EXHIBIT 10.17
PATENT COLLATERAL SECURITY AGREEMENT
THIS PATENT COLLATERAL SECURITY AGREEMENT is made as of the ____ day of
May, 1999, by and between QF ACQUISITION CORP. (d/b/a Quality Foods), a Delaware
corporation having its chief executive office at 0000 Xxxxx Xxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 ("Company") and FLEET CAPITAL CORPORATION, having a mailing
address at 000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000 ("Lender").
BACKGROUND
Company, Custom Food Products, Inc. and CFP Holdings, Inc. (each a
"Borrower" and collectively, the "Borrowers") and Lender have entered into a
Loan and Security Agreement of even date herewith (as amended, modified,
restated and supplemented from time to time, the "Loan Agreement") providing for
loans and advances by Lender to Borrowers. In order to induce Lender to execute
and deliver the Loan Agreement, Company agreed to execute and deliver to Lender
this Patent Collateral Security Agreement (as amended, modified, restated and
supplemented from time to time, the "Security Agreement"). This Security
Agreement, covering Patents (as hereinafter defined), is being executed
contemporaneously with the Loan Agreement under which Lender is granted a lien
on and security interest in the Patents, whereby Lender shall have the right to
foreclose on the Patents in the event of the occurrence and continuation of a
default hereunder or an Event of Default under the Loan Agreement.
NOW, THEREFORE, in consideration of the premises, Company and
Lender hereby agree as follows:
1. Defined Terms. As used in this Security Agreement, terms defined in
the Loan Agreement shall have their defined meanings when used herein and the
following terms shall have the following meanings, unless the context otherwise
requires:
"Code" shall mean the Uniform Commercial Code as the same may
from time to time be in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section
2 of this Security Agreement.
"Licenses" shall mean the patent license agreements of Company
designated on Schedule I hereto, as any of the same may from time to time be
amended or supplemented.
"Patents" shall mean all right, title and interest in and to
the U.S., Canadian and foreign patent applications and U.S., Canadian and
foreign patents shown in the attached Schedule A and those patents which are
hereafter obtained or acquired by Company and all registrations, applications
and recordings thereof, including, without limitation, all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, and all
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, Canada and any other country, all whether now owned or hereafter
acquired by Company.
"Proceeds" shall have the meaning assigned to it under Section
9-306 of the Code, and in any event, shall include, but not be limited to, (i)
any and all proceeds of any
insurance, indemnity, warranty or guarantee payable to Company from time to time
with respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to Company from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority), and (iii)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Security Agreement" shall mean this Security Agreement, as
the same may from time to time be amended or supplemented.
2. Grant of Security Interest. As collateral security for the prompt
payment of the Obligations (except PMSI Loans which are secured by the Equipment
financed thereby), Company hereby grants and conveys to Lender a security
interest in and to (a) the entire right, title and interest of Company in and to
the Patents, including the registrations and applications appurtenant thereto,
listed in Schedule A hereto (as the same may be amended pursuant hereto from
time to time), and in and to any and all patents, and registrations and
applications appurtenant thereto, hereafter acquired or filed by Company,
including without limitation all renewals thereof, all proceeds of infringement
suits, the rights to xxx for past, present and future infringements and all
rights corresponding thereto in the United States, Canada and any other country,
and all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, and (b) all of Company's right, title and
interest in, to and under the following:
(i) all Licenses;
(ii) all Accounts, contract rights and General
Intangibles arising under or relating to each and every License (including,
without limitation, (A) all moneys due and to become due under any License, (B)
any damages arising out of or for breach or default in respect of any such
License, (C) all other amounts from time to time paid or payable under or in
connection with any such License, and (D) the right of Company to terminate any
such License or to perform and to exercise all remedies thereunder); and,
(iii) to the extent not otherwise included, all
Proceeds and products of any or all of the foregoing. All of the property
referred to in this paragraph 2 is hereafter collectively called the
"Collateral".
provided, however, that the foregoing grant of a security interest and Lien
shall not include any rights or interests in the Property listed on Exhibit 4.1
of the Loan Agreement and any other comparable General Intangibles, Licenses or
contract rights or any Property of Company that is the subject of a Permitted
Purchase Money Lien securing Permitted Purchase Money Indebtedness if and to the
extent that (a) the terms of the document or documents creating or evidencing
such General Intangibles or contract rights or Permitted Purchase Money Lien or
Permitted Purchase Money Indebtedness as the case may be, prohibit such grant or
encumbrance thereof and (b) the term prohibiting such assignment or encumbrance
is effective as a matter of law and (c) the term prohibiting such assignment or
encumbrance has not been waived or the consent of the necessary party to the
grant of a security interest or Lien to Lender has not been obtained; provided
further, however, that (i) if any such prohibition is subsequently lifted,
terminated or is otherwise no longer effective as a matter of law or is waived
or the consent of the necessary party is obtained, the security interest granted
hereby shall automatically include such rights or interests in General
Intangibles or contract rights formerly subject to such prohibition without any
further action on the part of Company or Lender and (ii) the exclusion in the
foregoing proviso shall not limit, impair or otherwise affect Lender's security
interest in any rights or interests of Company in or to monies due or to become
due under any such General Intangibles or contract rights (including, without
limitation, any Accounts).
3. Representations and Warranties. Company covenants and warrants that
as of the date of this Security Agreement:
(a) Company is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Patents, free and
clear of any liens, charges and encumbrances, (including without limitation
pledges, assignments, licenses, registered user agreements and covenants by
Company not to xxx third persons), except (i) for the items disclosed in
Schedule I attached hereto, (ii) for any Permitted Liens and (iii) to an extent
that does not constitute or result in a Material Adverse Effect.
(b) Company has used, and will continue to use for the
duration of this Security Agreement, proper statutory notice, where appropriate,
in connection with its use of the Patents, except where the failure to use or
continue to use such notice would not have a Material Adverse Effect; and
(c) Company has used, and will continue to use for the
duration of this Security Agreement, consistent standards of quality in its
manufacture of products sold under the Patents, except where the failure to use
or continue to use such standards would not have a Material Adverse Effect.
4. New Patents. (a) If, before the Obligations shall have been paid in
full, Company shall obtain rights to any new Patents or become entitled to the
benefit of any patent application or patent for any reissue, division,
continuation, renewal, extension, or continuation-in-part of any Patent or any
improvement on any Patent, the provisions of paragraph 2 shall automatically
apply thereto and Company shall give Lender prompt written notice thereof. (b)
Company grants Lender a power-of-attorney, irrevocable so long as the Loan
Agreement is in existence, to modify this Security Agreement by amending
Schedule A to include any future Patents, including Patent registrations or
applications appurtenant thereto covered by this Security Agreement.
5. Covenants. Company covenants and agrees with Lender that from and
after the date of this Security Agreement and until the Obligations are fully
satisfied:
(a) Maintenance of Patents. Company will not do any act, or
omit to do any act, whereby the Patents or any registration or application
appurtenant thereto, may become abandoned, invalidated, unenforceable, avoided,
avoidable, or will otherwise diminish in value, except where the failure to act
or omit to do any act would not have a Material Adverse Effect, and shall notify
Lender immediately if it knows of any reason or has reason to know of any ground
under which this result may occur. Company shall take appropriate action at its
expense to halt the infringement of the Patents and shall properly exercise its
duty to control the nature and quality of the goods offered by any licensees in
connection with the Licenses set forth in Schedule I except when the failure to
do so would not have a Material Adverse Effect.
(b) Indemnification. (A) Company assumes all responsibility
and liability arising from the use of the Patents, and Company hereby
indemnifies and holds Lender harmless from and against any claim, suit, loss,
damage or expense (including reasonable attorneys' fees) arising out of
Company's operations of its business from the use of the Patents. (B) In any
suit, proceeding or action brought by Lender under any License for any sum owing
thereunder, or to enforce any provisions of such License, Company will indemnify
and keep Lender harmless from and against all expense, loss or damage suffered
by reason of any defense, set off, counterclaim,
recoupment or reduction or liability whatsoever of the obligee thereunder,
arising out of a breach of Company of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to or in
favor of such obligee or its successors from Company, and all such obligations
of Company shall be and remain enforceable against and only against Company and
shall not be enforceable against Lender.
6. Lender's Appointment as Attorney-in-Fact.
(a) Company hereby irrevocably constitutes and appoints Lender
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 Company and in the name of Company or in its own name, from
time to time in Lender's discretion, for the purposes of carrying out the terms
of this Security Agreement, upon the occurrence and continuance of an Event of
Default to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement and, without limiting the generality of the
foregoing, hereby gives Lender the power and right, on behalf of Company, to do
the following:
(i) Upon the occurrence and continuance of an Event
of Default, to ask, demand, collect, receive and give acquittances and receipts
for any and all moneys due and to become due under any License and, in the name
of Company or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any License and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by Lender for the purpose of collecting any and all such moneys due
under any License whenever payable; and
(ii) Upon the occurrence and continuance of an Event
of Default, (A) to direct any party liable for any payment under any License to
make payment of any and all moneys due and to become due thereunder directly to
Lender or as Lender shall direct; (B) to receive payment of and receipt for any
and all moneys, claims and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (C) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (D) to defend any suit, action or
proceeding brought against Company with respect to any Collateral; (E) to
settle, compromise, or adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases as Lender may
deem appropriate; and (F) 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 Lender were the absolute owner thereof for all
purposes, and to do, at Lender's option all acts and things which Lender deems
necessary to protect, preserve or realize upon the Collateral and Lender's
security interest therein, in order to effect the intent of this Security
Agreement, all as fully and effectively as Company might do.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Notwithstanding the foregoing, Company shall execute any additional
documents which Lender may require in order to confirm this power of attorney,
or which Lender may deem necessary to enforce any of its rights contained in
this Security Agreement.
(b) The powers conferred on Lender hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Lender shall be accountable only for 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
Company for any act or failure to act, except for its own recklessness or
willful misconduct.
(c) Company also authorizes Lender to execute, in connection
with the sale provided for in paragraph 8(b) of this Security Agreement, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
7. Execution of Power of Attorney. Concurrently with the execution and
delivery hereof, Company is executing and delivering to Lender, in the form of
Schedule II hereto, five (5) originals of a Power of Attorney for the
implementation of the assignment, sale or other disposal of the Patents pursuant
to this Agreement or the Loan Agreement. Notwithstanding the provisions of such
Power of Attorney, Lender shall not exercise its rights thereunder except upon
the occurrence and during the continuation of an Event of Default.
8. Remedies, Rights Upon Event of Default.
(a) If an Event of Default shall occur and be continuing, all
payments received by Company under or in connection with any of the Collateral
shall be held and applied as provided in the Loan Agreement.
(b) If any Event of Default shall occur and be continuing,
Lender may exercise in addition to all other rights and remedies granted to it
in this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Uniform Commercial Code. Company shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled.
9. Termination. At such time as Borrowers shall completely pay in full
all of the Obligations and the Loan Agreement is terminated, this Security
Agreement shall terminate and Lender shall execute and deliver to Company all
such releases, deeds, assignments and other instruments as may be necessary or
proper to re-vest in Company full title to the Patents, subject to any
disposition thereof which may have been made by Lender pursuant hereto.
10. Notices. Any notice to Lender or Company shall be deemed to have
been duly given when delivered in the manner and to the addresses set forth in
the Loan Agreement.
11. No Waiver. No course of dealing between Company and Lender, nor any
failure to exercise, nor any delay in exercising, on the part of Lender, any
right, power or privilege hereunder or under the Loan Agreement 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. Cumulative Remedies. All of Lender's rights and remedies with
respect to the Collateral, whether established hereby or by the Loan Agreement,
or by any other agreements or by law, shall be cumulative and may be exercised
singularly or concurrently.
13. 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 or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
14. No Modification Except in Writing. This Security Agreement is
subject to modification only by a writing signed by the parties, except as
provided in paragraphs 4 and 6.
15. Successors and Assigns. The benefits and burdens of this Security
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. This Security Agreement shall
not be assigned by either party except in connection with a permitted assignment
of the Loan Agreement.
16. Governing Law. The validity and interpretation of this Security
Agreement and the rights and obligations of the parties shall be governed by the
laws of the State of New York (without giving effect to principles of conflicts
of laws).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
QF ACQUISITION CORP.
(d/b/a Quality Foods)
By:_______________________________
Name: Xxxx Ek
Title: Vice President and CFO
FLEET CAPITAL CORPORATION
By:_______________________________
Name:
Title:
SCHEDULE A
Schedule A to a Patent Collateral Security Agreement dated May __, 1999, by and
between QF ACQUISITION CORP. (d/b/a Quality Foods) and FLEET CAPITAL CORPORATION
STATE OR ISSUE OR
PATENT NO. COUNTRY FILING DATE TITLE
---------- ------- ----------- -----
4,975,294 U.S.A. 12/4/90 Process for making a
restructured meat product
STATE OF ____________ )
: ss.:
COUNTY OF ____________ )
Before me, the undersigned, on this ____ day of May, 1999, personally
appeared Xxxx Ek to me known personally, and who being by me duly sworn, deposes
and says that he is the Vice President and CFO of QF ACQUISITION CORP., the
corporation described in and which executed the above instrument and that he was
authorized to sign said instrument on behalf of said corporation.
_____________________________________
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Before me, the undersigned, on this ____ day of May, 1999, personally
appeared _____________________, to me known personally, and who being by me duly
sworn, deposes and says that he is the _____________________ of FLEET CAPITAL
CORPORATION, the corporation described in and which executed the above
instrument and that he was authorized to sign said instrument on behalf of said
corporation.
_____________________________________
Notary Public
SCHEDULE I
NONE
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that QF ACQUISITION CORP. (d/b/a
Quality Foods), a corporation formed under the laws of Delaware, with its chief
executive office at 0000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
("Company"), pursuant to a Patent Collateral Security Agreement ("Security
Agreement"), hereby appoints and constitutes FLEET CAPITAL CORPORATION, a
Connecticut corporation, with offices at 000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxx 00000, in its capacity as lender ("Lender") under a Loan and
Security Agreement dated the date hereof AMONG Company, CFP Holdings, Inc. and
Custom Food Products, Inc. and Lender (the "Loan Agreement"), its true and
lawful attorney, with full power of substitution, and with full power and
authority to perform the following acts on behalf of Company:
Assigning, selling or otherwise disposing of all right, title and
interest of Company in and to the Patents listed on Schedule A of the
Security Agreement, and including those trademarks which are added to
the same subsequent hereto, and all registrations and recordings here
of, and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other
formality with respect to the foregoing, and to execute and deliver any
and all agreements, documents, instruments of assignment or other
papers necessary or advisable to effect such purpose;
This power of attorney is made pursuant to the Security Agreement,
dated the date hereof, between Company and Lender and may not be revoked until
the payment in full of all Obligations as defined in the Loan Agreement.
Dated: May __, 1998
QF ACQUISITION CORP.
(d/b/a Quality Foods)
By:______________________________
Name: Xxxx Ek
Title: Vice President and CFO
STATE OF ______________ )
: ss.:
COUNTY OF ____________ )
On this ____ day of May, 1999, before me personally came Xxxx Ek to me
known, who, being by me duly sworn, did depose and say that he is the Vice
President & CFO of QF ACQUISITION CORP., the corporation described in and which
executed the foregoing instrument; and that he was authorized to sign his name
thereto on behalf of said corporation.
_____________________________________
Notary Public
