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EXHIBIT 10.17
ASSIGNMENT OF SECURITY INTEREST IN PATENTS
THIS ASSIGNMENT of a security interest (the "Agreement") is made this
16th day of November, 1998, by VSI ENTERPRISES, INC., a Delaware corporation,
having its principal place of business at 0000 Xxxxxx Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxx 00000 (hereinafter referred to as "Assignor"), to THOMSON KERNAGHAN &
CO., LTD., having its principal place of business at 00 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx, Xxxxxx MR 1C9 (hereinafter referred to as "Assignee"):
WITNESSETH:
WHEREAS, Assignor is the maker of a promissory note, dated the date
hereof, in the principal amount of $900,000.00, payable to the order of
Assignee (the "Note"), and
WHEREAS, Assignor is the sole and exclusive owner of United States
Letters Patent Nos. 5,568,183; 5,515,099; 5,526,037; 5,598,209; 5,583,209;
5,583,565; 5,528,289; and 5,589,978 (collectively, the "Patents"); and
WHEREAS, as security for the payment of the Note, Assignor desires to assign a
security interest in its right, title and interest in and to said Patents and
the inventions disclosed thereby to Assignee, and
WHEREAS, Assignee desires to acquire a security interest in Assignor's
right, title and interest in and to said Patents and the inventions disclosed
thereby;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Assignor hereby assigns and grants to
Assignee, its successors and assigns, a security interest in all right, title
and interest of Assignor in and to the Patents and the inventions disclosed
thereby as security for the Note, such right, title and interest to be held
until all principal, interest and liquidated damages due under the Note are
paid in full or to the full end of the term for which said Patents or any
reissues, renewals or extensions thereof have been or may be granted, whichever
event shall first occur.
Assignor covenants and agrees that it will at any time on request by
Assignee execute and deliver any and all papers that may be reasonably
necessary to perfect the security interest of Assignee in and to said Patents
and the inventions disclosed thereby. Assignee agrees that upon payment in full
of all principal, interest and liquidated damages due under this Note, Assignee
will promptly execute and deliver to Assignor any and all documents,
instruments and other papers that may be necessary, in the reasonable opinion
of Assignor, to release and terminate the security interest granted herein and
all right, title and interest of Assignee in, to and under the Patents.
Assignor and Assignee acknowledge their mutual intent that all security
interests contemplated herein are given as a contemporaneous exchange for new
value to Assignor.
No Transfer of Ownership Prior to Default. Assignor does hereby make,
constitute and appoint Assignee and its designees, as Assignor's true and
lawful attorney in fact, with full power of substitution, to transfer the
Patents to the Assignee or such other name as designated by Assignee. Such
power may be exercised in the sole discretion of Assignee, but only upon a
default as set forth in the "Default" section of this Agreement.
Assignor agrees to give full cooperation and to use its best efforts
to take all such actions and to execute all such documents as may be necessary
or appropriate to effect any sale, transfer or other disposition of the
Patents, upon a default as set forth in the "Default" section of this
Agreement.
Assignor agrees to pay any and all expenses and out of pocket costs,
including, reasonable attorneys fees and costs, incurred by Assignee in
connection with enforcement of the terms of this Agreement upon a default by
Assignor and the payment thereof shall be secured by the Patents.
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Representations and Warranties Concerning the Patents. Assignor represents
and warrants that:
a. Assignor is the sole owner of the Patents.
b. The Patents are not subject to any security interest, lien, prior
assignment, or other encumbrance of any nature whatsoever except for
current taxes and assessments, if any, which are not delinquent and
the security interest created by this Agreement.
Covenants Concerning the Patents. Assignor covenants that:
a. Assignor will keep the Patents free and clear of any and all security
interests, lien, assignments or other encumbrances, except those for
current taxes and assessments, if any, which are not delinquent and
those arising from this Agreement.
b. Assignor agrees to give good faith, diligent cooperation to Assignee
and to perform such other acts reasonably requested by Assignee for
perfection and enforcement of said security interests.
DEFAULT. TIME IS OF THE ESSENCE OF THIS AGREEMENT. THE OCCURRENCE
OF ANY OF THE FOLLOWING EVENTS SHALL CONSTITUTE A DEFAULT UNDER THIS
AGREEMENT:
a. Any representation or warranty made by or on behalf of Assignor in
this Agreement is materially false or materially misleading when made;
b. Assignor fails in the payment or performance of any obligation,
covenant, agreement or liability created by this Agreement; or
c. Any Default under the Note referred to in this Agreement.
No course of dealing or any delay or failure to assert any default shall
constitute a waiver of that default or of any prior or subsequent default.
Remedies. Upon the occurrence of any default under this Agreement, Assignee
shall have the following rights and remedies, in addition to all other rights
and remedies existing at law, in equity, or by statute or provided in the Note;
a. Assignee shall have the rights and remedies available under the
Uniform Commercial Code;
b. If Assignor fails to cure any default within fifteen (15) days after
Assignor's receipt of written notice of default from Assignee,
Assignee may sell, assign, deliver or otherwise dispose of any or all
of the Patents for cash and/or credit and upon such terms and at such
place or places, and at such time or times, and to such person, firms,
companies or corporation as Assignee reasonably believes expedient,
without any advertisement whatsoever, and, after deducting the
reasonable costs and out-of-pocket expenses incurred by Assignee,
including, without limitation, (1) reasonable attorney fees and legal
expenses, (2) advertising of sale of the Patents, (3) sale
commissions, (4) sales tax, and (5) costs for preservation and
protection of the Patents, apply the remainder to pay, or to hold as a
reserve against, the obligations secured by this Agreement.
Voidable Transfers.
If the incurring of any debt by Assignor or the payment of any money or
transfer of property to Assignee by or on behalf of Assignor should for any
reason subsequently be determined to be "voidable" or "avoidable" in whole or
in part within the meaning of any state or federal law (collectively "voidable
transfer"), including, without limitation, fraudulent conveyances or
preferential transfers under the United States Bankruptcy Code or any other
federal or state law, and Assignee is required to repay or restore any voidable
transfers or the amount of any portion thereof, or upon the advise of
Assignee's counsel is advised to do so, then, as to any such amount or property
repaid or restored, including all reasonable
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costs, expenses, and attorneys fees of Assignee related thereto, the liability
of Assignor, and each of them, and this Agreement, shall automatically be
revived, reinstated and restored and shall exist as though the voidable
transfers had never been made.
Notice.
Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered or sent by
registered mail, return receipt requested, addressed: (i) if to the Assignor at
its executive offices and (ii) if to the Assignee, c/o Xxxxxxx X. Xxxxxxx, at
00 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0.
Miscellaneous.
The rights and remedies herein conferred are cumulative and not exclusive of
any other rights and remedies and shall be in addition to every other right,
power and remedy herein specifically granted or hereafter existing at law, in
equity, or by statute which Assignee might otherwise have, and any and all such
rights and remedies may be exercised from time to time and as often and in such
order as Assignee may deem expedient. No delay or omission in the exercise of
any such right, power or remedy or in the pursuance of any remedy shall impair
any such right, power or remedy or be construed to be a waiver thereof or of
any default or to be an acquiescence therein.
In the event of breach or default under the terms of this Agreement by
Assignor, Assignor agrees to pay all reasonable attorneys fees and legal
expenses incurred by or on behalf of Assignee in enforcement of this Agreement,
in exercising any remedy arising from such breach or default, or otherwise
related to such breach or default. Assignor additionally agrees to pay all
reasonable costs and out-of-pocket expenses, including, without limitation,
reasonable attorneys fees and legal expenses incurred by Assignee in obtaining
possession of Patents, and other otherwise incurred in foreclosing upon the
Patents.
Regardless of any breach or default, Assignor agrees to pay all
expenses, including reasonable attorneys fees and legal expenses, incurred by
Assignee in any bankruptcy proceeding of any type involving Assignor, the
Patents, or this Agreement, including, without limitation, expenses incurred in
modifying or lifting the automatic stay, determining adequate protection, use
of cash Patents, or relating to any plan of reorganization.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware.
Any provision of this Agreement which is prohibited and unenforceable
in any jurisdiction shall, as to such jurisdiction only, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
All references in this Agreement to the singular shall be deemed to
include the plural if the context so requires and vice versa. Reference in the
collective or conjunctive shall also include the disjunctive unless the context
otherwise clearly requires a different interpretation.
All agreements, representations, warranties and covenants made by
Assignor shall survive the execution and delivery of this Agreement, the filing
and consummation of any bankruptcy proceedings, and shall continue in effect so
long as any obligation to Assignee contemplated by this Agreement is
outstanding and unpaid, notwithstanding any termination of this Agreement. All
agreements, representations, warranties and covenants in this Agreement shall
bind the party making the same and its heirs and successors, and shall be to
the benefit of and be enforceable by each party for whom made their respective
heirs, successors and assigns.
This Agreement constitutes the entire agreement between Assignor and
Assignee as to the subject matter hereof and may not be altered or amended
except by written agreement signed by Assignor and Assignee. All other prior
and contemporaneous understandings between the parties hereto as to the subject
matter hereof are rescinded.
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IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement
to be executed by their respective duly authorized corporate officers as of the
date and year first above written.
ASSIGNOR:
VSI ENTERPRISES, INC.
By: /s/ Xxxxx X. North
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Name: Xxxxx X. North
Title: President & CEO
ASSIGNEE:
THOMSON KERNAGHAN & CO., INC.
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
Title: Vice President & Director
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