EXHIBIT 10.6
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of
September 23, 2002 is made by IRON AGE CORPORATION, a Delaware corporation, and
FALCON SHOE MFG. CO., a Maine corporation, (each a "Debtor" and collectively,
jointly and severally, the "Debtors"), in favor of FOOTHILL CAPITAL CORPORATION,
a California corporation, as the arranger and administrative agent for the
Lenders ("Secured Party").
RECITALS
A. Iron Age Holdings Corporation, a Delaware corporation,
Debtors and the Lender Group have entered into that certain Loan and Security
Agreement, of even date herewith (as amended, restated, modified, renewed or
extended from time to time, the "Loan Agreement"), pursuant to which the Lender
Group has agreed to make certain financial accommodations to Debtors, and
pursuant to which Debtors have granted to Secured Party for the benefit of the
Lender Group security interests in (among other things) all or substantially all
of the general intangibles of Debtors.
B. Pursuant to the Loan Agreement and as one of the conditions
precedent to the obligations of the Secured Party and the Lenders under the Loan
Agreement, each of the Debtors have agreed to execute and deliver this Agreement
to Secured Party for filing with the PTO and with any other relevant recording
systems in any domestic jurisdiction, and as further evidence of and to
effectuate Secured Party's existing security interests in the patents and other
general intangibles described herein.
ASSIGNMENT
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Each Debtor hereby agrees in favor of
Secured Party as follows:
1. Definitions; Interpretation.
(a) Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Debtor" and "Debtors" shall have the meaning ascribed to such
terms in the introductory paragraph of this Agreement.
"Event of Default" means any Event of Default under the Loan
Agreement.
"Lender Group" means, individually and collectively, each of
the Lenders and Secured Party.
"Lenders" means, individually and collectively, each of the
financial institutions identified on the signature pages of the Loan Agreement,
and any other Person made a party thereto in accordance with the provisions of
Section 14 thereof (together with their respective successors and assigns).
"Patent Collateral" shall have the meaning set forth in
Section 2.
"Patents" shall have the meaning set forth in Section 2.
"Proceeds" means whatever is receivable or received from or
upon the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Patent Collateral, including "proceeds"
as defined at UCC Section 9-102(a)(64), all insurance proceeds, and all proceeds
of proceeds. Proceeds shall include (i) any and all accounts, chattel paper,
instruments, general intangibles, cash and other proceeds, payable to or for the
account of any Debtor, from time to time in respect of any of the Patent
Collateral, (ii) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of any Debtor from time to time with
respect to any of the Patent Collateral, (iii) any and all claims and payments
(in any form whatsoever) made or due and payable to any Debtor from time to time
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Patent Collateral by any Person acting
under color of governmental authority, and (iv) any and all other amounts from
time to time paid or payable under or in connection with any of the Patent
Collateral or for or on account of any damage or injury to or conversion of any
Patent Collateral by any Person.
"PTO" means the United States Patent and Trademark Office and
any successor thereto.
"Secured Obligations" shall mean, with respect to each Debtor,
all liabilities, obligations, or undertakings owing by such Debtor to the Lender
Group of any kind or description arising out of or outstanding under, advanced
or issued pursuant to, or evidenced by the Loan Agreement, any of the other Loan
Documents, or this Agreement, irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due,
voluntary or involuntary, whether now existing or hereafter arising, and
including all interest (including interest that accrues after the filing of a
case under the Bankruptcy Code) and any and all costs, fees (including attorneys
fees), and expenses which such Debtor is required to pay pursuant to any of the
foregoing, by law, or otherwise.
"Secured Party" shall have the meaning ascribed to such term
in the introductory paragraph of this Agreement.
"UCC" means the Uniform Commercial Code as in effect from time
to time in the State of New York.
"United States" and "U.S." each mean the United States of
America.
(b) Terms Defined in UCC. Where applicable and except
as otherwise defined herein, terms used in this Agreement shall have the
meanings ascribed to them in the UCC.
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(c) Interpretation. In this Agreement, except to the
extent the context otherwise requires:
(i) Any reference to a Section or a Schedule
is a reference to a section hereof, or a schedule hereto, respectively,
and to a subsection or a clause is, unless otherwise stated, a
reference to a subsection or a clause of the Section or subsection in
which the reference appears.
(ii) The words "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a whole
and not merely to the specific Section, subsection, paragraph or clause
in which the respective word appears.
(iii) The meaning of defined terms shall be
equally applicable to both the singular and plural forms of the terms
defined.
(iv) The words "including," "includes" and
"include" shall be deemed to be followed by the words "without
limitation."
(v) References to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments, restatements, supplements, refinancings, renewals,
extensions, and other modifications thereto and thereof.
(vi) References to statutes or regulations
are to be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or
regulation referred to.
(vii) Any captions and headings are for
convenience of reference only and shall not affect the construction of
this Agreement.
(viii) Capitalized words not otherwise
defined herein shall have the respective meanings assigned to them in
the Loan Agreement.
(ix) In the event of a direct conflict
between the terms and provisions of this Agreement and the Loan
Agreement, it is the intention of the parties hereto that both such
documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of the Loan Agreement shall control and govern;
provided, however, that the inclusion herein of additional obligations
on the part of any Debtor and supplemental rights and remedies in favor
of Secured Party for the benefit of the Lender Group (whether under New
York law or applicable federal law), in each case in respect of the
Patent Collateral, shall not be deemed a conflict with the Loan
Agreement.
2. Security Interests.
(a) Assignment and Grant of Security in respect of
the Secured Obligations. Each Debtor, as security for the prompt payment and
performance of the Secured Obligations, hereby grants, assigns, transfers and
conveys to Secured Party, for the benefit of the
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Lender Group, a continuing, first priority security interest in all of such
Debtor's right, title and interest in, to and under the following property,
whether now existing or hereafter acquired or arising (collectively, the "Patent
Collateral"):
(i) all patent letters of the U.S. or any
other country, all registrations and recordings thereof, and all
applications for letters patent of the U.S. or any other country,
owned, held or used by such Debtor in whole or in part, including all
existing U.S. patents and patent applications of such Debtor which are
described in Schedule A hereto, as the same may be amended or
supplemented pursuant hereto from time to time, and together with and
including all patent licenses held by such Debtor, together with all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof and the inventions disclosed therein, and
all rights corresponding thereto throughout the world, including the
right to make, use, lease, sell and otherwise transfer the inventions
disclosed therein, and all proceeds thereof, including all license
royalties and proceeds of infringement suits (collectively, the
"Patents");
(ii) all claims, causes of action and rights
to xxx for past, present and future infringement or unconsented use of
any of the Patents and all rights arising therefrom and pertaining
thereto;
(iii) all general intangibles (as defined in
the UCC) and all intangible intellectual or other similar property of
such Debtor of any kind or nature, whether now owned or hereafter
acquired or developed, associated with or arising out of any of the
Patents and not otherwise described above; and
(iv) all products and Proceeds of any and
all of the foregoing.
(b) Continuing Security Interest. Each Debtor agrees
that this Agreement shall create a continuing security interest in the Patent
Collateral which shall remain in effect until terminated in accordance with
Section 18.
(c) Incorporation into Loan Agreement. This Agreement
shall be fully incorporated into the Loan Agreement and all understandings,
agreements and provisions contained in the Loan Agreement shall be fully
incorporated into this Agreement. Without limiting the foregoing, the Patent
Collateral described in this Agreement shall constitute part of the Collateral
in the Loan Agreement.
(d) Permitted Licensing. Anything in the Loan
Agreement or this Agreement to the contrary notwithstanding, each Debtor may
license the Patent Collateral in the ordinary course of business (but not
otherwise) to any other Person on a non-exclusive basis (subject to the security
interest of Secured Party therein).
3. Further Assurances; Appointment of Secured Party as
Attorney-in-Fact. Each Debtor at its expense shall execute and deliver, or cause
to be executed and delivered, to Secured Party for the benefit of the Lender
Group any and all documents and instruments, in form and substance reasonably
satisfactory to Secured Party, and take any and all action, which Secured Party,
in the exercise of its Permitted Discretion, may request from time to time, to
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perfect and continue the perfection or to maintain the priority of, or provide
notice of the security interest in the Patent Collateral held by Secured Party
for the benefit of the Lender Group and to accomplish the purposes of this
Agreement. If any Debtor refuses to execute and deliver, or fails timely to
execute and deliver, any of the documents it is requested to execute and deliver
by Secured Party in accordance with the foregoing, Secured Party shall have the
right, in the name of such Debtor, or in the name of Secured Party or otherwise,
without notice to or assent by such Debtor, and such Debtor hereby irrevocably
constitutes and appoints Secured Party (and any of Secured Party's officers or
employees or agents designated by Secured Party) as such Debtor's true and
lawful attorney-in-fact with full power and authority, (i) to sign the name of
such Debtor on all or any of such documents or instruments, and perform all
other acts, that Secured Party, in the exercise of its Permitted Discretion,
deems necessary or advisable in order to perfect or continue the perfection of,
maintain the priority or enforceability of or provide notice of the security
interest in the Patent Collateral held by Secured Party for the benefit of the
Lender Group, and (ii) to execute any and all other documents and instruments,
and to perform any and all acts and things for and on behalf of such Debtor,
which Secured Party, in the exercise of its Permitted Discretion, may deem
necessary or advisable to maintain, preserve and protect the Patent Collateral
and to accomplish the purposes of this Agreement, including (A) after the
occurrence and during the continuance of any Event of Default, to defend,
settle, adjust or institute any action, suit or proceeding with respect to the
Patent Collateral, (B) after the occurrence and during the continuance of any
Event of Default, to assert or retain any rights under any license agreement for
any of the Patent Collateral, including any rights of such Debtor arising under
Section 365(n) of the Bankruptcy Code, and (C) upon the occurrence and during
the continuance of any Event of Default, to execute any and all applications,
documents, papers and instruments for Secured Party to use the Patent
Collateral, to grant or issue any exclusive or non-exclusive license with
respect to any Patent Collateral, and to assign, convey or otherwise transfer
title in or dispose of the Patent Collateral. The power of attorney set forth in
this Section 3, being coupled with an interest, is irrevocable so long as this
Agreement shall not have terminated in accordance with Section 18.
4. Representations and Warranties. Each Debtor represents and
warrants to each member of the Lender Group, as follows:
(a) No Other Patents. A true and correct list of all
Patents owned, held (whether pursuant to a license or otherwise) or used by
Debtors, in whole or in part, is set forth in Schedule A.
(b) Validity. Each of the Patents listed on Schedule
A is subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, all maintenance fees required to be paid on account of any Patents have
been timely paid for maintaining such Patents in force, and, to the best of such
Debtor's knowledge, each of the Patents is valid and enforceable.
(c) Title. (i) Each Debtor has, to its knowledge,
rights in and good and defensible title to the existing Patent Collateral, (ii)
with respect to the Patent Collateral shown on Schedule A hereto as owned by it,
such Debtor is the sole and exclusive owner thereof, free and clear of any Liens
and rights of others (other than Permitted Liens), including licenses, shop
rights, and covenants by such Debtor not to xxx third persons, and (iii) with
respect to any Patent
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for which such Debtor is either a licensor or a licensee pursuant to a license
or licensee agreement regarding such Patent, each such license or licensing
agreement is in full force and effect, such Debtor is not in default of any of
its obligations thereunder and, other than (A) the parties to such licenses or
licensing agreements, or (B) in the case of a non-exclusive license or license
agreement entered into by such Debtor or any such licensor regarding such Patent
Collateral, the parties to any other such non-exclusive licenses or license
agreements entered into by such Debtor or any such licensor with any other
Person, no other Person is known by such Debtor to have any rights in or to any
of the Patent Collateral.
(d) No Infringement. To each Debtor's knowledge, (i)
no material infringement or unauthorized use presently is being made of any of
the Patent Collateral by any Person; and (ii) the past, present and contemplated
future use of the Patent Collateral by such Debtor has not, does not and will
not infringe upon or violate any right, privilege or license agreement of or
with any other Person.
(e) Powers. Each Debtor has the unqualified right,
power and authority to pledge and to grant to Secured Party a security interest
in all of the Patent Collateral pursuant to this Agreement, and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other Person except as already
obtained.
5. Covenants. Each Debtor covenants that so long as this
Agreement shall be in effect, each such Debtor shall:
(a) Compliance with Law. Comply, in all material
respects, with all applicable statutory and regulatory requirements in
connection with any and all of the Patent Collateral and give such notice of
patent, prosecute such material claims, and do all other acts and take all other
measures which, in such Debtor's reasonable business judgment, may be necessary
or desirable to preserve, protect and maintain such Patent Collateral and all of
such Debtor's rights therein, including diligently prosecute any material patent
application pending as of the date of this Agreement or thereafter;
(b) Compliance with Agreement. Comply with each of
the terms and provisions of this Agreement, the Loan Agreement, and the other
Loan Documents, and not enter into any agreement (for example, a license
agreement) which is inconsistent with the obligations of such Debtor under this
Agreement without Secured Party's prior written consent; and
(c) Lien Protection. Not permit the inclusion in any
contract to which such Debtor becomes a party of any provision that could or
might impair or prevent the creation of security interests in favor of Secured
Party, for the benefit of the Lender Group, in such Debtor's rights and interest
in the Patents and the Patent Collateral, and each such Debtor will promptly
give Secured Party written notice of the occurrence of any event that could
reasonably be expected to have a material adverse effect on any of the Patents
or the Patent Collateral, including any petition under the Bankruptcy Code filed
by or against any licensor of any of the Patents for which such Debtor is a
licensee.
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6. Future Rights. For so long as any of the Secured
Obligations shall remain outstanding, or, if earlier, until Secured Party shall
have released or terminated, in whole but not in part, its interest in the
Patent Collateral, if and when any Debtor shall obtain rights to any new
patentable inventions, or become entitled to the benefit of any Patent, or any
reissue, division, continuation, renewal, extension or continuation-in-part of
any Patent or Patent Collateral or any improvement thereof (whether pursuant to
any license or otherwise), the provisions of Section 2 shall automatically apply
thereto and the applicable Debtor shall give to Secured Party prompt notice
thereof. Each Debtor shall do all things reasonably deemed necessary or
advisable by Secured Party to ensure the validity, perfection, priority and
enforceability of the security interest of Secured Party in such future acquired
Patent Collateral. If any Debtor refuses to execute and deliver, or fails timely
to execute and deliver, any of the documents it is requested to execute and
deliver by Secured Party in connection herewith, each Debtor hereby authorizes
Secured Party to modify, amend or supplement the Schedules hereto and to
re-execute this Agreement from time to time on such Debtor's behalf and as its
attorney-in-fact to include any future patents which are or become Patent
Collateral and to cause such re-executed Agreement or such modified, amended or
supplemented Schedules to be filed with the PTO.
7. Duties of the Secured Party and the Lender Group.
Notwithstanding any provision contained in this Agreement, neither Secured Party
nor any other member of the Lender Group shall have a duty to exercise any of
the rights, privileges or powers afforded to it, nor be responsible to any
Debtor or any other Person for any failure to do so or delay in doing so. Except
for the accounting for moneys actually received by Secured Party or any other
member of the Lender Group hereunder or in connection herewith, neither Secured
Party nor any other member of the Lender Group shall have a duty or liability to
exercise or preserve any rights, privileges or powers pertaining to the Patent
Collateral.
8. Events of Default. The occurrence of any "Event of Default"
under the Loan Agreement shall constitute an Event of Default hereunder.
9. Remedies. From and after the occurrence and during the
continuation of an Event of Default, Secured Party shall have all rights and
remedies available to it under the Loan Agreement, the other Loan Documents, and
applicable law (which rights and remedies are cumulative) with respect to the
security interests in any of the Patent Collateral or any other Collateral. Each
Debtor hereby agrees that such rights and remedies include the right of Secured
Party as a secured party to sell or otherwise dispose of its Collateral after
default, pursuant to UCC Section 9-610. Each Debtor hereby agrees that Secured
Party shall at all times have such royalty free licenses, to the extent
permitted by law, for any Patent Collateral that is reasonably necessary to
permit the exercise of any of Secured Party's rights or remedies upon or after
the occurrence of (and during the continuance of) an Event of Default with
respect to (among other things) any tangible asset of such Debtor in which
Secured Party has a security interest, including Secured Party's rights to sell
inventory, tooling or packaging which is acquired by such Debtor (or its
successor, assignee or trustee in bankruptcy). In addition to and without
limiting any of the foregoing, upon the occurrence and during the continuance of
an Event of Default, Secured Party shall have the right but shall in no way be
obligated to bring suit, or to take such other action as Secured Party deems
necessary or advisable, in the name of any Debtor or Secured Party, to enforce
or protect any of the Patent Collateral, in which event any such Debtor shall,
at the request of Secured Party, do any and all lawful acts and execute any and
all
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documents required by Secured Party in aid of such enforcement. To the extent
that Secured Party shall elect not to bring suit to enforce such Patent
Collateral, upon, during, or after the occurrence of an Event of Default, the
applicable Debtor agrees to use all reasonable measures and its diligent
efforts, whether by action, suit, proceeding or otherwise, to prevent the
infringement, misappropriation or violations thereof by others and for that
purpose agrees diligently to maintain any action, suit or proceeding against any
Person necessary to prevent such infringement, misappropriation or violation.
10. Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by each of the Debtors and Secured
Party and their respective successors and assigns.
11. Notices. All notices and other communications hereunder
shall be in writing and shall be mailed, sent or delivered in accordance with
the Loan Agreement.
12. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
except to the extent that the validity or perfection of the security interests
hereunder in respect of any Patent Collateral are governed by federal law, in
which case such choice of New York law shall not be deemed to deprive Secured
Party of such rights and remedies as may be available under federal law.
13. Entire Agreement; Amendment. This Agreement and the Loan
Agreement, together with the Schedules hereto and thereto, contain the entire
agreement of the parties with respect to the subject matter hereof and supersede
all prior drafts and communications relating to such subject matter. Neither
this Agreement nor any provision hereof may be modified, amended or waived
except by the written agreement of the parties, as provided in the Loan
Agreement. Notwithstanding the foregoing, Secured Party may re-execute this
Agreement or modify, amend or supplement the Schedules hereto as provided in
Section 6 hereof.
14. Severability. If one or more provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to any party, such invalidity, illegality or
unenforceability in such jurisdiction or with respect to such party shall, to
the fullest extent permitted by applicable law, not invalidate or render illegal
or unenforceable any such provision in any other jurisdiction or with respect to
any other party, or any other provisions of this Agreement.
15. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
16. Loan Agreement. Each Debtor acknowledges that the rights
and remedies of the Secured Party held for the benefit of the Lender Group with
respect to the security interest in the Patent Collateral granted hereby are
more fully set forth in the Loan Agreement and all such rights and remedies are
cumulative.
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17. No Inconsistent Requirements. In the event of a direct
conflict between the terms and provisions contained in this Agreement and the
terms and provisions contained in the Loan Agreement, it is the intention of the
parties hereto that such terms and provisions in such documents shall be read
together and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of the Loan Agreement shall
control and govern.
18. Termination. Upon the indefeasible payment in full in cash
of the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, this Agreement shall
terminate and Secured Party shall execute and deliver such documents and
instruments and take such further action reasonably requested by Debtors and at
Debtors' expense as shall be reasonably necessary to evidence termination of the
security interests granted by Debtors to Secured Party for the benefit of the
Lender Group hereunder.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
IRON AGE CORPORATION,
a Delaware corporation
By: Xxxx X. Xxxxxx
Title: Authorized Signatory
FALCON SHOE MFG. CO.,
a Maine corporation
By: Xxxx X. Xxxxxx
Title: Authorized Signatory
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent
By: Xxxx X. Xxxxxx
Title: Authorized Signatory
STATE OF Pennsylvania )
) ss
COUNTY OF Allegheny )
On September 23, 2002, before me, Rose Xxxx Xxxxxxx, Notary
Public, personally appeared Xxxx X. Xxxxxx, 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.
Rose Xxxx Xxxxxxx
Signature
[SEAL]
STATE OF )
) ss
COUNTY OF )
On ___________, ____, before me,
_____________________________, Notary Public, personally appeared
____________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------------
Signature
[SEAL]
SCHEDULE A
to the Patent Security Agreement
United States Patents
and Patent Applications of
Iron Age Corporation
FILING PATENT FILING FILING
DEBTOR COUNTRY NUMBER DATE STATUS TITLE
------ ------- ------ ---- ------ -----
United States Patents
and Patent Applications of
Falcon Shoe Mfg. Co.
FILING PATENT FILING FILING
DEBTOR COUNTRY NUMBER DATE STATUS TITLE
------ ------- ------ ---- ------ -----
