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EXHIBIT 10.13
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Assignment"), made as of
the 27th day of July, 1999, by THOMASTON XXXXX, INC., a Georgia corporation,
having its chief executive office at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
00000 (the "Assignor") in favor of FOOTHILL CAPITAL CORPORATION, a California
corporation, with an office at Northpark Town Center, Building 400, 0000
Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, as Agent (the "Agent", and
sometimes herein the "Assignee") for the Co-Agents (as defined below) and the
Lenders (as defined below) party to the Loan Agreement (as defined below).
PRELIMINARY STATEMENTS.
(1) The Assignor, the lenders party thereto from time to time
(the "Lenders"), the co-agents party thereto from time to time (the "Co-Agents")
and the Agent are parties to that certain Loan and Security Agreement of even
date herewith (as hereafter amended, restated or otherwise modified from time to
time, the "Loan Agreement"), pursuant to which the Lenders have agreed to extend
credit to the Assignor from time to time and the Assignor has granted a security
interest in all of its assets to the Agent for the benefit of the Agent, the
Lenders and the Co-Agents (collectively, the "Lender Group"); and
(2) The Lender Group has required that the Assignor execute
and deliver this Assignment in order to secure the prompt and complete payment,
observance and performance of the Obligations (as defined in the Loan Agreement)
and as a condition precedent to any extension of credit under the Loan
Agreement;
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Assignor hereby agrees as
follows:
1. Incorporation of Loan Agreement. The Loan Agreement and the
terms and provisions thereof are hereby incorporated herein in their entirety by
this reference thereto. Terms used herein which are defined in the Loan
Agreement shall have the respective meanings set forth in the Loan Agreement
unless otherwise defined herein.
2. Assignment and Grant of Security. To secure the complete
and timely payment of all the Obligations of the Assignor, now or hereafter
existing from time to time, the Assignor hereby pledges and collaterally assigns
to the Assignee, for the benefit of the Lender Group, and hereby grants to the
Assignee, for its own benefit and for the benefit of the Lender Group, a
security interest in the Assignor's entire right, title and interest in and to
all of the Assignor's patents and patent applications (collectively, the
"Patents"), including, without limitation, each patent and patent application
listed on Schedule A attached hereto, and all future
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Patents of the Assignor, including all proceeds thereof, the right (but not the
obligation) to xxx for past, present and future infringements in the name of the
Assignor or in the name of the Assignee, all rights (but not obligations)
corresponding thereto and all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof (it being understood and agreed
that the Patents assigned hereby shall include, without limitation, rights and
interests pursuant to licensing or other contracts in favor of the Assignor
pertaining to the Patents, but in the case of third parties which are not
Affiliates of the 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).
3. Representations and Warranties. The Assignor covenants and
warrants as follows:
(a) A true and complete list of all Patents in
existence as of the date hereof is set forth in Schedule A hereto.
(b) The Patents are subsisting and have not been
adjudged invalid or unenforceable and the Assignor is not aware of any
claim by any third party that the Patents are invalid or unenforceable.
(c) To the best of the Assignor's knowledge, each of
the Patents is valid and enforceable.
(d) No claim has been made that the practice of any
of the Patents does or may violate the rights of any third person.
(e) The Assignor is the legal and beneficial owner of
the Patents free and clear of any Lien, security interest, charge or
encumbrance, including, without limitation, pledges, assignments,
licenses, shop rights and covenants by the Assignor not to xxx third
persons, except for the security interest and assignment created by
this Assignment, and the license agreements set forth on Schedule B
attached hereto (the "Existing License Agreements"). No effective
financing statement or other instrument similar in effect covering all
or any part of the Patents is on file in any recording office, except
such as may have been filed in favor of the Assignee relating to this
Assignment or for which duly executed termination statements have been
recorded or delivered to the Assignee.
(f) This Assignment shall create in favor of the
Assignee a valid and perfected security interest in the Patents upon
making the filings referred to in clause (g) below, free and clear of
all Liens.
(g) Except for the filing of financing statements in
THomaston County, Georgia under the Code and filings with the United
States Patent and Trademark Office,
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no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
either (i) for the grant by the Assignor of the security interest
granted hereby or for the execution, delivery or performance of this
Assignment by the Assignor or (ii) for the perfection of or the
exercise by the Assignee of its rights and remedies hereunder to the
Patents in the United States of America.
(h) The chief executive office of the Assignor is
located at the address set forth above for the Assignor.
(i) None of the Assignor's Affiliates or Subsidiaries
has any right, title or interest in any of the Patents.
4. New Patents and Applications. If, at any time during the
term of the Loan Agreement, the Assignor shall become entitled to the benefit of
any patent application or patent for any reissue, division, continuation,
renewal, extension or continuation-in-part of any Patent or any improvement on
any Patent, the provisions of this Assignment shall automatically apply thereto.
With respect to all of the foregoing rights or benefits, the Assignor shall give
to the Assignee prompt notice thereof in writing.
5. Assignor's Covenants. On a continuing basis, the Assignor
shall make, execute, acknowledge and deliver, and file and record in the proper
filing and recording places, all such instruments, including, without
limitation, appropriate financing and continuation statements and security
agreements, and take all such action as may reasonably be deemed necessary or
advisable by the Assignee to carry out the intent and purposes of this
Assignment, or for assuring and confirming to the Assignee the grant or
perfection of a security interest in all of the Patents. Without limiting the
generality of the foregoing sentence, the Assignor (i) shall not enter into any
agreement which would materially impair or conflict with the Assignor's
obligations hereunder without the Assignee's prior written consent (which
consent shall not be unreasonably withheld); (ii) upon the written request of
the Assignee, shall use reasonable efforts to obtain any necessary consents of
third parties to the grant or perfection of a security interest to the Assignee
with respect to the Patents; (iii) shall, from time to time, upon the Assignee's
reasonable request, cause its books and records to be marked with such legends
or segregated in such manner as the Assignee may reasonably specify, and take or
cause to be taken such other action and adopt such procedures as the Assignee
may reasonably specify to give notice of or to perfect the security interest in
the Patents intended to be created hereby; (iv) shall at all times keep at least
one complete set of its records concerning the Patents at its chief executive
office or principal place of business as set forth above and shall not change
the location of its chief executive office or such records without giving the
Assignee at least thirty (30) days' prior written notice thereof; (v) shall
promptly, following its becoming aware thereof, notify the Assignee of the
institution of, or any adverse determination in, any proceeding in the United
States Patent and Trademark Office or any United States or foreign court
regarding the
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Assignee's claim of ownership in any of the Patents; (vi) shall not permit the
inclusion in any contract to which it becomes a party of any provisions which
would impair or prevent the creation of a security interest in the Assignor's
rights and interest acquired under such contracts in any property included
within the definition of the Patents; (vii) shall properly maintain and care for
the Patents; (viii) shall not grant any security interest in any of the Patents
except in the name of the Assignee; (ix) except as permitted under the Loan
Agreement and herein, shall not sell or contract for sale or otherwise dispose
of any Patent; (x) except with the consent of the Assignee, shall not license
any Patent other than pursuant to the Existing License Agreements; (xi) upon any
officer of the Assignor obtaining knowledge thereof, shall promptly notify the
Assignee of any event which materially adversely affects the value of any
Patent, the ability of the Assignor or the Assignee to dispose of any of the
Patents or the rights and remedies of the Assignee in relation thereto
including, without limitation, the levy of any legal process against any of the
Patents; (xii) shall diligently keep reasonable records respecting the Patents;
(xiii) shall promptly notify the Assignee of any suspected infringement of any
of the Patents by any third party and of all steps, including the commencement
and course of litigation, taken to remedy such infringement; (xiv) shall apply
proper statutory patent notice to all products covered by the Patents, and (xv)
shall not terminate any Existing License Agreement or amend, modify or waive any
provision of any Existing License Agreement in any manner that could reasonably
be deemed to be materially adverse to the interests of the Assignee, without the
prior written consent of the Assignee.
6. Amounts Payable in Respect of the Patents. Except as
otherwise provided in this Section 6 or in the Loan Agreement, the Assignor
shall continue to collect, at its own expense, all amounts due or to become due
to the Assignor in respect of the Patents. Upon the occurrence and during the
continuance of an Event of Default, the Assignee is hereby given full power and
authority, without notice or demand, (i) to notify any and all obligors with
respect to any Patent which the Assignor, except for the execution hereof, could
ask for, and (ii) to demand, take, collect, xxx for and receive for its own use
all amounts due or to become due the Assignor in respect of the Patents, and in
connection therewith to enforce all rights and remedies with respect to any
Patent which the Assignor could enforce if this Assignment had not been made;
and Assignor hereby ratifies any action which the Assignee shall lawfully take
to enforce the Assignee's rights hereunder. Whether or not the Assignee shall
have so notified any obligors, the Assignor shall at its expense render all
reasonable assistance to the Assignee in enforcing claims against such obligors.
7. Power of Attorney. The Assignor hereby authorizes and
empowers the Assignee, upon the occurrence and during the continuance of an
Event of Default, to make, constitute and appoint any officer or agent of the
Assignee as the Assignor's true and lawful attorney-in-fact, with power (i) to
endorse the Assignor's name on all applications, documents, papers and
instruments necessary or desirable for the Assignee in the use or maintenance of
the Patents, (ii) to take any other actions with respect to the Patents
including, without limitation, commencement or continuation of any litigation or
administrative proceeding, as the Assignee
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deems in the best interests of the Lender Group, (iii) to grant or issue
licenses to the Patents to anyone on terms which the Assignee in its reasonable
judgment deems commercially reasonable, or (iv) to assign, pledge, convey or
otherwise transfer title in or dispose of the Patents to anyone on terms which
the Assignee in its reasonable judgment deems commercially reasonable.
8. Patent Applications; Maintenance and Litigation.
(a) The Assignor shall have the duty to preserve and
maintain all Patents as to which a security interest has been granted
pursuant to this Assignment. Any expenses incurred in connection with
such an application, or in protecting, maintaining or preserving the
Patents, shall be borne by the Assignor.
(b) Notwithstanding anything to the contrary in
Section 2 hereof, the Assignor shall have the right and obligation to
commence and diligently 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, or other damage or
reexamination or reissue proceedings as are reasonable to protect any
of the Patents. However, no such suit, proceeding or other action shall
be settled or voluntarily dismissed, nor shall any party be released or
excused of any claims of, or liability for, infringement without the
prior written consent of the Assignee, which consent shall not be
unreasonably withheld. The Assignee shall provide all reasonable and
necessary cooperation in connection with any such suit, proceeding or
action, including, without limitation, joining as a necessary party.
(c) The Assignor hereby agrees to indemnify and hold
harmless the Assignee for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (including reasonable attorneys' fees) of any kind
whatsoever which may be imposed on, incurred by or asserted against the
Assignee in connection with or in any way rising out of any such suits,
proceedings or other actions, or any other suits, proceedings or other
actions relating to any or all of the Patents (including, without
limitation, whether brought by the Assignor or any other Person, suits,
proceedings or other actions in which an allegation of liability,
strict or otherwise, is or may be made by any Person who alleges or may
allege having suffered damages as a consequence of alleged improper,
imprudent, reckless, negligent, willful, faulty, defective or
substandard design, testing, specification, manufacturing supervision,
manufacturing defect, manufacturing deficiency, publicity or
advertisement or improper use, howsoever arising or by whomsoever
caused, of any inventions disclosed and claimed in the Patents or any
of them); unless with respect to any of the above, the Assignee is
judicially determined to have acted or failed to act with gross
negligence or wilful misconduct. The indemnification in this paragraph
shall survive the termination of this Agreement.
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9. Amendments, Etc. No amendment or waiver of any provision of
this Assignment nor consent to any departure by the Assignor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given, except as
provided in Section 4 hereof, in which case the writing need only be signed by
the Assignee.
10. Addresses for Notices. All notices and other
communications to any party provided for hereunder shall be in writing
(including telecommunications) and mailed, transmitted or delivered to such
party, addressed to it at the address first stated herein for such party, or as
to either party at such other address as shall be designated by such party in a
written notice delivered to the other party in accordance with the terms of this
Section. All such notices and other communications shall be effective as
provided in Article 12 of the Loan Agreement.
11. Continuing Assignment; Transfers by Lenders. This
Assignment shall create a continuing security interest and collateral assignment
of the Patents and shall (i) remain in full force and effect until payment in
full of the Obligations and the termination of the Loan Agreement, (ii) be
binding upon the Assignor, its successors and assigns and (iii) inure to the
benefit of the Assignee, the Co-Agents, the Lenders and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Lender may assign or otherwise transfer any
Obligations held by it, and such other benefits in respect thereof granted to
the Assignee herein or otherwise, to any other person or entity, subject,
however, to the provisions of Article 15 of the Loan Agreement. Upon the payment
in full of the Obligations and the termination of the Loan Agreement, the
assignment hereunder shall terminate and all rights to the Patents shall revert
to the Assignor, subject to any disposition thereof which may have been made by
the Assignee pursuant hereto or pursuant to the Loan Agreement. Upon any such
termination, the Assignee shall, at the Assignor's expense, execute and deliver
to the Assignor such documents as the Assignor shall reasonably request to
evidence such termination.
12. Cumulative Remedies; Power of Attorney; Effect on Loan
Agreement. All of the Assignee's rights and remedies with respect to the
Patents, whether established hereby, by the Loan Agreement or by any other Loan
Document, or by any other agreements or by law shall be cumulative and may be
exercised singularly or concurrently. The Assignor hereby acknowledges and
agrees that this Assignment is not intended to limit or restrict in any way the
rights and remedies of the Assignee, the Co-Agents or the Lenders under the Loan
Agreement, but rather is intended to facilitate the exercise of such rights and
remedies. The Agent shall have, upon the occurrence and during the continuation
of an Event of Default, in addition to all other rights and remedies given it by
this Assignment and the Loan Agreement, those rights and remedies allowed by law
and the rights and remedies of a secured party on default under the UCC as
enacted in the State of Georgia at that time.
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13. Counterparts. This Assignment may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
14. Severability. Any provision of this Assignment which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
15. Governing Law. THIS ASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be executed by their respective officers thereunder duly
authorized, as of the date first above written.
THOMASTON XXXXX, INC.
By: /s/
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Name:
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Title:
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Agreed and Accepted as
of this ____day of July, 1999.
FOOTHILL CAPITAL CORPORATION,
as the Agent and the Assignee
By: /s/
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Name:
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Title:
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