EXHIBIT 99.3
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT ("Agreement"), dated as of
May 7, 1998, is entered into between XXXXXX SNOWBOARDS, INC., an Oregon
corporation ("Debtor") and FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), in light of the following:
A. Debtor, Westbeach Snowboard U.S.A. Inc., and Foothill are,
contemporaneously herewith, entering into that certain Loan and Security
Agreement ("Loan Agreement") and other instruments, documents and agreements
contemplated thereby or related thereto (collectively, together with the Loan
Agreement, the "Loan Documents"); and
B. Debtor is the owner of certain intellectual property, identified
below, in which Debtor is granting a security interest to Foothill.
NOW THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth and for other
good and valuable consideration, the parties hereto mutually agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. The following terms, as used in this Agreement,
have the following meanings:
"Code" means the California Uniform Commercial Code, as amended
and supplemented from time to time, and any successor statute.
"Collateral" means:
(i) Each of the trademarks and rights and interest which are
capable of being protected as trademarks (including trademarks, service
marks, designs, logos, indicia, tradenames, corporate names, company names,
business names, fictitious business names, trade styles, and other source or
business identifiers, and applications pertaining thereto), which are
presently, or in the future may be, owned, created, acquired, or used
(whether pursuant to a license or otherwise) by Debtor, in whole or in part,
and all trademark rights with respect thereto throughout the world, including
all proceeds thereof (including license royalties and proceeds of
infringement suits), and rights to renew and extend such trademarks and
trademark rights;
(ii) Each of the patents and patent applications which are
presently, or in the future may be, owned, issued, acquired, or used (whether
pursuant to a license or otherwise) by Debtor, in whole or in part, and all
patent rights with
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respect thereto throughout the world, including all proceeds thereof
(including license royalties and proceeds of infringement suits), foreign
filing rights, and rights to extend such patents and patent rights;
(iii) Each of the copyrights and rights and interests capable of
being protected as copyrights, which are presently, or in the future may be,
owned, authored, acquired, or used (whether pursuant to a license or
otherwise) by Debtor, in whole or in part, and all copyright rights with
respect thereto throughout the world, including all proceeds thereof
(including license royalties and proceeds of infringement suits), and all
tangible property embodying the copyrights (including books, records, films,
computer tapes or disks, photographs, specification sheets, source codes,
object codes, and other physical manifestations of the foregoing);
(iv) All of Debtor's right to the trademarks and trademark
registrations listed on Exhibit A, attached hereto, as the same may be
updated hereafter from time to time;
(v) All of Debtor's right, title, and interest, in and to the
patents and patent applications listed on Exhibit B, attached hereto, as the
same may be updated hereafter from time to time;
(vi) All of Debtor's right, title, and interest, in and to the
copyrights and copyright registrations listed on Exhibit C, attached hereto,
as the same may be updated hereafter from time to time;
(vii) All of Debtor's right, title and interest to register
trademark claims under any state or federal trademark law or regulation of
any foreign country and to apply for, renew, and extend the trademark
registrations and trademark rights, the right (without obligation) to xxx or
bring opposition or cancellation proceedings in the name of Debtor or in the
name of Foothill for past, present, and future infringements of the
trademarks, registrations, or trademark rights and all rights (but not
obligations) corresponding thereto in the United States and any foreign
country, and the associated goodwill;
(viii) All of Debtor's right, title, and interest in all
patentable inventions, and to file applications for patent under federal
patent law or regulation of any foreign country, and to request reexamination
and/or reissue of the patents, the right (without obligation) to xxx or bring
interference proceedings in the name of Debtor or in the name of Foothill for
past, present, and future infringements of the patents, and all rights (but
not obligations) corresponding thereto in the United States and any foreign
country;
(ix) All of Debtor's right to register copyright claims under any
federal copyright law or regulation of any foreign country and to apply for
registrations on original works, compilations, derivative works, collective
works,
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and works for hire, the right (without obligation) to xxx in the name of
Debtor or in the name of Foothill for past, present, and future infringements
of the copyrights, and all rights (but not obligations) corresponding thereto
in the United States and any foreign country;
(x) All general intangibles relating to the foregoing; and
(xi) All proceeds of any and all of the foregoing (including,
without limitation, license royalties and proceeds of infringement suits)
and, to the extent not otherwise included, all payments under insurance, or
any indemnity, warranty, or guaranty payable by reason of loss or damage to
or otherwise with respect to the Collateral.
"Obligations" means all obligations, liabilities, and
indebtedness of Debtor to Foothill, whether direct, indirect, liquidated, or
contingent, and whether arising under this Agreement, the Loan Agreement, any
other of the Loan Documents, or otherwise, including all costs and expenses
described in Section 11.8 hereof.
1.2 CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Any initially capitalized terms used but not defined herein shall
have the meaning set forth in the Loan Agreement. Any reference herein to any
of the Loan Documents includes any and all alterations, amendments, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against Foothill or Debtor, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
Debtor, Foothill, and their respective counsel, and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of Foothill and Debtor.
2. GRANT OF SECURITY INTEREST.
Debtor hereby grants to Foothill a first-priority security interest in
all of Debtor's right, title, and interest in and to the Collateral to secure
the Obligations.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Debtor hereby represents, warrants, and covenants that:
3.1 TRADEMARKS; SERVICE MARKS; PATENTS.
(i) A true and complete schedule setting forth all federal and
state trademark and service xxxx registrations owned or controlled by Debtor
or licensed
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to Debtor, together with a summary description and full information in
respect of the filing or issuance thereof and expiration dates is set forth
on Exhibit A;
(ii) A true and complete schedule setting forth all patents owned
or controlled by Debtor or licensed to Debtor, together with a summary
description and full information in respect of the filing or issuance thereof
and expiration dates is set forth on Exhibit B;
(iii) A true and complete schedule setting forth all federal
copyright registrations owned or controlled by Debtor or licensed to Debtor,
together with a summary description and full information in respect of the
filing or issuance thereof and expiration dates is set forth on Exhibit C;
3.2 VALIDITY; ENFORCEABILITY. Each of the patents, service marks,
trademarks and copyrights is valid and enforceable, and Debtor is not presently
aware of any past, present, or prospective claim by any third party that any of
the patents, service marks or trademarks are invalid or unenforceable, or that
the use of any patents, service marks, trademarks or copyrights violates the
rights of any third person, or of any basis for any such claims;
3.3 TITLE. Debtor is the sole and exclusive owner of the entire and
unencumbered right, title, and interest in and to each of the patents, patent
applications, service marks, service xxxx registrations, trademarks, trademark
registrations, and copyrights, free and clear of any liens, charges, and
encumbrances, including pledges, assignments, licenses, shop rights, and
covenants by Debtor not to xxx third persons;
3.4 NOTICE. Debtor has used and will continue to use proper
statutory notice in connection with its use of each of the patents, service
marks, trademarks and copyrights;
3.5 QUALITY. Debtor has used and will continue to use consistent
standards of high quality (which may be consistent with Debtor's past practices)
in the manufacture, sale, and delivery of products and services sold or
delivered under or in connection with the service marks and trademarks,
including, to the extent applicable, in the operation and maintenance of its
merchandising operations, and will continue to maintain the validity of the
service marks and trademarks;
3.6 PERFECTION OF SECURITY INTEREST. Except for the filing of a
financing statement with the Secretary of State of Oregon and filings with the
United States Patent and Trademark Office, and the United States Copyright
Office necessary to perfect the security interests created hereunder, no
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either for the grant
by Debtor of the security interest hereunder or for the execution, delivery, or
performance of this Agreement by Debtor or for the perfection of or the exercise
by Foothill of its rights hereunder to the Collateral in the United States.
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4. AFTER-ACQUIRED PATENT, SERVICE XXXX, TRADEMARK OR COPYRIGHT RIGHTS.
If Debtor shall obtain rights to any new service marks, trademarks OR
copyright, any new patentable inventions or become entitled to the benefit of
any patent application or patent for any reissue, division, or continuation, of
any patent, the provisions of this Agreement shall automatically apply thereto.
Debtor shall give prompt notice in writing to Foothill with respect to any such
new service marks, trademarks, copyright or patents, or renewal or extension of
any service xxxx or trademark registration. Debtor shall bear any expenses
incurred in connection with future patent applications or service xxxx or
trademark registrations or copyright registrations.
5. LITIGATION AND PROCEEDINGS.
Debtor shall commence and diligently prosecute in its own name, as the
real party in interest, for its own benefit, and its own expense, such suits,
administrative proceedings, or other action for infringement or other damages as
are in its reasonable business judgment necessary to protect the Collateral.
Debtor shall provide to Foothill any information with respect thereto requested
by Foothill. Foothill shall provide at Debtor's expense all necessary
cooperation in connection with any such suits, proceedings, or action,
including, without limitation, joining as a necessary party. Following Debtor's
becoming aware thereof, Debtor shall notify Foothill of the institution of, or
any adverse determination in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any United States,
state, or foreign court regarding Debtor's claim of ownership in any of the
patents, service marks, trademarks or copyrights, its right to apply for the
same, or its right to keep and maintain such patent, service xxxx, copyright or
trademark rights.
6. POWER OF ATTORNEY.
Debtor grants Foothill power of attorney, having the full authority,
and in the place of Debtor and in the name of Debtor, from time to time
following an Event of Default in Foothill's discretion, to take any action and
to execute any instrument which Foothill may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, as may
be subject to the provisions of this Agreement: to endorse Debtor's name on all
applications, documents, papers, and instruments necessary for Foothill to use
or maintain the Collateral; to ask, demand, collect, xxx for, recover, impound,
receive, and give acquittance and receipts for money due or to become due under
or in respect of any of the Collateral; to file any claims or take any action or
institute any proceedings that Foothill may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce Foothill's rights
with respect to any of the Collateral and to assign, pledge, convey, or
otherwise transfer title in or dispose of the Collateral to any person.
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7. RIGHT TO INSPECT.
Debtor grants to Foothill and its employees and agents the right to
visit Debtor's plants and facilities which manufacture, inspect, or store
products sold under any of the patents or trademarks, and to inspect the
products and quality control records relating thereto at reasonable times during
regular business hours.
8. EVENTS OF DEFAULT.
Any of the following events shall be an Event of Default:
8.1 LOAN AGREEMENT. An Event of Default shall occur as defined in
the Loan Agreement;
8.2 MISREPRESENTATION. Any representation or warranty made herein by
Debtor or in any document furnished to Foothill by Debtor under this Agreement
is incorrect in any material respect when made or when reaffirmed; and
8.3 BREACH. Debtor fails to observe or perform any covenant,
condition, or agreement to be observed or performed pursuant to the terms hereof
which materially and adversely affects Foothill.
9. SPECIFIC REMEDIES.
Upon the occurrence of any Event of Default, Foothill shall have, in
addition to, other rights given by law or in this Agreement, the Loan Agreement,
or in any other Loan Document, all of the rights and remedies with respect to
the Collateral of a secured party under the Code, including the following:
9.1 NOTIFICATION. Foothill may notify licensees to make royalty
payments on license agreements directly to Foothill;
9.2 SALE. Foothill may sell or assign the Collateral and associated
goodwill at public or private sale for such amounts, and at such time or times
as Foothill deems advisable. Any requirement of reasonable notice of any
disposition of the Collateral shall be satisfied if such notice is sent to
Debtor five days prior to such disposition. Debtor shall be credited with the
net proceeds of such sale only when they are actually received by Foothill, and
Debtor shall continue to be liable for any deficiency remaining after the
Collateral is sold or collected. If the sale is to be a public sale, Foothill
shall also give notice of the time and place by publishing a notice one time at
least five days before the date of the sale in a newspaper of general
circulation in the county in which the sale is to be held. To the maximum
extent permitted by applicable law, Foothill may be the purchaser of any or all
of the Collateral and associated goodwill at any public sale and 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 public sale,
to use and apply all or
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any part of the Obligations as a credit on account of the purchase price of any
collateral payable by Foothill at such sale.
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING
EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES. THE PARTIES AGREE THAT ALL ACTIONS
OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER
COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF DEBTOR
AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
10. DEBTOR AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. DEBTOR AND FOOTHILL REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11. GENERAL PROVISIONS.
11.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Debtor and Foothill.
11.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties;
provided, however, that Debtor may not assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely void. Foothill may assign this Agreement and its
rights and duties hereunder and no consent or approval by Debtor is required in
connection with any such assignment.
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11.3 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
11.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Debtor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
11.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
11.6 AMENDMENTS IN WRITING. This Agreement can only be amended by a
writing signed by both Foothill and Debtor.
11.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver a manually executed
counterpart of this Agreement but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
11.8 FEES AND EXPENSES. Debtor shall pay to Foothill on demand all
costs and expenses that Foothill pays or incurs in connection with the
negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement, including: (a) reasonable attorneys' and
paralegals' fees and disbursements of counsel to Foothill; (b) costs and
expenses (including reasonable attorneys' and paralegals' fees and
disbursements) for any amendment, supplement, waiver, consent, or subsequent
closing in connection with this Agreement and the transactions contemplated
hereby; (c) costs and expenses of lien and title searches; (d) taxes, fees, and
other charges for filing this Agreement at the United States Patent and
Trademark Office, the United States Copyright Office or for filing financing
statements, and continuations, and other actions to perfect, protect, and
continue the security interest created hereunder; (e) sums paid or incurred to
pay any amount or take any action required of Debtor under this Agreement that
Debtor fails to pay or take; (f) costs and expenses of preserving and protecting
the Collateral; and (g) costs and expenses (including reasonable attorneys' and
paralegals' fees and disbursements) paid or incurred to enforce the security
interest created hereunder, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of this Agreement, or to defend any claims made
or threatened against Foothill arising out of the transactions contemplated
hereby (including preparations for the consultations concerning
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any such matters). The foregoing shall not be construed to limit any other
provisions of this Agreement or the Loan Documents regarding costs and expenses
to be paid by Debtor. The parties agree that reasonable attorneys' and
paralegals' fees and costs incurred in enforcing any judgment are recoverable as
a separate item in addition to fees and costs incurred in obtaining the judgment
and that the recovery of such attorneys' and paralegals' fees and costs is
intended to survive any judgment, and is not to be deemed merged into any
judgment.
11.9 NOTICES. Except as otherwise provided herein, all notices,
demands, and requests that either party is required or elects to give to the
other shall be in writing and shall be governed by the provisions of Section 12
of the Loan Agreement.
11.10 TERMINATION BY FOOTHILL. After termination of the Loan
Agreement and when Foothill has received payment and performance, in full, of
all Obligations, Foothill shall execute and deliver to Debtor a termination of
all of the security interests granted by Debtor hereunder.
11.11 INTEGRATION. This Agreement, together with the other Loan
Documents, reflect the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Xxxxx Xxxxx
----------------------------------------
Title: AVP
-------------------------------------
XXXXXX SNOWBOARDS, INC.,
an Oregon corporation
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Title: CEO
-------------------------------------
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EXHIBIT "A"
-----------
REGISTERED TRADEMARKS AND SERVICE MARKS
---------------------------------------
Trademark or Service Xxxx Registration Date Registration No.
--------------------------- ----------------- ----------------
M and Design 8-12-97 2,086,873
Xxxxxx a New Symbol
of Strength 8-20-96 1,994,516
Xxxxxx 12-17-96 2,022,859
Xxxxxx Snowboards 7-2-96 1,983,504
PENDING TRADEMARKS AND SERVICE MARKS
------------------------------------
Trademark and Service Xxxx Filing Date Serial No.
-------------------------- ----------- ----------
Double-Barrel 1-10-95 74-620,227
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EXHIBIT "B"
-----------
PATENTS
-------
Patent Description/Title Issue Date Patent No. Name of Inventor
------------------------ ---------- ---------- ----------------
Attachment System 2-3-98 5,713,587 Xxxxxx X. Xxxxxx
to Snowboards
PATENT APPLICATIONS
-------------------
Description Filing Date Serial No. Name of Inventor
----------- ----------- ---------- ----------------
None
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EXHIBIT "C"
-----------
REGISTERED COPYRIGHTS
---------------------
Copyright Country Registration Date Registration No.
--------- ------- ----------------- ----------------
Xxxxxx Xxxxx XXX 0-0-00 XX 000000
52 Snowboard
design
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