PATENT, COPYRIGHT AND TRADEMARK COLLATERAL SECURITY AGREEMENT
THIS PATENT, COPYRIGHT AND TRADEMARK COLLATERAL SECURITY
AGREEMENT (the "Agreement") is made as of the 27th day of May,
2003 between GALAXY NUTRITIONAL FOODS, INC., a Delaware
corporation ("Borrower") and TEXTRON FINANCIAL CORPORATION, a
Delaware corporation ("Lender"). All capitalized terms not
otherwise defined herein shall have the meanings ascribed
thereto in the Loan Agreement (as this term is defined below).
RECITALS
A. Borrower and Lender have entered into that certain Loan
and Security Agreement dated as of even date herewith, pursuant
to which Lender has agreed to extend credit to Borrower in the
maximum amount of $7,500,000 (as amended, restated, modified and
supplemented from time to time, the "Loan Agreement").
B. In order to induce Lender to enter into the Loan
Agreement and the transactions contemplated thereby, and as a
condition thereto, Borrower is required to execute and deliver to
Lender this Agreement and pursuant hereto to assign and grant to
Lender a security interest in and to all of Borrower's right,
title, and interest in the Intellectual Property Collateral (as
defined below).
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. As used in this Agreement:
(a) "Copyrights" means and includes, in each case whether
now existing or hereafter arising, all of Borrower's right, title
and interest in and to (i) all copyrights, rights and interests
in copyrights, works protectable by copyright, copyright
registrations and copyright applications; (ii) all renewals of
any of the foregoing; (iii) all income, royalties, damages and
payments now or hereafter due and/or payable under any of the
foregoing, including, without limitation, damages or payments for
past or future infringements of any of the foregoing; (iv) the
right to ▇▇▇ for past, present and future infringements of any of
the foregoing; and (v) all rights corresponding to any of the
foregoing throughout the world.
(b) "Patents" means and includes, in each case whether now
existing or hereafter arising, all of Borrower's right, title and
interest in and to (i) any and all patents and patent
applications, (ii) inventions and improvements described and
claimed therein, (iii) reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (iv)
income, royalties, damages, claims and payments now or hereafter
due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past and future
infringements thereof, (v) rights to ▇▇▇ for past, present and
future infringements thereof, and (vi) all rights corresponding
to any of the foregoing throughout the world.
(c) "Trademarks" means and includes in each case whether
now existing or hereafter arising, all of Borrower's rights,
title and interest in and to (i) trademarks (including service
marks), trade names and trade styles and the registrations and
applications for registration thereof and the goodwill of the
business symbolized by the trademarks, (ii) licenses of the
foregoing, whether as licensee or licensor, (iii) renewals
thereof, (iv) income, royalties, damages and payments now or
hereafter due and/or payable with respect thereto, including,
without limitation, damages, claims and payments for past and
future infringements thereof, (v) rights to ▇▇▇ for past, present
and future infringements thereof, including the right to settle
suits involving claims and demands for royalties owing, and (vi)
all rights corresponding to any of the foregoing throughout the
world.
(d) "Other Assets", means Borrower's intellectual property
and/or proprietary materials other than Copyrights, Patents and
Trademarks, including without limitation, formulations,
manufacturing procedures, quality control procedures and product
specifications relating to any products sold under the
Copyrights, Patents, and Trademarks
(e) "Intellectual Property Collateral" means collectively
the Copyrights, Other Assets, Patents, and Trademarks.
2. As collateral security for the prompt and punctual
payment and performance of the Obligations by Borrower and for
the prompt performance by Borrower of its obligations and
undertakings under this Agreement, Borrower hereby grants to
Lender, its successors and assigns, a security interest in all of
the Intellectual Property Collateral, whether now owned or
hereafter acquired by Borrower, and hereby pledges, mortgages,
and hypothecates the Intellectual Property Collateral to Lender.
3. Borrower covenants, warrants and represents that:
(a) Set forth on Schedule A attached hereto is a
true and complete list of all of the Intellectual Property
Collateral that is subject to current registrations or pending
applications for registration in the United States Copyright
Office, the United States Patent and Trademark Office, and any
other government or public office or agency of the United
States of America or other jurisdictions.
(b) Borrower is the sole and exclusive owner of all
of the Intellectual Property Collateral, free and clear of all
liens and encumbrances, except for (i) the security interest
created by this Agreement and the other Loan Documents, (ii)
the security interest of FINOVA Mezzanine Capital, Inc.
described in Exhibit A hereto and of FINOVA Capital Coporation
pursuant to an agreement dated November 14, 2001, and (iii) the
licenses issued by Borrower in and to Intellectual Property
Collateral set forth on Schedule 5.8 of the Loan Agreement.
(c) Except for the security interest of FINOVA
Mezzanine Capital, Inc. described in Exhibit A hereto and of
FINOVA Capital Coporation pursuant to an agreement dated
November 14, 2001, Lender has a first priority security
interest in the Intellectual Property Collateral.
(d) Borrower will take actions to defend Borrower's
right, title and interest in and to its Intellectual Property
Collateral against the claims of third parties, except where
the failure to do so would not have or be reasonably expected
to have a Materially Adverse Effect.
(e) The Intellectual Property Collateral set forth
on Schedule A is subsisting and has not been adjudged invalid
or unenforceable, in whole or in part, and Borrower has not
received any claim by any third party that any of such
Intellectual Property Collateral is invalid or unenforceable.
(f) Execution, delivery and performance of this
Agreement by Borrower does not (i) violate, conflict with,
result in a breach of, constitute a default under, result in
the termination of, or result in the creation of any
encumbrances upon any of the Intellectual Property Collateral,
under any agreement to which Borrower is a party or by which
Borrower is bound, or (ii) violate any laws, rules, regulations
or orders applicable to any of the Intellectual Property
Collateral.
(g) Borrower has used, and will continue to use for
the duration of this Agreement, reasonably consistent standards
of quality in its manufacture of the products sold under or
utilizing any of the Intellectual Property Collateral.
(h) Borrower will not grant to any Person an
exclusive license for any territory in the United States of
America or Canada for all or any part of the Intellectual
Property Collateral.
(i) Borrower shall take any and all reasonable
actions as are necessary or appropriate to properly maintain,
protect, preserve, care for, and enforce any of the
Intellectual Property Collateral, including, without
limitation, payment when due of such fees, taxes, and other
expenses which shall be incurred or which shall accrue with
respect to any of the Intellectual Property Collateral.
(j) If Lender deems it necessary to perfect or
continue perfection of Lender's interest in the Intellectual
Property Collateral conveyed hereunder, Borrower shall (a)
cause this Agreement to be properly recorded with the United
States Patent and Trademark Office, the United States Copyright
Office, and any other government or public office or agency of
the United States of America, as applicable, and (b) for
Intellectual Property Collateral registered in the United
States or Canada (and upon Lender's request in such other
jurisdictions), will execute and deliver to Lender such
documents as Lender may require to perfect its security
interest in registered Intellectual Property Collateral.
(k) All information heretofore or herein supplied in
writing to Lender by or on behalf of Borrower with respect to
any of the Intellectual Property Collateral is accurate and
complete in all material respects.
(l) With respect to the Master Distribution and
License Agreement effective May 22, 2003 between Borrower and
Fromageries Bel S.A. ("Bel License Agreement"), Borrower will
not (i) increase the Territory (as defined therein) to include
any countries in addition to the specific countries described
in clause (i), (ii) and (iii) of Section 1.3 thereof or (ii)
otherwise materially amend, modify, supplement or otherwise
change the terms, conditions or parameters of the agreement
except as contemplated in the Bel License Agreement as in
effect on May 22, 2003. The foregoing will not prevent or
prohibit the Borrower from negotiating, establishing the terms
and conditions of, and entering into the manufacturing
agreement contemplated by the Bel License Agreement.
4. Borrower hereby grants to Lender and its employees,
representatives and agents the right to visit during regular
business hours any of Borrower's plants and facilities that
manufacture, inspect or store products that are sold utilizing
any of the Intellectual Property Collateral, and to inspect the
products and quality control records relating thereto, provided
that Lender shall not interfere with the daily operations of
Borrower. Borrower shall do any and all acts required by Lender
to ensure Borrower's compliance with Section 3(g) above.
5. Borrower agrees that, until all of the Obligations of
Borrower under the Loan Documents shall have been satisfied in
full, Borrower will not (a) sell, assign, transfer or sublicense
the Intellectual Property Collateral or any of its rights or
interests therein other than to: (i) Lender, (ii) Fromageries
Bel S.A. pursuant to or as contemplated by the Bel License
Agreement or the manufacturing agreement contemplated thereunder,
and (iii) parties to whom Borrower has granted licenses in the
ordinary course of its business on market terms or with the prior
written consent of Lender or (b) enter into any other agreement
which is inconsistent with Borrower's obligations hereunder,
without the prior written consent of Lender.
6. If, before the Obligations of the Borrower shall have
been satisfied in full, Borrower shall obtain rights to any new
Intellectual Property Collateral, the provisions of this
Agreement shall automatically apply thereto. Borrower shall give
Lender prompt written notice of any new Intellectual Property
Collateral which shall become subject to registrations or pending
applications for registration in the United States Copyright
Office, the United Patent and Trademark Office, and any other
government or public office or agency of the United States of
America or other jurisdictions and will execute and deliver to
Lender such documents as Lender may require to perfect its
security interest in any registered Intellectual Property
Collateral.
7. Borrower authorizes Lender to modify this Agreement
by amending Schedule A to include any new registrations and/or
applications pending for any Intellectual Property Collateral
without the necessity of Borrower's approval of or signature to
such amendment, and Borrower shall do all such other acts (at
its own expense) deemed reasonably necessary or appropriate by
Lender to implement or preserve Lender's interests therein.
All representations and warranties of Borrower set forth herein
shall be deemed to be restated by Borrower as of the date of
any such amendment of or supplement to Schedule A with full
force and effect as though made on such date.
8. If any Event of Default shall have occurred and be
continuing, Lender shall have, in addition to all other rights
and remedies given by this Agreement, those allowed by law and
the rights and remedies of a Lender under the Uniform Commercial
Code as enacted in any applicable jurisdiction and, without
limiting the generality of the foregoing, Lender may immediately,
without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to Borrower, all of
which are hereby expressly waived, and without advertisement,
sell at public or private sale or otherwise realize upon, in
Providence, Rhode Island, or elsewhere, all or from time to time
any part of the Intellectual Property Collateral, or any interest
which Borrower may have therein, and after deducting from the
proceeds of sale or other disposition of any part of the
Intellectual Property Collateral all expenses (including all
reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds to the payment of the
Obligations of Borrower. Any remainder of the proceeds after
payment in full of the Obligations of Borrower shall be paid over
to Borrower. Written notice of any sale or other disposition of
any part of the Intellectual Property Collateral shall be given
to Borrower at least ten (10) days before the time of any
intended public or private sale or other disposition thereof is
to be made, which Borrower hereby agrees shall be reasonable
notice of such sale or other disposition. At any such sale or
other disposition, Lender may, to the extent permissible under
applicable law, purchase the whole or any part of any of the
Intellectual Property Collateral sold.
In addition, upon the occurrence of an Event of Default,
Lender shall have, and Borrower hereby grants to Lender,
effective under this Agreement and the other Loan Documents, a
fully-paid-up, right and license to make, use, practice, and sell
(or license or otherwise transfer) the Intellectual Property
Collateral, for the exclusive purpose of, and to the extent
necessary and sufficient for, the full and complete enjoyment and
exercise of and realization upon the rights, remedies, and
interests of Lender pursuant to this Agreement and the other Loan
Documents. Except for the exclusive territorial license of
Intellectual Property Collateral granted by Borrower to
Fromageries Bel S.A. and such other licenses of Intellectual
Property Collateral for exclusive territories not prohibited by
this Agreement, the license granted by Borrower to Lender
hereunder is worldwide.
9. Subject to the terms of the Loan Agreement, at such
time as Borrower shall completely satisfy all of the Obligations,
this Agreement shall terminate and Lender shall execute and
deliver to Borrower all deeds, assignments, termination
statements under the Uniform Commercial Code, and other
instruments as may be necessary or proper to release Lender's
security interest in the Intellectual Property Collateral,
subject to any disposition thereof which may have been made by
Lender pursuant hereto.
10. Any and all fees, costs and expenses, of whatever kind
or nature, including the reasonable attorneys' fees and legal
expenses incurred by Lender in connection with preparation of
this Agreement and all other documents relating hereto and the
consummation of this transaction, the filing or recording of any
documents (including all taxes in connection therewith) in public
offices, the payment or discharge of any taxes, counsel fees,
maintenance fees, encumbrances or otherwise protecting,
maintaining or preserving any part of the Intellectual Property
Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to any part of the
Intellectual Property Collateral, shall be borne and paid by
Borrower on demand by Lender and until so paid shall be added to
the principal amount of the Obligations and shall bear interest
at the highest rate prescribed in the Loan Agreement.
11. Borrower shall not knowingly abandon or dedicate to
the public any of the Intellectual Property Collateral, nor
knowingly do any act nor omit to do any act if such act or
omission is of a character that tends to cause or contribute to
the abandonment or dedication to the public of any part of the
Intellectual Property Collateral, without the consent of
Lender, which consent shall not be unreasonably withheld.
12. In the event of the occurrence of an Event of Default
under the Loan Agreement, Borrower hereby authorizes and empowers
Lender to make, constitute and appoint any officer or agent of
Lender as Lender may select, in its exclusive discretion, as
Borrower's true and lawful attorney-in-fact, with the power to
endorse Borrower's name on all applications, documents, papers
and instruments necessary for Lender to use any of the
Intellectual Property Collateral, or to grant or issue any
exclusive or non-exclusive license under any of the Intellectual
Property Collateral to anyone else, or necessary for Lender to
assign, pledge, convey or otherwise transfer title in or dispose
of any of the Intellectual Property Collateral to anyone else.
Borrower hereby ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof. This power of attorney
shall be irrevocable until this Agreement shall terminate
pursuant to the terms herein.
13. If Borrower fails to comply with any of its obligations
hereunder, Lender may perform such obligations in Borrower's name
or in Lender's name, but at Borrower's expense, and Borrower
hereby agrees to reimburse Lender in full for all expenses,
including reasonable attorneys' fees, incurred by Lender in
protecting, defending and maintaining any of the Intellectual
Property Collateral.
14. This Agreement is supplemental to the Loan Agreement,
and in no event shall this Agreement, or the recordation of this
Agreement or any other documents in connection herewith with the
United States Patent and Trademark Office, the United States
Copyright Office, or any other government or public office or
agency of the United States of America, adversely effect or
impair, in any way or to any extent, the other Loan Documents,
and the security interest of Lender in the Collateral (including
the Intellectual Property Collateral) pursuant to the other Loan
Documents. Any and all rights and interests of Lender in and to
the Intellectual Property Collateral (and any and all obligations
of Borrower with respect to the Intellectual Property Collateral)
provided herein, or arising hereunder or in connection herewith,
shall only supplement and be cumulative and in addition to the
rights and interests of Lender (and the obligations of Borrower)
in, to, or with respect to the Collateral (including Intellectual
Property Collateral) provided in or arising under or in
connection with the other Loan Documents.
15. No course of dealing between Borrower 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.
16. All of Lender's rights and remedies with respect to any
of the Intellectual Property 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.
17. Notices that are required to be delivered hereunder
shall be sufficient if in writing and sent to the addresses set
forth in the Loan Agreement, in the manner and within the time
specified in the Loan Agreement.
18. The provisions of this 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.
19. This Agreement is subject to modification only by a
writing signed by the parties, except as provided in Section 7.
20. The benefits and burdens of this Agreement shall inure
to the benefit of and be binding upon the respective successors
and permitted assigns of the parties.
21. The validity and interpretation of this Agreement and
the rights and obligations of the parties shall be governed by
the laws of the State of Rhode Island, without reference to
applicable conflict of law principles.
22. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be
an original but all of which taken together shall constitute
one and the same agreement. The parties hereby acknowledge and
agree that facsimile signatures of this Agreement shall have
the same force and effect as original signatures.
[Signatures on Following Page]
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement as of the date set forth above.
ATTEST BORROWER:
GALAXY NUTRITIONAL FOODS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. New
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. New
[CORPORATE SEAL] Title: Chief Executive Officer
LENDER:
TEXTRON FINANCIAL CORPORATION
By:
_______________________________
Name: ________________________
Title: _______________________
SCHEDULE A
Intellectual Property Collateral
(A) TRADEMARKS/SERVICEMARKS
GCC = Galaxy Cheese Company
GFC = Galaxy Food Company
GNF = Galaxy Nutritional Foods
FMC = Finova Mezzanine Capital
REGISTRATIONS
TRADEMARK COUNTRY REGISTRATION REGISTRATION CLAS
Owner DATE NUMBER S
Security Interest
Formagg United 04/03/84 1272946 29
O = GCC States
SI = FMC
Formagg Canada 03/01/85 TMA300386 29
O = GFC
Formagg France 06/07/1984 1275120 29
O = GCC
Formagg Japan 08/31/94 ▇▇▇▇▇▇▇ 31
O = GCC
Formagg United 02/25/87 B1217447 29
O = GCC Kingdom
Galaxy Nutritional United 06/11/02 2577980 29
Foods States
O = GNF
SI = FMC
Galaxy Nutritional United 04/29/02 2560390 40
Foods States
O = GNF
SI = FMC
G and Design United 02/01/00 2314619 40
O = GFC States
SI = FMC
▇▇▇▇▇▇▇'▇ and United 10/09/84 1299683 29
Design States
O = GCC
SI = FMC
Lite Bakery United 10/07/97 2102820 30
O = GFC States
SI = FMC
SCHEDULE A
INTELLECTUAL PROPERTY COLLATERAL
(cont'd)
The Lite Bakery United 10/21/97 2106432 30
and Design States
O = GFC
SI = FMC
Lite & Less and United 04/18/00 2343029 29
Design States
O = GFC
SI = FMC
Pizza and Dessert United 09/18/98 2189242 35
that Doesn't Hurt States
O = GFC
SI = FMC
Soyco Australi 11/12/01 894748 29
a
Soyco United 01/12/93 1745941 29
O = GFC States
SI = FMC
Soyco and Design United 08/17/93 1788315 29
O = GFC States
SI = FMC
Soymage United 01/05/96 1744693 29
O = GFC States
SI = FMC
Soy Singles United 06/24/97 2074712 29
O = GFC States
SI = FMC
Veggie Nature's Australi 11/12/01 894749 29
Alternative to a
Milk
O = GNF
Veggie Nature's United 12/17/02 2662329 29
Alternative to States
Milk & Design
O = GNF
Veggy Singles United 06/03/97 2068151 29
O = GFC States
SI = FMC
Veggie Slices Australi 11/12/01 894750 29
O = GNF a
SCHEDULE A
INTELLECTUAL PROPERTY COLLATERAL
(cont'd)
Veggie Slices United 10/29/02 2641674 29
O = GFC States
Veggie Slices & Japan 02/21/03 ▇▇▇▇▇▇▇ 29
Design
O = GNF
Veggie Slices Japan 02/21/03 ▇▇▇▇▇▇▇ 29
Nature's
Alternative to
Cheese & Design
O = GNF
Wholesome Valley United 02/01/00 2314726 29
O = GFC States
SI = FMC
APPLICATIONS
TRADEMARK COUNTRY APPLICATION APPLICATION CLASS
DATE NUMBER
Galaxy Nutritional Australi 11/12/01 894747 29
Foods a
O = GNF
Galaxy Nutritional United 02/01/01 76/204595 35
Foods States
O = GNF
SI = FMC
Galaxy Nutritional United 02/19/03 76/491198 29
Foods States
O = GNF
Galaxy Nutritional United 02/19/03 76/491197 29
Foods States
O = GNF
Galaxy Nutritional United 02/18/03 76/491199 29
Foods and Design States
O = GNF
Galaxy Nutritional United 02/19/03 76/491272 40
Foods States
O = GNF
SCHEDULE A
INTELLECTUAL PROPERTY COLLATERAL
(cont'd)
Galaxy Nutritional United 02/07/02 76/367873 29
Foods Veggie States
O = GNF
G (Stylized United 02/19/02 76/491273 40
Design) States
O = GNF
G (Stylized United 02/19/03 76/491274 29
Design) States
O = GNF
Ultra Smoothie United 08/29/02 76/445746 32
O = GNF States
Ultra Smoothie United 04/01/03 76/506079 29
O = GNF States
Ultra Smoothie United 04/01/03 76/502629 29
O = GNF States
Ultra Smoothie and United 09/04/02 76/446486 32
Design States
O = GNF
Veggie Slices Japan 08/23/01 76635/2001 29
O = GNF
Veggie Slices Japan 08/23/01 76633/2001 29
Nature's
Alternative to
Cheese
O = GNF
Wild Strings United 09/16/02 76/450007 29
O = GNF States
B) PATENTS
None
C) COPYRIGHTS
None
