's title to or Assignee's security interest
in all or any part of the Collateral.
(b) Assignor hereby authorizes Assignee to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of Assignor. Assignor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Assignor shall be sufficient as a financing statement and
may be filed as a financing statement in any and all jurisdictions.
(c) Assignor hereby authorizes Assignee to modify this Agreement
without obtaining Assignor's approval of or signature to such modification by
amending Schedule A annexed hereto to include reference to any right, title or
----------
interest in any existing Patent or any Patent acquired or developed by Assignor
after the execution hereof or to delete any refer ence to any right, title or
interest in any Patent in which Assignor no longer has or claims any right,
title or interest.
(d) Assignor will furnish to Assignee from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Assignee may reasonably request,
all in reasonable detail.
(e) If Assignor shall hereafter obtain rights to any patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any Patent or any improvement on any Patent, the
provisions of this Agreement shall automatically apply thereto. Assignor shall
promptly notify Assignee in writing of any of the foregoing rights or benefits
acquired by Assignor after the date hereof. Concurrently with the filing of an
application for any
5
Patent, Assignor shall execute, deliver and record in all places where this
Agreement is recorded an appropriate Subsidiary Patent Collateral Assignment and
Security Agreement, substantially in the form hereof, with appropriate
insertions, or an amendment to this Agreement, in form and substance
satisfactory to Assignee, pursuant to which Assignor shall grant a security
interest and conditional assignment to the extent of its interest in such Patent
as provided herein to Assignee unless so doing would, in the reasonable judgment
of Assignor, after due inquiry, result in the grant of a patent in the name of
Assignee, in which event Assignor shall give written notice to Assignee as soon
as reasonably practicable and the filing shall instead be undertaken as soon as
practicable but in no case later than immediately following the grant of the
Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
-----------------------------
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Assignee of any change in Assignor's name, identity or
corporate structure within 15 days of such change;
(c) give Assignee 30 days' prior written notice of any change in
Assignor's chief place of business or chief executive office or the office where
Assignor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent permitted under the Credit Agreement;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
(f) except for the security interest and conditional assignment
created by this Agreement, not create or suffer to exist any Lien upon or with
respect to any of the Collateral to secure the indebtedness or other obligations
of any Person;
(g) diligently keep reasonable records respecting the Collateral and
at all times keep at least one complete set of its records concerning
substantially all of the Patents at its chief executive office or principal
place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way impair or prevent the
creation of a security interest in, or the assignment of, Assignor's rights and
interests in any property included within the definition of any Patents acquired
under such contracts;
6
(i) take all steps necessary to protect the secrecy of all trade
secrets relating to the products and services sold or delivered under or in
connection with the Patents, including without limitation entering into
confidentiality agreements with employees and labeling and restricting access to
secret information and documents;
(j) use proper statutory notice in connection with its use of each
material Patent;
(k) use consistent standards of high quality (which may be consistent
with Assignor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the Patents,
including, to the extent applicable, in the operation and maintenance of its
retail stores and other merchandising operations; and
(l) upon any officer of Assignor obtaining knowledge thereof,
promptly notify Assignee in writing of any event that may materially and
adversely affect the value of the Collateral or any portion thereof, the ability
of Assignor or Assignee to dispose of the Collateral or any portion thereof, or
the rights and remedies of Assignee in relation thereto, including without
limitation the levy of any legal process against the Collateral or any portion
thereof.
SECTION 8. CERTAIN INSPECTION RIGHTS. Subject to the terms of the
-------------------------
Credit Agreement, Assignor hereby grants to Assignee and any and all of its
employees, representatives and agents the right to visit Assignor's and any of
its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under any
of the Patents (or which were so utilized during the prior six month period),
and to inspect the quality control and all other records relating thereto upon
reasonable notice to Assignor and as often as may be reasonably requested.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
--------------------------------------------
otherwise provided in this Section 9, Assignor shall continue to collect, at its
own expense, all amounts due or to become due to Assignor in respect of the
Collateral or any portion thereof. In connection with such collections, Assignor
may take (and, at Assignee's direction, shall take) such action as Assignor or
Assignee may deem necessary or advisable to enforce collection of such amounts;
provided, however, that Assignee shall have the right at any time, upon the
-------- -------
occurrence and during the continuation of an Event of Default and upon written
notice to Assignor of its intention to do so, to notify the obligors with
respect to any such amounts of the existence of the security interest created,
and the conditional assignment effected hereby, and to direct such obligors to
make payment of all such amounts directly to Assignee, and, upon such
notification and at the expense of Assignor, to enforce collection of any such
amounts and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as Assignor might have done. After
receipt by Assignor of the notice from Assignee referred to in the proviso to
-------
the preceding sentence, (i) all amounts and proceeds (including checks and other
instruments) received by Assignor in respect of amounts due to Assignor in
respect of the Collateral or any portion thereof shall be received in trust for
the benefit of Assignee hereunder, shall be segregated from other
7
funds of Assignor and shall be forthwith paid over or delivered to Assignee in
the same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 17, and (ii) Assignor shall not
adjust, settle or compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
----------------------------------
(a) Assignor shall have the duty diligently to prosecute any patent
application relating to any of the Patents specifically identified in Schedule A
----------
annexed hereto that is pending as of the date of this Agreement, to make
application on any existing or future unpatented but patentable invention that
is material to Assignor's business, and to do any and all acts which are
necessary or desirable to preserve and maintain all rights in all material
Patents. Any expenses incurred in connection therewith shall be borne solely by
Assignor. Assignor shall not abandon any right to file a patent application or
any pending patent application or any material Patent without the prior written
consent of Assignee.
(b) Except as provided in Section 10(d) and notwithstanding Section
2, Assignor shall have the right to commence and prosecute in its own name, as
real party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, or other
damage or reexamination or reissue proceedings as are in its reasonable business
judgment necessary to protect the Collateral. Assignee shall provide, at
Assignor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party.
(c) Assignor shall promptly, following its becoming aware thereof,
notify Assignee of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office or any
federal, state, local or foreign court) described in Section 10(a) or 10(b) or
regarding Assignor's interests in any material Collateral. Assignor shall
provide to Assignee any information with respect thereto requested by Assignee.
(d) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, Assignee
shall have the right (but not the obligation) to bring suit, in the name of
Assignor, Assignee or otherwise, to enforce any Patent and any license
thereunder, in which event Assignor shall, at the request of Assignee, do any
and all lawful acts and execute any and all documents required by Assignee in
aid of such enforcement and Assignor shall promptly, upon demand, reimburse and
indemnify Assignee as provided in Section 18 in connection with the exercise of
its rights under this Section 10. To the extent that Assignee shall elect not to
bring suit to enforce any Patent or any license thereunder as provided in this
Section 10(d), Assignor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the infringement of any of the
Patents by others and for that purpose agrees to diligently maintain any action,
suit or proceeding against any Person so infringing necessary to prevent such
infringement.
8
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent
-------------------------------
that Assignor is permitted to license the Collateral, Assignee shall enter into
a non-disturbance agreement or other similar arrangement, at Assignor's request
and expense, with Assignor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Assignee pursuant to which (a)
Assignee shall agree not to disturb or interfere with such licensee's rights
under its license agreement with Assignor so long as such licensee is not in
default thereunder and (b) such licensee shall acknowledge and agree that the
Collateral licensed to it is subject to the security interest and conditional
assignment created in favor of Assignee and the other terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of Default
--------------------------
shall have occurred and, by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall have
occurred and be continuing, (c) an assignment to Assignee of any rights, title
and interests in and to the Collateral shall have been previously made and shall
have become absolute and effective pursuant to Section 2, Section 13(f) or
Section 16(b), and (d) the Secured Obligations shall not have become immediately
due and payable, upon the written request of Assignor and the written consent of
Assignee, Assignee shall promptly execute and deliver to Assignor such
assignments as may be necessary to reassign to Assignor any such rights, title
and interests as may have been assigned to Assignee as aforesaid, subject to any
disposition thereof that may have been made by Assignee pursuant hereto;
provided that, after giving effect to such reassignment, Assignee's security
--------
interest and conditional assignment granted pursuant to Section 1 and Section 2,
as well as all other rights and remedies of Assignee granted hereunder, shall
continue to be in full force and effect; and provided, further that the rights,
-------- -------
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Assignee and Permitted Liens.
SECTION 13. ASSIGNEE APPOINTED ATTORNEY-IN-FACT. Assignor hereby
-----------------------------------
irrevocably appoints Assignee as Assignor's attorney-in-fact, with full
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion to take any
action and to execute any instrument that Assignee may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) while an Event of Default exists, to endorse Assignor's name on
all applications, documents, papers and instruments necessary for Assignee in
the use or maintenance of the Collateral;
(b) while an Event of Default exists, to ask for, demand, collect,
▇▇▇ for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral;
(c) while an Event of Default exists, to receive, endorse and collect
any drafts or other instruments, documents and chattel paper in connection with
clause (b) above;
9
(d) while an Event of Default exists, to file any claims or take any
action or institute any proceedings that Assignee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Assignee with respect to any of the Collateral;
(e) while an Event of Default exists, to pay or discharge taxes or
Liens (other than Liens permitted under this Agreement or the Credit Agreement)
levied or placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by Assignee in its sole discretion, any such payments made by
Assignee to become obligations of Assignor to Assignee, due and payable
immediately without demand; and
(f) upon the occurrence and during the continuation of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Assignee pursuant to Section 16(b), (ii) to grant or issue an
exclusive or non-exclusive license to the Collateral or any portion thereof to
any Person, and (iii) otherwise generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Assignee were the absolute owner thereof for all
purposes, and to do, at Assignee's option and Assignor's expense, at any time or
from time to time, all acts and things that Assignee deems necessary to protect,
preserve or realize upon the Collateral and Assignee's security interest therein
in order to effect the intent of this Agreement, all as fully and effectively as
Assignor might do.
SECTION 14. ASSIGNEE MAY PERFORM. If Assignor fails to perform any
--------------------
agreement contained herein, Assignee may itself perform, or cause performance
of, such agreement, and the expenses of Assignee incurred in connection
therewith shall be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Assignee
----------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Assignee shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
Assignee shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Assignee accords its own property.
SECTION 16. REMEDIES. If any Event of Default shall have occurred
--------
and be continuing:
(a) Assignee may exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Collateral), and also may (i) require
Assignor to, and Assignor hereby agrees that it will at
10
its expense and upon request of Assignee forthwith, assemble all or part of the
Collateral as directed by Assignee and make it available to Assignee at a place
to be designated by Assignee that is reasonably convenient to both parties, (ii)
enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to the disposition of the
Collateral, store the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Assignee deems appropriate, (iv) take
possession of Assignor's premises or place custodians in exclusive control
thereof, remain on such premises and use the same for the purpose of taking any
actions described in the preceding clause (iii) and collecting any Secured
Obligation, (v) exercise any and all rights and remedies of Assignor under or in
connection with the contracts related to the Collateral or otherwise in respect
of the Collateral, including without limitation any and all rights of Assignor
to demand or otherwise require payment of any amount under, or performance of
any provision of, such contracts, and (vi) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Assignee's offices or elsewhere, for cash, on credit
or for future delivery, at such time or times and at such price or prices and
upon such other terms as Assignee may deem commercially reasonable. Assignee or
any Lender or any Interest Rate Exchanger may be the purchaser of any or all of
the Collateral at any such sale and Assignee, as administrative agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by Assignee
at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Assignor, and Assignor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Assignor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Assignor 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. Assignee shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Assignee 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. Assignor hereby waives any claims against
Assignee arising by reason of the fact that the price at which any Collateral
may have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if Assignee accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, Assignor shall be liable for the deficiency and
the fees of any attorneys employed by Assignee to collect such deficiency.
(b) Upon written demand from Assignee, Assignor shall execute and
deliver to Assignee an assignment or assignments of the Patents and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; provided that the failure of Assignor to comply with such
--------
demand will not impair or affect the validity of
11
the conditional assignment effected by Section 2 or its effectiveness upon
notice by Assignee as specified in Section 2. Assignor agrees that such an
assignment (including without limitation the conditional assignment effected by
Section 2) and/or recording shall be applied to reduce the Secured Obligations
outstanding only to the extent that Assignee (or any Lender or any Interest Rate
Exchanger) receives cash proceeds in respect of the sale of, or other
realization upon, the Collateral.
SECTION 17. APPLICATION OF PROCEEDS. All proceeds received by
-----------------------
Assignee in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied as provided in subsection
2.4D of the Credit Agreement.
SECTION 18. INDEMNITY AND EXPENSES.
----------------------
(a) Assignor agrees to indemnify Assignee and each Lender and
Interest Rate Exchanger from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Assignee's or such Lender's or such
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Assignor shall pay to Assignee upon demand the amount of any and
all reasonable out-of-pocket costs and expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that Assignee 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 Collateral, (iii) the exercise or enforcement
of any of the rights of Assignee hereunder, or (iv) the failure by Assignor to
perform or observe any of the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST; TRANSFER OF
--------------------------------------------------------
LOANS. This Agreement shall create a continuing security interest in, and
-----
conditional assignment of, the Collateral and shall (a) remain in full force and
effect until the payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, (b) be binding upon Assignor, its successors and
assigns, and (c) inure, together with the rights and remedies of Assignee
hereunder, to the benefit of Assignee and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest and conditional assignment granted hereby shall terminate and all
rights to the Collateral shall revert to Assignor. Upon any such termination
Assignee will, at Assignor's expense, execute and deliver to Assignor such
documents as Assignor shall reasonably request to evidence such termination.
12
SECTION 20. ASSIGNEE AS ADMINISTRATIVE AGENT.
--------------------------------
(a) Assignee has been appointed to act as Assignee hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Assignee shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Agreement; provided that Assignee shall exercise, or refrain from
--------
exercising, any remedies provided for in Section 16 in accordance with the
instructions of (i) Requisite Lenders or (ii) after payment in full of all
Obligations under the Credit Agreement and the other Loan Documents, the holders
of a majority of the aggregate notional amount (or, with respect to any Lender
Interest Rate Agreement that has been terminated in accordance with its terms,
the amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Lender Interest
Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or,
if applicable, such holders being referred to herein as "REQUISITE OBLIGEES").
In furtherance of the foregoing provisions of this Section 20(a), each Interest
Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Assignee for the benefit of
Lenders and Interest Rate Exchangers in accordance with the terms of this
Section 20(a).
(b) Assignee shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Assignee under this Agreement; removal
of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute removal as Assignee under this Agreement; and appointment of a
successor Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute appointment of a successor Assignee under this
Agreement. Upon the acceptance of any appointment as Administrative Agent under
subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Assignee under this Agreement, and the retiring or removed Assignee under this
Agreement shall promptly (i) transfer to such successor Assignee all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Assignee under this Agreement, and
(ii) execute and deliver to such successor Assignee such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Assignee of the security
interests created hereunder, whereupon such retiring or removed Assignee shall
be discharged from its duties and obligations under this Agreement. After any
retiring or removed Administrative Agent's resignation or removal hereunder as
Assignee, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Assignee hereunder.
13
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
---------------
or waiver of any provision of this Agreement, and no consent to any departure by
Assignor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Assignee and, in the case of any such amendment or
modification, by Assignor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be given as provided in the Credit
Agreement. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
-----------------------------------------------------
failure or delay on the part of Assignee in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR
14
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Assignor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Assignor at its address provided in Section 22, such
service being hereby acknowledged by Assignor to be sufficient for personal
jurisdiction in any action against Assignor in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Assignee to bring proceedings against Assignor in the courts
of any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY AGREE
--------------------
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Assignor and Assignee each acknowledge
that this waiver is a material inducement for Assignor and Assignee to enter
into a business relationship, that Assignor and Assignee have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Assignor and Assignee further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
15
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
▇▇▇▇▇▇▇ INC.,
as Assignor
By: ___________________________
Name: ___________________________
Title: ___________________________
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ FARGO BANK, N.A.,
as Administrative Agent
By: ___________________________
Name: ___________________________
Title: ___________________________
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ 9411
Attention: ▇▇▇▇ ▇▇▇▇
S-1
SCHEDULE A
TO PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
PATENTS ISSUED
--------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
PATENTS PENDING
---------------
Applicant's Date Application
Name Filed No. Invention Inventor
---------- ----- ----------- --------- --------
STATE OF CALIFORNIA )
) SS.:
COUNTY OF ____________ )
On ___________, 19___, before me, ____________________, a Notary Public
in and for said State, 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)
