1
EXHIBIT 4.12
COMPANY AND SUBSIDIARY PATENT
AND TRADEMARK SECURITY AGREEMENT
This COMPANY AND SUBSIDIARY PATENT AND TRADEMARK SECURITY
AGREEMENT (this "AGREEMENT") is dated as of February 27, 1998 and entered into
by and among ZILOG, INC., a Delaware corporation ("COMPANY"), each of the
undersigned direct and indirect domestic Subsidiaries of Company (each of
Company and such Subsidiaries being a "GRANTOR" and collectively, "GRANTORS";
provided that after the Closing Date, Grantors shall be deemed to include any
Additional Grantors (as hereinafter defined)) and STATE STREET BANK AND TRUST
COMPANY, a chartered trust company, in its capacity as Trustee under the
Indenture referred to below (in such capacity, called "SECURED PARTY").
PRELIMINARY STATEMENTS
A. Secured Party has entered into an Indenture dated as of
February 27, 1998 (said Indenture, as it may hereafter be amended, supplemented
or otherwise modified from time to time, being the "INDENTURE", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) with Company and certain subsidiaries of Company pursuant to which
Company has issued 9 1/2% Senior Secured Notes Due 2005 in the original
principal amount of $280,000,000 (the "NOTES"). The Notes are offered pursuant
to the offering circular dated February 23, 1998 (the "Offering Circular").
B. Pursuant to Article 11 of the Indenture, the Grantors which
are Company Subsidiaries have guarantied the prompt payment and performance when
due of all obligations of Company under the Indenture and Notes.
C. Each Grantor owns and uses in its business, and will in the
future adopt and so use, various intangible assets, including trademarks,
service marks, designs, logos, indicia, tradenames, corporate names, company
names, business names, fictitious business names, trade styles and/or other
source and/or business identifiers and applications pertaining thereto
(collectively, the "TRADEMARKS").
D. Secured Party, for its benefit and the ratable benefit of
Holders, desires to become a secured creditor with respect to and, under the
circumstances described herein, an assignee of all of the existing and future
Trademarks, all registrations that have been or may hereafter be issued or
applied for thereon in the United States and any state thereof and in certain
foreign countries (the "REGISTRATIONS"), all common law and other rights in and
to the Trademarks in the United States and any state thereof and in certain
foreign countries (the "TRADEMARK RIGHTS"), all goodwill of each Grantor's
business symbolized by the Trademarks and associated therewith, including,
without limitation, the documents and things described in Section 1(b) (the
"ASSOCIATED GOODWILL"), and all proceeds of the Trademarks, the Registrations,
the Trademark Rights and the Associated Goodwill, and Grantors agree to create a
secured and protected interest in the Trademarks, the Registrations, the
Trademark Rights, the Associated Goodwill and all the proceeds thereof as
provided herein.
2
E. Each Grantor 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).
F. Pursuant to the Company Security Agreement and the Subsidiary
Security Agreement, Grantors have granted to Secured Party a lien on and
security interest in, among other assets, the machinery, equipment,
formulations, manufacturing procedures, quality control procedures and product
specifications relating to the products and services sold or delivered under or
in connection with the Trademarks and Patents such that, upon the occurrence and
during the continuation of an Event of Default, Secured Party would be able to
exercise its remedies consistent with the Company Security Agreement, Subsidiary
Security Agreement, this Agreement and applicable law to foreclose upon each
Grantor's business and use the Trademarks, the Registrations, the Trademark
Rights and the Patents in conjunction with the continued operation of such
business, maintaining substantially the same product and service specifications
and quality as maintained by such Grantor, and benefit from the Associated
Goodwill.
G. Upon the occurrence and during the continuation of an Event of
Default, and to permit Secured Party to operate each Grantor's business without
interruption and to use the Trademarks, Registrations, Trademark Rights, Patents
and Associated Goodwill in conjunction therewith, each Grantor is willing to
grant to Secured Party the conditional assignment of such Grantor's entire
right, title and interest in and to the Collateral (as hereinafter defined) and
to appoint Secured Party as such Grantor's attorney-in-law and attorney-in-fact
to execute documents and take actions to confirm said assignments.
H. Each Grantor is willing to grant to Secured Party (i) a
security interest in all of the 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 such Grantor's entire
right, title and interest in and to all such Collateral.
I. It is a condition precedent to the initial purchase of the
Notes that Grantors shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises, and in order to
induce the initial Holders to purchase the Notes, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party for Secured Party's
benefit and the ratable benefit of Holders as follows:
SECTION 1. GRANT OF SECURITY. Each Grantor hereby assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
such Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which such Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) each of the Trademarks and rights and interests in Trademarks
which are presently, or in the future may be, owned, held (whether pursuant to a
license or otherwise) or
2
3
used by such Grantor, in whole or in part (including, without limitation, the
Trademarks specifically identified in Schedule I annexed hereto, as the same may
be amended pursuant hereto from time to time), and including all Trademark
Rights with respect thereto and all federal, state and foreign Registrations
therefor heretofore or hereafter granted or applied for, the right (but not the
obligation) to register claims under any state or federal trademark law or
regulation or any trademark law or regulation of any foreign country and to
apply for, renew and extend the Trademarks, Registrations and Trademark Rights,
the right (but not the obligation) to xxx or bring opposition or cancellation
proceedings in the name of such Grantor or in the name of Secured Party or
otherwise 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; it being understood that the rights and interests included
herein shall include, without limitation, all rights and interests pursuant to
licensing or other contracts in favor of such Grantor pertaining to the
Trademarks, Registrations or Trademark Rights presently or in the future owned
or used by third parties but, in the case of third parties which are not
Affiliates of such Grantor, 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) the following documents and things in such Grantor's
possession, or subject to such Grantor's right to possession, related to (1) the
production, sale and delivery by such Grantor, or by any Affiliate, licensee or
subcontractor of such Grantor, of products or services sold or delivered by or
under the authority of such Grantor in connection with the Trademarks,
Registrations or Trademark Rights (which products and services shall, for
purposes of this Agreement, be deemed to include, without limitation, products
and services sold or delivered pursuant to merchandising operations utilizing
any Trademarks, Registrations or Trademark Rights); or (2) any retail or other
merchandising operations conducted under the name of or in connection with the
Trademarks, Registrations or Trademark Rights by such Grantor or any Affiliate,
licensee or subcontractor of such Grantor:
(i) all lists and ancillary documents that identify and
describe any of such Grantor's customers, or those of its Affiliates, licensees
or subcontractors, for products sold and services delivered under or in
connection with the Trademarks or Trademark Rights, including, without
limitation, any lists and ancillary documents that contain a customer's name and
address, the name and address of any of its warehouses, branches or other places
of business, the identity of the Person or Persons having the principal
responsibility on a customer's behalf for ordering products or services of the
kind supplied by such Grantor, or the credit, payment, discount, delivery or
other sale terms applicable to such customer, together with information setting
forth the total purchases, by product, part number, packaging, voltage or other
criteria, and the patterns of such purchases;
(ii) all product and service specification documents and
production and quality control manuals used in the manufacture or delivery of
products and services sold or delivered under or in connection with the
Trademarks or Trademark Rights;
(iii) all documents which reveal the name and address of
any source of
3
4
supply, and any terms of purchase and delivery, for any and all materials,
components and services used in the production of products and services sold or
delivered under or in connection with the Trademarks or Trademark Rights; and
(iv) all documents constituting or concerning the then
current or proposed advertising and promotion by such Grantor or its Affiliates,
licensees or subcontractors of products and services sold or delivered under or
in connection with the Trademarks or Trademark Rights including, without
limitation, all documents which reveal the media used or to be used and the cost
for all such advertising conducted within the described period or planned for
such products and services;
(c) 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 such Grantor 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
such Grantor in whole or in part (including, without limitation, the patents and
patent applications listed in Schedule II 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 xxx for past, present and future infringements in the name of
such Grantor or in the name of Secured Party or Holders), 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 such Grantor 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;
(d) all general intangibles relating to the Collateral;
(e) 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
(f) 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 Secured Party 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 limitation of, the granting of a security interest in the Collateral pursuant
to Section 1, each
4
5
Grantor hereby, effective upon the occurrence of an Event of Default and upon
written notice from Secured Party, grants, sells, conveys, transfers, assigns
and sets over to Secured Party, for its benefit and the ratable benefit of
Holders, all of such Grantor's right, title and interest in and to the
Collateral, including, without limitation, such Grantor's right, title and
interest in and to the Trademarks identified in Schedule I annexed hereto, the
goodwill of the business symbolized by said Trademarks, all Registrations
relating to said Trademarks, and the Patents identified in Schedule II.
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. Section 362(a)), of all obligations and
liabilities of every nature of each Grantor (whether as a borrower or guarantor)
now or hereafter existing under or arising out of or in connection with the
Indenture and the Notes 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 a Grantor would accrue on
such obligations, whether or not a claim is allowed against such Grantor for
such interest in the related bankruptcy proceeding), 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 Secured Party or any Holder as
a preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
each Grantor now or hereafter existing under this Agreement (all such
obligations of Grantors, together with the Underlying Debt, being the "SECURED
OBLIGATIONS").
SECTION 4. GRANTOR REMAINS LIABLE. Anything contained herein to
the contrary notwithstanding, (a) each Grantor 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 Secured
Party of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Except as set forth in
the Offering Circular, each Grantor represents and warrants as follows:
(a) Description of Collateral. A true and complete list of all
Trademarks, Registrations and Trademark Rights owned, held (whether pursuant to
a license or otherwise) or
5
6
used by such Grantor, in whole or in part, as of the date of this Agreement is
set forth in Schedule I annexed hereto, and a true and complete list of all
Patents owned, held (whether pursuant to a license or otherwise) or used by such
Grantor, in whole or in part, as of the date of this Agreement is set forth in
Schedule II annexed hereto.
(b) Validity and Enforceability of Collateral. Each of the
Trademarks, Registrations, Trademark Rights and Patents owned, held or used by
such Grantor is valid, subsisting and enforceable, such Grantor is not aware of
any pending or threatened claim by any third party that any of the Trademarks,
Registrations or Trademark Rights or Patents owned, held or used by such Grantor
is invalid or unenforceable or that the use of any of the Trademarks,
Registrations, Trademark Rights or Patents by such Grantor 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, such Grantor owns the
Collateral owned by such Grantor free and clear of any Lien. Except such as may
have been filed in favor of Secured Party relating to this Agreement, (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 such Grantor keeps its records
regarding the Collateral owned by such Grantor is, and has been for the four
month period preceding the date hereof, located at the address set forth in
Schedule III. Such Grantor has not in the past done, and does not now do,
business under any other name (including any trade-name or fictitious business
name) except as set forth in Schedule IV.
(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 such Grantor of the
security interest and conditional assignment granted hereby, (ii) the execution,
delivery or performance of this Agreement by such Grantor, or (iii) the
perfection of or the exercise by Secured Party of its rights and remedies
hereunder (except as may have been taken by or at the direction of such
Grantor).
(f) Perfection. This Agreement, together with the filing of a
financing statement describing the Collateral with the filing offices listed on
Schedule V and the recording of this Agreement with the United States Patent and
Trademark Office 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 duly made or taken.
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of such Grantor with respect
to the Collateral is accurate and complete in all respects.
6
7
SECTION 6. FURTHER ASSURANCES; NEW TRADEMARKS, REGISTRATIONS
TRADEMARK RIGHTS, PATENTS AND PATENT APPLICATIONS.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to perfect and protect
any security interest or conditional assignment granted or purported to be
granted hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) 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 Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (ii) use its best efforts to obtain any
necessary consents of third parties to the grant and perfection of a security
interest and assignment to Secured Party with respect to any Collateral owned by
such Grantor, (iii) at any reasonable time, upon not less than one Business Day
written notice from Secured Party, exhibit the Collateral owned by such Grantor
to and allow inspection of such Collateral by Secured Party, or persons
designated by Secured Party, and (iv) at Secured Party's request, appear in and
defend any action or proceeding that may affect such Grantor's title to or
Secured Party's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Secured Party 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 any Grantor. Each
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by a Grantor shall be sufficient as
a financing statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Each Grantor hereby authorizes Secured Party to modify this
Agreement without obtaining any Grantor's approval of or signature to such
modification by amending Schedule I or Schedule II annexed hereto, as
applicable, to include reference to any right, title or interest in any existing
Trademark, Registration, Trademark Right or Patent or any Trademark,
Registration, Trademark Right or Patent acquired or developed by a Grantor after
the execution hereof or to delete any reference to any right, title or interest
in any Trademark, Registration, Trademark Right or Patent in which a Grantor no
longer has or claims any right, title or interest.
(d) Each Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(e) If any Grantor shall hereafter obtain rights to any new
Trademarks, Registrations, Trademark Rights, 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 or any Patent, the provisions of this Agreement shall
automatically apply thereto. Such Grantor shall promptly notify Secured Party
7
8
in writing of any of the foregoing rights acquired by such Grantor after the
date hereof and of any Registrations issued or applications for Registration or
for Patents made after the date hereof. Concurrently with the filing of an
application for Registration for any Trademark or any application for any
Patent, such Grantor shall execute, deliver and record in all places where this
Agreement is recorded an appropriate Patent and Trademark Security Agreement,
substantially in the form hereof, with appropriate insertions, or an amendment
to this Agreement, in form and substance satisfactory to Secured Party, pursuant
to which such Grantor shall grant a security interest and conditional assignment
to the extent of its interest in such Patent or Registration, as applicable, as
provided herein to Secured Party unless so doing would, in the reasonable
judgment of such Grantor, after due inquiry, result in the grant of a
Registration in the name of Secured Party, in which event such Grantor shall
give written notice to Secured Party 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 Registration or Patent.
SECTION 7. CERTAIN COVENANTS OF GRANTOR. Each Grantor 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 Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in such Grantor's chief place of business or chief executive office or
the office where such Grantor 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 the validity thereof is being contested in good faith and
except where any failure to pay would not have a Material Adverse Effect;
provided that such Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against such Grantor or any of the Collateral as a result of the failure to make
such payment;
(e) not sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the
Indenture;
(f) except for the security interest and conditional assignment
created by this Agreement or permitted under the Indenture, 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 Trademarks,
8
9
Registrations, Trademark Rights and 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, such Grantor's rights
and interests in any property included within the definitions of any Trademarks,
Registrations, Trademark Rights, Associated Goodwill and 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 Trademarks, Trademark Rights and 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 of the Trademarks, Registrations, Trademark Rights and Patents;
(k) use consistent standards of high quality (which may be
consistent with such Grantor's past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection with
the Trademarks, Registrations, Trademark Rights and Patents, including, to the
extent applicable, in the operation and maintenance of its distribution channel
and other resell operations; and
(l) upon any officer of such Grantor obtaining knowledge thereof,
promptly notify Secured Party in writing of any event that may materially and
adversely affect the value of the Collateral or any portion thereof, the ability
of such Grantor or Secured Party to dispose of the Collateral or any portion
thereof, or the rights and remedies of Secured Party in relation thereto,
including, without limitation, the levy of any legal process against the
Collateral or any portion thereof.
SECTION 8. CERTAIN INSPECTION RIGHTS. Each Grantor hereby grants
to Secured Party and its employees, representatives and agents the right to
visit such Grantor'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 Trademarks, Registrations, Trademark Rights
or 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 such Grantor 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, each Grantor shall continue to collect,
at its own expense, all amounts due or to become due to such Grantor in respect
of the Collateral or any portion thereof. In connection with such collections,
such Grantor may take (and, at Secured Party's direction, shall take) such
action as such Grantor or Secured Party may deem necessary or advisable to
enforce collection of such amounts; provided, however, that Secured Party shall
9
10
have the right at any time, upon the occurrence and during the continuation of
an Event of Default and upon written notice to such Grantor 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 Secured Party, and, upon such notification and at the expense of such
Grantor, 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 such Grantor might have done. After receipt by such Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including checks and other instruments) received
by such Grantor in respect of amounts due to such Grantor in respect of the
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party 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) such Grantor 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. TRADEMARK AND PATENT APPLICATIONS AND LITIGATION.
(a) Each Grantor shall have the duty diligently, through counsel
reasonably acceptable to Secured Party, to prosecute any trademark or patent
application relating to any of the Trademarks and Patents owned, held or used by
such Grantor, specifically identified in Schedule I and Schedule II,
respectively, annexed hereto that is pending as of the date of this Agreement,
to make application on any existing or future registerable but unregistered
Trademarks or unpatented but patentable invention and to file and prosecute
opposition and cancellation proceedings, renew Registrations and do any and all
acts which are necessary or desirable to preserve and maintain all rights in all
Trademarks, Registrations, Trademark Rights and Patents. Any expenses incurred
in connection therewith shall be borne solely by such Grantor. Subject to the
foregoing, such Grantor shall not abandon any Trademark, Registration, Trademark
Right or any right to file a patent application or any pending patent
application or any Patent without the prior written consent of Secured Party.
(b) Except as provided in Section 10(d) and notwithstanding
Section 2, each Grantor 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,
dilution or other damage, or reexamination or reissue proceedings as are in its
reasonable business judgment necessary to protect the Collateral. Secured Party
shall provide, at such Grantor'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) Each Grantor shall promptly, following its becoming aware
thereof, notify Secured Party 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 such Grantor's ownership, right to use, or
10
11
interest in any Collateral. Such Grantor shall provide to Secured Party any
information with respect thereto requested by Secured Party.
(d) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Trademark,
Registration, Trademark Right, Associated Goodwill, Patent and any license
thereunder, in which event such Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and such Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Section 18 in connection
with the exercise of its rights under this Section 10. To the extent that
Secured Party shall elect not to bring suit to enforce any Trademark,
Registration, Trademark Right, Associated Goodwill, Patent or any license
thereunder as provided in this Section 10(d), such Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Trademarks, Registrations, Trademark
Rights, Associated Goodwill or 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 any Grantor is permitted to license the Collateral, Secured Party shall
enter into a non-disturbance agreement or other similar arrangement, at such
Grantor's request and expense, with such Grantor and any licensee of any
Collateral permitted hereunder in form and substance satisfactory to Secured
Party pursuant to which (a) Secured Party shall agree not to disturb or
interfere with such licensee's rights under its license agreement with such
Grantor 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
Secured Party 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 Secured Party 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 any Grantor and the
written consent of Secured Party, Secured Party shall promptly execute and
deliver to such Grantor such assignments as may be necessary to reassign to such
Grantor any such rights, title and interests as may have been assigned to
Secured Party as aforesaid, subject to any disposition thereof that may have
been made by Secured Party pursuant hereto; provided that, after giving effect
to such reassignment, Secured Party's security interest and conditional
assignment granted pursuant to Section 1 and Section 2, as well as all other
rights and remedies of Secured Party 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)
11
12
encumbering such rights, title and interest at the time of their assignment to
Secured Party and Permitted Liens.
SECTION 13. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Each
Grantor hereby, upon the occurrence and during the continuance of an Event of
Default, irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of such Grantor and in the name of such
Grantor, Secured Party or otherwise, from time to time in Secured Party's
discretion to take any action and to execute any instrument that Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation:
(a) to endorse such Grantor's name on all applications,
documents, papers and instruments necessary for Secured Party in the use or
maintenance of the Collateral;
(b) to ask for, demand, collect, xxx 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) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Indenture) 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 Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to Secured Party, due and payable immediately without demand;
and
(f) (i) to execute and deliver any of the assignments or
documents requested by Secured Party 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 Secured Party were the absolute owner thereof
for all purposes, and to do, at Secured Party's option and such Grantor's
expense, at any time or from time to time, all acts and things that Secured
Party deems necessary to protect, preserve or realize upon the Collateral and
Secured Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
SECTION 14. SECURED PARTY MAY PERFORM. If any Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by such Grantor under Section 18.
12
13
SECTION 15. STANDARD OF CARE. The powers conferred on Secured
Party 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, Secured Party 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. Secured Party 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 Secured Party accords
its own property.
SECTION 16. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party 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 (a) require
each Grantor to, and each Grantor hereby agrees that it will at its expense and
upon request of Secured Party forthwith, assemble all or part of the Collateral
as directed by Secured Party and make it available to Secured Party at a place
to be designated by Secured Party that is reasonably convenient to both parties,
(b) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (c) prior to the disposition of the
Collateral, store the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems appropriate, (d)
take possession of Grantors' 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 (c) and collecting any Secured
Obligation, (e) exercise any and all rights and remedies of a Grantor 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
such Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, such contracts, and (f) 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 Secured Party'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 Secured Party may deem
commercially reasonable. Secured Party or any Holder may be the purchaser of any
or all of the Collateral at any such sale and Secured Party, as agent for and
representative of Holders, 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 Secured Party 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
any Grantor, and each Grantor 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. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor 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.
13
14
Secured Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. Secured Party 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. Each Grantor hereby waives any claims
against Secured Party 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 Secured Party 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, Grantors shall be liable for
the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency.
(b) Upon written demand from Secured Party, each Grantor shall
execute and deliver to Secured Party an assignment or assignments of the
Trademarks, Registrations, Trademark Rights, the Associated Goodwill and 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 such Grantor 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
Secured Party as specified in Section 2. Each Grantor 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 Secured Party (or any Holder)
receives cash proceeds in respect of the sale of, or other realization upon, the
Collateral.
(c) Within five Business Days after written notice from Secured
Party, each Grantor shall make available to Secured Party, to the extent within
such Grantor's power and authority, such personnel in such Grantor's employ on
the date of such Event of Default as Secured Party may reasonably designate, by
name, title or job responsibility, to permit such Grantor to continue, directly
or indirectly, to produce, advertise and sell the products and services sold or
delivered by such Grantor under or in connection with the Trademarks,
Registrations and Trademark Rights, such persons to be available to perform
their prior functions on Secured Party's behalf and to be compensated by Secured
Party at such Grantor's expense on a per diem, pro-rata basis consistent with
the salary and benefit structure applicable to each as of the date of such Event
of Default.
SECTION 17. APPLICATION OF PROCEEDS. All proceeds received by
Secured Party in respect of the sale of, collection from, or other realization
upon all or any part of the Collateral shall be applied as provided in
subsection 4.10 of the Indenture.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify Secured Party and each
Holder 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 Secured Party's or such Holder's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
14
15
(b) Grantors shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by any Grantor to perform or observe any of the provisions
hereof.
(c) The provisions of this Section 18 shall survive any
termination of this Agreement.
SECTION 19. CONTINUING SECURITY INTEREST AND CONDITIONAL
ASSIGNMENT; TRANSFER OF NOTES. 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,
(b) be binding upon each Grantor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (d), but subject to the provisions of
subsection 2.06 of the Indenture, any Holder may assign or otherwise transfer
any Notes held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Secured Party
or Holders herein or otherwise. Upon the payment in full of all Secured
Obligations, the security interest and conditional assignment granted hereby
shall terminate and all rights to the Collateral shall revert to Grantors. Upon
any such termination Secured Party will, at Grantors' expense, execute and
deliver to Grantor such documents as Grantors shall reasonably request to
evidence such termination.
SECTION 20. SECURED PARTY AS TRUSTEE.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Holders. Secured Party 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,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Indenture; provided that Secured Party
shall exercise, or refrain from exercising, any remedies provided for in Section
16 in accordance with the instructions of the Holders of a majority in principal
amount of the then outstanding Notes.
(b) Secured Party shall at all times be the same Person that is
Trustee under the Indenture. Written notice of resignation by Trustee pursuant
to subsection 7.08 of the Indenture shall also constitute notice of resignation
as Secured Party under this Agreement; removal of Trustee pursuant to subsection
7.08 of the Indenture shall also constitute removal as Secured Party under this
Agreement; and appointment of a successor Trustee pursuant to subsection 7.08 of
the Indenture shall also constitute appointment of a successor Secured Party
under this Agreement. Upon the acceptance of any appointment as Trustee under
subsection 7.08 of the Indenture by a successor Trustee, that successor Trustee
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under this
Agreement, and the retiring or removed Secured Party under this
15
16
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party), together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Trustee's
resignation or removal hereunder as Secured Party, 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 Secured Party hereunder.
SECTION 21. ADDITIONAL GRANTORS. The initial Grantors hereunder
shall be such of the Subsidiaries of Company as are signatories hereto on the
date hereof. From time to time subsequent to the date hereof, additional
Subsidiaries of Company may become parties hereto, as additional Grantors (each
an "ADDITIONAL GRANTOR"), by executing, delivering and recording in all places
where this Agreement is recorded an appropriate Patent and Trademark Security
Agreement, substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement. Upon delivery of any such agreement or amendment to
Trustee, notice of which is hereby waived by Grantors, each such Additional
Grantor shall be a Grantor and shall be as fully a party hereto as if such
Additional Grantor were an original signatory hereto. Each Grantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Trustee not to cause any Subsidiary of Company to become an
Additional Grantor hereunder. This Agreement shall be fully effective as to any
Grantor that is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Grantor hereunder.
SECTION 22. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by Grantors. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 23. NOTICES. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or three Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. 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 Secured Party.
16
17
SECTION 24. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party 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 25. 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 26. 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 27. 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 Indenture, 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 28. 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.
17
18
IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ZILOG, INC.
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------
Name: XXXXXX X. XXXXXXX
--------------------------------------
Title: Vice President & Chief Financial
Officer
-------------------------------------
Address: 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ZILOG EUROPE
By: /s/ XXXXXXX X. XXXXXXX
----------------------------------------
Name: XXXXXXX X. XXXXXXX
--------------------------------------
Title: Secretary
-------------------------------------
Address: 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
STATE STREET BANK AND TRUST COMPANY, SECURED
PARTY (IN ITS CAPACITY AS TRUSTEE)
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
Address: Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
18
