Exhibit 10.5
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT (as amended, amended and restated or
otherwise modified from time to time, the "Security Agreement") made as of this
27th day of April, 2004, by EASY GARDENER PRODUCTS, LTD., a Texas limited
partnership ("Borrower") in favor of LASALLE BUSINESS CREDIT, LLC, as agent for
the Lenders party to the Loan Agreement (defined below), with an office at 000
Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 ("Agent"):
W I T N E S S E T H:
WHEREAS, Borrower, EYAS International, Inc., a Texas corporation, EG
Product Management, L.L.C., a Texas limited liability company, EG, L.L.C., a
Nevada limited liability company, Xxxxxxxxx Consumer Products Group, Inc., a
Delaware corporation, Xxxxxxxxx Consumer Products, Inc., a Delaware corporation,
NBU Group, LLC, a Texas limited liability company, Agent and Lenders are parties
to a certain Loan and Security Agreement of even date herewith (as amended,
amended and restated or otherwise modified from time to time, the "Loan
Agreement") and other related loan documents of even date herewith
(collectively, with the Loan Agreement, and as each may be amended or otherwise
modified from time to time, the "Financing Agreements"), which Financing
Agreements, among other things, provide (i) for Lenders to, from time to time,
extend credit to or for the account of Borrower, and (ii) for the grant by
Borrower to Agent, for the benefit of Agent and Lenders, of a security interest
in certain of Borrower's assets, including, without limitation, its patents and
patent applications;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Borrower agrees as follows:
1. Incorporation of Financing Agreements. The Financing Agreements
and the terms and provisions thereof are hereby incorporated herein in their
entirety by this reference thereto. All terms capitalized but not otherwise
defined herein shall have the same meanings herein as in the Loan Agreement.
2. Grant and Reaffirmation of Grant of Security Interests. To secure
the complete and timely payment and satisfaction of the Liabilities, Borrower
hereby grants to Agent, for the benefit of Agent and Lenders, and hereby
reaffirms its prior grant pursuant to the Financing Agreements of, a continuing
security interest in Borrower's entire right, title and interest in and to all
of its now owned or existing and hereafter acquired or arising patents and
patent applications, including, without limitation, the inventions and
improvements described and claimed therein, all patentable inventions and those
patents and patent applications listed on Schedule A attached hereto and made a
part hereof and all patents and the reissues, divisions, continuations,
renewals, extensions and continuations-in-part of any of the foregoing, and all
income, royalties, damages and payments now or hereafter due and/or payable
under or with respect to any of the foregoing, including, without limitation,
damages and payments for past, present and future infringements of any of the
foregoing and the right to xxx for past, present and future infringements of any
of the foregoing (all of the foregoing are sometimes hereinafter individually
and/or collectively referred to as the "Patents").
3. Warranties and Representations. Borrower warrants and represents
to Agent and Lenders that:
(i) no Patent has been adjudged invalid or unenforceable by a court
of competent jurisdiction nor has any such Patent been cancelled, in whole
or in part and each such Patent is presently subsisting;
(ii) Except as provided in the Loan Agreement, Borrower is the sole
and exclusive owner of the entire and unencumbered right, title and
interest in and to each Patent, free and clear of any liens, charges and
encumbrances, including without limitation, shop rights and covenants by
Borrower not to xxx third persons;
(iii) Borrower has no notice of any suits or actions commenced or
threatened with reference to any Patent; and
(iv) Borrower has the unqualified right to execute and deliver this
Security Agreement and perform its terms.
4. Restrictions on Future Agreements. Borrower agrees that until
Borrower's Liabilities shall have been satisfied in full and the Financing
Agreements shall have been terminated, Borrower shall not, without the prior
written consent of Agent, sell or assign its interest in any Patent or enter
into any other agreement with respect to any Patent which would affect the
validity or enforcement of the rights transferred to Agent under this Security
Agreement.
5. New Patents. Borrower represents and warrants that, based on a
diligent investigation by Borrower, the Patents listed on Schedule A constitute
all of the federally registered Patents and Patent applications now owned by
Borrower. If, before Borrower's Liabilities shall have been satisfied in full or
before the Financing Agreements have been terminated, Borrower shall (i) become
aware of any existing Patents of which Borrower has not previously informed
Agent, (ii) obtain rights to any new patentable inventions or Patents, or (iii)
become entitled to the benefit of any Patents, which benefit is not in existence
on the date hereof, the provisions of this Security Agreement above shall
automatically apply thereto and Borrower shall give to Agent prompt written
notice thereof. Borrower hereby authorizes Agent to modify this Security
Agreement by amending Schedule A to include any such Patents.
6. Royalties; Terms. The term of this Security Agreement shall
extend until the earlier of (i) the expiration of each of the Patents, and (ii)
the payment in full of Borrower's Liabilities and the termination of the
Financing Agreements. Borrower agrees
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that upon the occurrence of an Event of Default, the use by Agent of all Patents
shall be without any liability for royalties or other related charges from Agent
to Borrower.
7. Release of Security Interest. This Security Agreement is made for
collateral purposes only. Upon payment in full of Borrower's Liabilities and
termination of the Financing Agreements, Agent shall take such actions as may be
necessary or proper to terminate the security interests created hereby and
pursuant to the Financing Agreements
8. Expenses. All expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by
Borrower. All fees, costs and expenses, of whatever kind or nature, including
reasonable attorneys' fees and legal expenses, incurred by Agent in connection
with the filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, reasonable
counsel fees, maintenance fees, encumbrances or otherwise in protecting,
maintaining or preserving the Patents or in defending or prosecuting any actions
or proceedings arising out of or related to the Patents shall be borne by and
paid by Borrower and until paid shall constitute Liabilities.
9. Duties of Borrower. Borrower shall have the duty (i) to file and
prosecute diligently any patent applications pending as of the date hereof or
hereafter until Borrower's Liabilities shall have been paid in full and the
Financing Agreements have been terminated, (ii) to make application on
unpatented but patentable inventions, as commercially reasonable, (iii) to
preserve and maintain all rights in the Patents, as commercially reasonable and
(iv) to ensure that the Patents are and remain enforceable, as commercially
reasonable. Any expenses incurred in connection with Borrower's obligations
under this Section 9 shall be borne by Borrower.
10. Agent's Right to Xxx. After an Event of Default, Agent shall
have the right, but shall in no way be obligated, to bring suit in its own name
to enforce the Patents and, if Agent shall commence any such suit, Borrower
shall, at the request of Agent, do any and all lawful acts and execute any and
all proper documents required by Agent in aid of such enforcement and Borrower
shall promptly, upon demand, reimburse and indemnify Agent for all costs and
expenses incurred by Agent in the exercise of its rights under this Section 10.
11. Waivers. No course of dealing between Borrower, Agent and
Lenders, nor any failure to exercise, nor any delay in exercising, on the part
of Agent, any right, power or privilege hereunder or under the Financing
Agreements shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
12. Severability. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause
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or provision in any other jurisdiction, or any other clause or provision of this
Security Agreement in any jurisdiction.
13. Modification. This Security Agreement cannot be altered, amended
or modified in any way, except as specifically provided in Section 5 hereof or
by a writing signed by the parties hereto.
14. Cumulative Remedies; Power of Attorney; Effect on Financing
Agreements. All of Agent's rights and remedies with respect to the Patents,
whether established hereby or by the Financing Agreements, or by any other
agreements or by law shall be cumulative and may be exercised singularly or
concurrently. Borrower hereby authorizes Agent upon the occurrence of an Event
of Default, to make, constitute and appoint any officer or agent of Agent as
Agent may select, in its sole discretion, as Borrower's true and lawful
attorney-in-fact, with power to (i) endorse Borrower's name on all applications,
documents, papers and instruments necessary or desirable for Agent in the use of
the Patents or (ii) take any other actions with respect to the Patents as Agent
deems to be in the best interest of Agent, or (iii) grant or issue any exclusive
or non-exclusive license under the Patents to anyone, or (iv) assign, pledge,
convey or otherwise transfer title in or dispose of the Patents to anyone.
Borrower hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney, being coupled with an interest,
shall be irrevocable until Borrower's Liabilities shall have been paid in full
and the Financing Agreements have been terminated. Borrower acknowledges and
agrees that this Security Agreement is not intended to limit or restrict in any
way the rights and remedies of Agent under the Financing Agreements but rather
is intended to facilitate the exercise of such rights and remedies. Agent shall
have, in addition to all other rights and remedies given it by the terms of this
Security Agreement and the Financing Agreements, all rights and remedies allowed
by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in Illinois.
15. Binding Effect; Benefits. This Security Agreement shall be
binding upon Borrower and its respective successors and assigns, and shall inure
to the benefit of Agent, its successors, nominees and assigns.
16. Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois and applicable
federal law.
17. Headings. Paragraph headings used herein are for convenience
only and shall not modify the provisions which they precede.
18. Further Assurances. Borrower agrees to execute and deliver such
further agreements, instruments and documents, and to perform such further acts,
as Agent shall reasonably request from time to time in order to carry out the
purpose of this Security Agreement and agreements set forth herein.
19. Survival of Representations. All representations and warranties
of Borrower contained in this Security Agreement shall survive the execution and
delivery of
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this Security Agreement and shall be remade on the date of each borrowing under
the Financing Agreements.
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IN WITNESS WHEREOF, Borrower has duly executed this Security
Agreement as of the date first written above.
EASY GARDENER PRODUCTS, LTD.
By Xxxxxxx X. Xxxx
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Title CFO
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Agreed and Accepted
As of the Date First Written Above
LASALLE BUSINESS CREDIT, LLC, as Agent
By Xxxxxxx Staple
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Title First Vice President
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SCHEDULE A
PATENTS
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Patent Description U.S. Patent No. Issue Date
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Garden Watering Tool 5782412 7/21/98
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Root Feeder 5322085 6/21/98
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Nozzle Structure for a Root 4705218 11/10/87
Feeding Device
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Fertilizer Product and Process for 4474595 10/2/84
Making and Using It
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Fertilizer Briquette Adapted to be 4348218 9/7/82
Hammered into the Ground
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Method of Making a 4318218 3/9/82
Dynamoelectric Machine Stator
Assembly
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Fertilizer 3892552 7/1/75
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Root Feeder Head Assembly D 357971 5/2/95
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Lawn edging strip 5456045 10/10/95
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Stackable landscape edging and 6622426 9/23/03
methods of manufacturing and
using same
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Pourable granular paper mulch 6021598 2/8/00
composition
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