PATENT SECURITY AGREEMENT
EXHIBIT 10.45
THIS PATENT SECURITY AGREEMENT (the “Agreement”), is made as of this 18th day of April, 2007
by and between Bear Lake Holdings, Inc., a Delaware corporation, having a mailing address of 0000
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000-0000 and Xxxxxxxx/Center Arms Company, Inc., a
New Hampshire corporation, having a mailing address of 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxxx 00000-0000 (collectively, the “Debtor”), and Citizens Bank of Massachusetts, having
its principal place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (the “Secured Party”).
RECITALS
WHEREAS, Secured Party, Debtor, and other parties have entered into a certain Loan and
Security Agreement (All Assets), of even or near date herewith, pursuant to which the Secured Party
agreed to make available to the borrowers thereunder certain revolving loan facilities up to an
aggregate principal amount of $15,000,000.00 (as such agreement may be amended, restated, modified
or supplemented and in effect from time to time, the “Loan Agreement”); and
WHEREAS, pursuant to the terms of the Loan Agreement, Debtor has granted to Secured Party a
first lien security interest in substantially all of the assets of Grantor, including all right,
title and interest of Grantor in, to and under all now owned and hereafter acquired patent rights
of the Debtor, and all products and proceeds thereof, to secure the payment of all amounts owing by
Debtor under the Loan Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for other good and
valuable consideration, receipt and sufficiency of which are hereby acknowledged, Grantor agrees as
follows:
1. DEFINITIONS; INTERPRETATION.
(a) Terms Defined in Loan Agreement. All capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.
(b) Certain Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:
(i) “Collateral”, in addition to the meaning ascribed to such term in the Loan
Agreement, has the meaning set forth in Section 2 hereof.
(ii) “PTO” means the United States Patent and Trademark Office.
(iii) “UCC” or “Uniform Commercial Code” means the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts; provided that to the extent that, if
by reason of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection or priority of the security interests hereunder in any collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the Commonwealth of
Massachusetts, the terms “UCC” and “Uniform Commercial Code”
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shall mean the Uniform Commercial Code as in effect, from time to time, in such other
jurisdictions for the purposes of the provisions hereof relating to such perfection or the
effect of perfection or non-perfection or priority.
| a. | Terms Defined in UCC. Where applicable in the context of this Agreement, and except as otherwise defined herein, terms used in this Agreement shall have the meanings ascribed to them in the UCC. | ||
| b. | Construction. In this Agreement, the following rules of construction and interpretation shall be applicable: (i) no reference to “proceeds” in this Agreement authorizes any sale, transfer, or other disposition of any Collateral by Debtor; (ii) “includes” and “including” are not limiting; (iii) “or” is not exclusive; and (iv) “all” includes “any” and “any” includes “all.” To the extent not inconsistent with the foregoing, the rules of construction and interpretation applicable to the Loan Agreement shall also be applicable to this Agreement and are incorporated herein by reference. |
2. SECURITY INTEREST.
(a) Grant of Security Interest. As security for the payment and performance of the
Obligations, the Debtor hereby assigns, transfers, and conveys to the Secured Party, and grants to
the Secured Party a first lien security interest in and mortgage to, all of Debtor’s right, title,
and interest in, to, and under the following property, in each case whether now or hereafter
existing or arising or in which the Debtor now or hereafter owns, acquires, or develops an interest
and wherever located (collectively, the “Collateral”):
(i) All patents, patent applications, domestic or foreign, all licenses relating to any
of the foregoing and all income and royalties with respect to any licenses (including such
patents and patent applications described in Schedule A), all rights to xxx for
past, present, or future infringement thereof, all rights arising therefrom and pertaining
thereto, and all reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof;
(ii) All general intangibles and all intangible intellectual or other similar property
of Debtor of any kind or nature, associated with or arising out of any of the aforementioned
properties and assents and not otherwise described above; and
(iii) All products and proceeds of any and all of the foregoing Collateral (including
license royalties, rights to payment, accounts, and proceeds of infringement suits) 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 the foregoing Collateral.
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(b) Continuing Security Interest. Debtor agrees that this Agreement shall create a
continuing security interest in the Collateral which shall remain in effect until termination in
accordance with Section 11 hereof.
3. SUPPLEMENT TO LOAN AGREEMENT. This Agreement has been granted in conjunction with the
security interests granted to the Secured Party under the Loan Agreement and/or other security
documents referred to therein. The rights and remedies of the Secured Party with respect to the
security interests granted herein are without prejudice to, and are in addition to those set forth
in the Loan Agreement or other security documents referred to therein, all terms and provisions of
which are incorporated herein by reference.
4. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to the Secured Party that:
(a) Schedule A provides a true and complete list of all patents, patent applications,
domestic or foreign, and all licenses relating to any of the foregoing now owned or being
prosecuted by the Debtor.
(b) The Debtor is the owner of the entire right, title and interest in and to the Collateral
and has the power to transfer the Collateral free and clear from any adverse lien, security
interest, or other encumbrance, except for the security interest created by the Loan Agreement and
this Agreement.
(c) In the event that the Debtor makes or acquires any improvements in or relating to the
inventions as covered by the patent rights described in Schedule A, such improvements shall
be deemed to be Collateral for the purposes of this Agreement and shall be made a part hereof under
the same terms and conditions.
(d) The Debtor shall not take any action or permit any action to be taken by others under its
control or fail to take any action which would affect the validity, grant and enforcement of the
Collateral to which this Agreement applies.
(e) The Debtor shall assume full and complete responsibility for the prosecution, grant,
enforcement or any other desirable actions in connection with the Collateral, and shall hold the
Secured Party harmless (except for the Secured Party’s gross negligence or willful misconduct) for
any and all costs, damages and expenses which may be incurred by the Secured Party in connection
with its security interest in the Collateral. In connection with such responsibility, the Debtor
may employ counsel of its own choice, subject to the reasonable approval of the Secured Party.
(f) The Debtor will render to the Secured Party, a yearly written report or such other
frequent reports that the Secured Party may reasonably request setting forth each patent
application covered by this Agreement and the status thereof, and shall, within one (1) month after
the filing of additional applications, advise the Secured Party of such additional applications,
and furnish suitable documents transferring a security interest to the Secured Party as heretofore
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provided.
5. FURTHER ACTS. On a continuing basis, the Debtor shall make, execute, acknowledge, and
deliver, and file and record in the proper filing and recording offices, all such instruments and
documents, and take all such action as may be necessary or advisable or may be reasonably requested
by the Secured Party to carry out the intent and purposes of this Agreement, or for assuring,
confirming, or protecting the grant or perfection of the security interest granted hereby, to
ensure the Debtor’s compliance with this Agreement or to enable the Secured Party to exercise and
enforce its rights and remedies hereunder with respect to the Collateral, including any documents
for filing with the PTO, an abstract thereof, or any other document describing the Secured Party’s
interest in the Collateral with the PTO, at the sole cost and expense of the Debtor. In addition,
the Debtor authorizes the Secured Party to file financing statements describing the Collateral in
any UCC filing office deemed appropriate by the Secured Party. In addition, the Debtor shall
preserve and maintain in all material respects all rights in the Collateral and, upon and after the
recurrence and during the continuance of an Event of Default, if requested by the Secured Party,
use commercially reasonable efforts to obtain any consents, waivers, or agreements necessary to
enable Secured Party to exercise its remedies with respect to the Collateral. The Debtor shall not
abandon any right to file a patent application that is material to the business of the Debtor nor
shall the Debtor abandon any such pending patent application or patent license without the prior
written consent of the Secured Party.
6. ASSIGNMENT UPON EVENT OF DEFAULT. The Debtor hereby assigns, transfers and conveys to the
Secured Party, effective upon the occurrence and during the continuance of any Event of Default,
the nonexclusive right and license to use all of the Collateral owned or used by the Debtor,
together with any goodwill associated therewith, all to the extent necessary to enable the Secured
Party to realize on the Collateral or on any other property of the Debtor constituting collateral
in which a lien or security interest may now or hereafter be granted to the Secured Party under any
other Loan Document (including, without limitation, completing production of, advertising for sale
and selling such collateral) and any successor or assign to enjoy the benefits of the Collateral or
any such other collateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of the Secured Party and its successors, assigns and transferees, whether
by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge, without requirement
that any monetary payment whatsoever be made to the Debtor by the Secured Party.
7. COVENANTS CONCERNING COLLATERAL. The Debtor further covenants with the Secured Party as
follows: (a) except for the security interest herein granted, the Debtor shall be the owner of or
have other rights in the Collateral free from any lien, security interest or other encumbrance, and
the Grantor shall defend the same against all claims and demands of all persons at any time
claiming the same or any interests therein adverse to the Secured Party, (b) the Debtor shall not
pledge, mortgage or create, or suffer to exist a security interest in the Collateral in favor of
any person other than the Secured Party, (c) the Debtor will not use the Collateral in violation of
any policy of insurance thereon, (d) the Debtor will permit the Secured Party, or its designee, to
inspect the Collateral and any records pertaining thereto, wherever located, at any reasonable time
during business hours upon prior notice, (e) the Debtor will pay promptly when
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due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in connection with this
Agreement other than any taxes contested in good faith and for which appropriate reserves have been
established by the Debtor, and (f) the Debtor will not sell or otherwise dispose, or offer to sell
or otherwise dispose, of the Collateral or any interest therein except as permitted by the Loan
Agreement.
8. POWER OF ATTORNEY.
(a) Appointment and Powers of Secured Party. To the fullest extent permitted by
applicable law, the Debtor hereby irrevocably constitutes and appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of the Debtor or in the Secured
Party’s own name, for the purpose of carrying out the terms of this Agreement, after the occurrence
of any Event of Default, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or desirable to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby gives said attorney the
power and right, on behalf of the Debtor, without notice to or assent by the Debtor, to do the
following:
(i) upon the occurrence and during the continuance of an Event of Default,
generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral in such manner as is consistent with the Uniform Commercial Code
and as fully and completely as though the Secured Party were the absolute owner thereof for
all purposes, and to do at the Debtor’s expense, at any time, or from time to time, all acts
and things which the Secured Party deems necessary to protect, preserve or realize upon the
Collateral and the Secured Party’s security interest therein, in order to effect the intent
of this Agreement, all as fully and effectively as the Debtor might do, including, without
limitation, (i) the filing and prosecuting of registration and transfer applications with
the appropriate federal or local agencies or authorities with respect to patentable
inventions and processes, and (ii) the execution, delivery and recording, in connection with
any sale or other disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral; and
(ii) to the extent that the Debtor’s authorization given in Section 5 is not
sufficient, to file such financing statements with respect hereto, or a photocopy of this
Agreement in substitution for a financing statement, as the Secured Party may deem
appropriate and to execute in the Debtor’s name such financing statements and amendments
thereto and continuation statements which may require the Debtor’s signature.
(b) Ratification by Debtor. To the extent permitted by law, the Debtor hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney is a power coupled with an interest and shall be irrevocable.
(c) No Duty on Secured Party. The powers conferred on the Secured Party
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hereunder are solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. The Secured Party shall be accountable only for the amounts
that it actually receives as a result of the exercise of such powers and neither it nor any of its
officers, directors, employees or agents shall be responsible to the Debtor for any act or failure
to act, except for the Secured Party’s own gross negligence or willful misconduct.
9. REMEDIES. If an Event of Default shall have occurred and be continuing, the Secured
Party shall have, in accordance with the provisions of the Loan Agreement, all rights, remedies,
powers or discretions under this Agreement, in any jurisdiction in which enforcement of the
obligations incurred under the Loan Documents is sought, in addition to all other rights and
remedies, the rights and remedies of a secured party under the Uniform Commercial Code or of any
jurisdiction in which Collateral is located, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Secured Party may, so far as the Debtor can
give authority therefor, enter upon any premises on which the Collateral or records thereof may be
situated and remove the same therefrom. The Secured Party may in its reasonable discretion require
the Debtor to assemble all or any part of the Collateral at such location or locations within the
jurisdiction(s) of the Debtor’s principal office(s) or at such other locations as the Secured Party
may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, the Secured Party shall give to the
Debtor at least ten business days’ prior written notice of the time and place of any public sale of
Collateral or of the time after which any private sale or any other intended disposition is to be
made. The Debtor hereby acknowledges that ten business days’ prior written notice of such sale or
sales shall be reasonable notice. In addition, the Debtor waives any and all rights that it may
have to a judicial hearing in advance of the enforcement of any of the Secured Party’s rights
hereunder, including, without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights with respect thereto.
10. AUTHORIZATION TO SUPPLEMENT. If the Debtor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent application or patent for any
reissue, division, or continuation, of any patent, the provisions of this Agreement shall
automatically apply thereto. The Debtor shall give prompt notice in writing to the Secured Party
with respect to any such new patent rights. Without limiting the foregoing and to further the
Debtor’s obligations under this Section 6, the Debtor authorizes the Secured Party to
modify this Agreement by amending Schedule A to include any such new patent rights.
Notwithstanding the foregoing, no failure to modify this Agreement or amend Schedule A
shall in any way affect, invalidate, or detract from the Secured Party’s continuing security
interest in all of the Collateral, whether or not listed in Schedule A.
11. BINDING EFFECT. This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the Debtor, the Secured Party, and their respective successors and assigns. The
Debtor may not assign, transfer, hypothecate, or otherwise convey its rights, benefits,
obligations, or duties hereunder except as specifically permitted by the Loan Agreement.
12. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the
law of the Commonwealth of Massachusetts, except as required by mandatory provisions of law or to
the extent the validity, perfection, or priority of the security
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interests hereunder, or the remedies hereunder, in respect of any Collateral are governed by
another jurisdiction.
13. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Loan Agreement, and all of the other
Loan Documents, together with any and all schedules, exhibits, and appendices thereto, contains the
entire agreement of the parties with respect to the subject matter hereof and supersedes 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, the Secured Party
unilaterally may re-execute this Agreement or modify, amend, or supplement Schedule A to
this Agreement as provided in Section 6 hereof. To the extent any provision of this
Agreement conflicts with the Loan Agreement, the provision giving the Secured Party greater rights
or remedies shall govern, it being understood that the purpose of this Agreement is to add to, and
not detract from, the rights granted to the Secured Party under the Loan Agreement.
14. 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.
15. TERMINATION. Upon payment of the obligations due under the Loan Agreement (except for any
indemnity obligations surviving the termination of the Loan Agreement), the security interests
created hereby shall terminate and the Secured Party (at the Debtor’s sole cost and expense) shall
execute and deliver to Debtor such documents and instruments reasonably requested by the Debtor as
shall be necessary to evidence termination of all such security interests given by the Debtor to
the Secured Party hereunder, including cancellation of this Agreement by written notice from the
Secured Party to the PTO.
16. NO INCONSISTENT REQUIREMENTS. The Debtor acknowledges that this Agreement and the other
documents, agreements, and instruments entered into or executed in connection herewith may contain
covenants and other terms and conditions variously stated regarding the same or similar matters,
and the Debtor agrees that all such covenants, terms, and conditions shall be performed and
satisfied in accordance with their respective terms.
17. SEVERABILITY. If one or more provision 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.
18. NOTICES. All notices and other communications hereunder shall made in accordance with the
provisions of the Loan Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| DEBTOR: | ||||
| BEAR LAKE HOLDINGS, INC. | ||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: Xxxx X. Xxxxx | ||||
| Title: Treasurer | ||||
| XXXXXXXX/CENTER ARMS COMPANY, INC. | ||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: Xxxx X. Xxxxx | ||||
| Title: Treasurer | ||||
| SECURED PARTY: | ||||
| CITIZENS BANK OF MASSACHUSETTS | ||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: Xxxxxxx X. Xxxxxx | ||||
| Title: Vice President | ||||
