INTELLECTUAL PROPERTY SECURITY AGREEMENT
(Borrower as Grantor)
This Intellectual Property Security Agreement (this "Agreement") is made as
of August 2, 1999, by MDV Technologies, Inc., a Delaware Corporation
("Borrower") in favor of IMPERIAL BANK, a California chartered bank ("Secured
Party").
RECITALS
A. Secured Party has agreed to lend to Borrower certain amounts (the
"Loan"), as more fully described in a Credit Agreement, dated as of June 17,
1998 (as amended from time to time, the "Loan Agreement").
B. One of the preconditions to Secured Party's obligation to make any
Loan advance is Borrower's grant to Secured Party of a security interest in the
"Intellectual Property Collateral," as defined in SECTION 2, to secure
Borrower's obligations to Secured Party.
C. To induce Secured Party to advance the Loan pursuant to the terms of
the Loan Agreement, Borrower has agreed to enter into this Agreement.
AGREEMENTS
1. DEFINITIONS. The following terms not otherwise defined herein will
have the meanings indicated:
a. "COPYRIGHTS" means copyrights, registrations and applications
therefor, and any and all (i) renewals and extensions thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable with respect
thereto, including damages and payments for past or future infringements
thereof, (iii) rights to xxx for past, present and future infringements thereof,
and (iv) all other rights corresponding thereto throughout the world.
b. "LICENSES" means license agreements in which a party grants or
receives a grant of any interest in Copyrights, Trademarks, Patents and Trade
Secrets and other intellectual property and any and all (i) renewals,
extensions, supplements, amendments and continuations thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable to the party
with respect thereto, including damages and payments for past or future
violations or infringements or misappropriations thereof, and (iii) rights to
xxx for past, present and future violations or infringements thereof.
* Indicates confidential information which has been omitted and filed
separately with the Securities and Exchange Commission.
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c. "PATENTS" means patents and patent applications along with any and all
(i) inventions and improvements described and claimed therein, (ii) reissues,
reexaminations, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (iii) income, royalties, damages and payments now
and hereafter due and/or payable to the holder with respect thereto, including
damages and payments for past or future infringements thereof, (iv) rights to
xxx for past, present and future infringements thereof, and (v) all other rights
corresponding thereto throughout the world.
d. "TRADEMARKS" means trademarks (including service marks and trade names,
whether registered or at common law), registrations and applications therefor,
and the entire product lines and goodwill of the owner's business connected
therewith and symbolized thereby, together with any and all (i) renewals
thereof, (ii) income, royalties, damages and payments now and hereafter due or
payable with respect thereto, including damages and payments for past or future
infringements thereof, (iii) rights to xxx for past, present and future
infringements or misappropriations thereof, and (iv) all other rights
corresponding thereto throughout the world.
e. "TRADE SECRETS" means trade secrets, along with any and all (i)
income, royalties, damages and payments now and hereafter due and/or payable to
the owner with respect thereto, including damages and payments for past or
future infringements or misappropriations thereof, (ii) rights to xxx for past,
present and future infringements or misappropriations thereof, and (iii) all
other rights corresponding thereto throughout the world.
2. GRANT OF SECURITY INTEREST. Borrower hereby grants to Secured Party a
security interest in the following described intellectual property
(collectively, the "Intellectual Property Collateral"):
All Copyrights of Borrower, now owned or hereafter acquired, including
those Copyrights listed on Exhibit A hereto.
All Licenses of Borrower, now owned or hereafter acquired, including
those Licenses listed on Exhibit A hereto,
All Patents of Borrower, now owned or hereafter acquired, including
those Patents listed on Exhibit A hereto
All Trademarks of Borrower, now owned or hereafter acquired, including
those Trademarks listed on Exhibit A hereto
All Trade Secrets of Borrower, now owned or hereafter acquired
All files and records of Borrower or in which Borrower has any
interest and supporting evidence and documents relating to the Intellectual
Property Collateral, including computer programs, disks, tapes and related
electronic data processing media, all rights of Borrower to retrieval from third
parties of electronically processed and recorded information, and all payment
records, correspondence, license agreements and the like, together with all
Borrower's books of account, ledgers, cabinets and equipment in which the same
are reflected or maintained, now owned or hereafter acquired.
All proceeds of the foregoing.
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3. SECURED INDEBTEDNESS. The Intellectual Property Collateral secures
and will secure all Indebtedness of Borrower to Secured Party. For purposes of
this Agreement, "Indebtedness" will mean all loans and advances made by Secured
Party to Borrower, including related interest, loan fees, charges, attorneys'
fees and other expenses for which Borrower is obligated, all guaranties by
Borrower in favor of Secured Party and all other obligations and liabilities of
Borrower to Secured Party, whether now existing or hereafter incurred or
created, whether voluntary or involuntary, whether due or not due, whether
absolute or contingent, or whether incurred directly or acquired by Secured
Party by assignment or otherwise. Without limiting the generality of the
foregoing, "Indebtedness" includes all obligations of Borrower to Secured Party
under any promissory note or other instrument evidencing debt, including all
renewals and modifications thereof, and under any guaranty.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and
warrants that:
a. This Agreement has been duly executed and delivered by Borrower and is
a legal, valid and binding obligation of Borrower enforceable against Borrower
in accordance with its terms, except as enforceability may be affected by
bankruptcy and other laws affecting creditors' rights generally and equitable
principles, and performance of this Agreement by Borrower does not conflict with
or result in a breach of Borrower's organizational documents or any agreement,
law, regulation or order by which Borrower or its property may be bound.
b. The issued Intellectual Property Collateral is existing and is valid
and enforceable, except to the extent that any Intellectual Property Collateral
determined to be invalid or unenforceable will not have a material adverse
effect on the Borrower or its business or financial condition.
c. Borrower is and will be and remain the sole and exclusive owner of the
Intellectual Property Collateral, , all of which is and will be free and clear
of any liens, charges, encumbrances and exclusive licenses, except (i) those in
favor of Secured Party; (ii) the rights of certain former shareholder of
Borrower pursuant to the Agreement and Plan of Merger dated October 8, 1996; and
(iii) or to which Secured Party has consented in writing, subject to paragraph
6(a) hereinbelow.
d. The Intellectual Property Collateral is and will be sufficient for the
purpose of producing all goods, performing the services and otherwise carrying
on the business of Borrower to which it relates.
e. The Intellectual Property Collateral does not infringe any rights
owned or possessed by any third party.
f. There are no material claims, judgments or settlements to be paid by
Borrower or pending claims or litigation relating to the Intellectual Property
Collateral
g. No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Intellectual Property Collateral is on file or of record in any public
office, except such as may have been filed by Borrower in favor of Secured
Party.
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h. When all appropriate filings have been made with the United States
Patent and Trademark Office, the United States Copyright Office, and the
Secretary of State of the State of California, Secured Party will have a valid
and continuing first priority lien on and first priority security interest in
the Intellectual Property Collateral in which a security interest may be
perfected under the laws of the United States or any state thereof and all
action necessary to protect and create such security interest in each such item
of the Intellectual Property Collateral will have been duly taken.
5. COVENANTS OF BORROWER. Borrower agrees that:
a. Borrower will preserve and maintain all rights in the Intellectual
Property Collateral, will diligently pursue any patent, trademark and copyright
applications, and will timely and fully perform all Borrower's obligations in
connection with the Intellectual Property Collateral.
b. Borrower will execute, procure, deliver, register and/or record all
such documents and showings and take all further action as is necessary,
including paying maintenance fees on Intellectual Property Collateral, or
reasonably requested by Secured Party from time to time to evidence, register,
record and/or perfect Secured Party rights hereunder, including as respects
additional Intellectual Property Collateral contemplated in paragraph 5.j.
hereinbelow, or otherwise carry out the intent and purposes of this Agreement.
Secured Party may, at its option, make any such recordation or filing in which
case Borrower will reimburse Secured party's related costs promptly following
receipt of an invoice therefor.
c. Borrower will take commercially reasonable action to halt the
infringement of any of the Intellectual Property Collateral if such infringement
could have a material adverse effect on the value of the Intellectual Property
Collateral or Borrower's ability to use the Intellectual Property Collateral,
and Borrower will promptly notify Secured Party of such infringement or any
other event which would have a material adverse effect on the value of the
Intellectual Property Collateral.
d. Borrower will not amend, modify, terminate or waive any provisions of
any other contract to which Borrower is a party in any manner which might
materially adversely affect the Intellectual Property Collateral.
e. Borrower will not transfer or further encumber any interest in the
Intellectual Property Collateral, except for non-exclusive licenses granted by
Borrower in the ordinary course of business. The Borrower may not enter into an
exclusive license arrangement on any of its Intellectual Property Collateral
without prior written approval of the Secured Party, which approval with not be
unreasonably withheld.
f. Borrower will pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon the Intellectual Property Collateral
or in respect of its income or profits therefrom and all claims of any kind,
except that no such charge need be paid if (i) such non-payment would not
involve any danger of forfeiture or loss of any of the Intellectual Property
Collateral or any interest therein and (ii) such charge is adequately reserved
in accordance with and to the extent required by GAAP.
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g. Borrower will promptly notify Secured Party of any changes in
Borrower's principal office address, state of incorporation, name or corporate
structure.
h. Upon reasonable notice (unless a default has occurred and is
continuing, in which case no notice is necessary), Borrower will at all times
afford Secured Party full and free access during normal business hours to all
the books and records and correspondence of Borrower, and Secured Party or its
representatives may examine the same, take extracts therefrom and make
photocopies thereof. Borrower agrees to provide Secured Party, at Borrower's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto.
i. Borrower will keep and maintain adequate and complete records of the
Intellectual Property Collateral, including a record of all payments received
and all credits granted with respect to the Intellectual Property Collateral and
all other dealings with respect to the Intellectual Property Collateral.
Borrower will xxxx its books and records pertaining to the Intellectual Property
Collateral to evidence this Agreement and the security interest granted hereby.
j. If prior to the time the Indebtedness has been paid in full Borrower
obtains any material rights to or interests in any new inventions, whether or
not patentable, or additional Intellectual Property Collateral, Borrower will
promptly notify Secured Party thereof.
k. Borrower will not enter into any agreement which precludes Borrower's
grant of a security interest to Secured Party in any Intellectual Property
Collateral without Secured Party's prior written consent.
l. Borrower will supply to Secured Party any source code related to any
Intellectual Property Collateral, as may be amended or updated from time to
time, it being understood that Secured Party will not utilize or disseminate
such source code except following a default and as contemplated in SECTION 8.
6. FURTHER UNDERSTANDINGS. Borrower's rights as to the Intellectual
Property Collateral are subject to the following further understandings:
a. Prior to the occurrence of a default hereunder Borrower may continue
to exploit, license, franchise, use, enjoy and protect (whether in the United
States of America or any foreign jurisdiction) the Intellectual Property
Collateral in the ordinary course of business and in a manner consistent with
the preservation of Secured Party's rights hereunder, and Secured Party will
execute and deliver, at Borrower's sole cost and expense, any and all
instruments, certificates or other documents reasonably requested by Borrower to
enable Borrower to do so.
b. This Agreement, and the security interest created hereunder, will
terminate when (i) all Indebtedness has been fully paid and satisfied and (ii)
there are no outstanding commitments for additional Indebtedness. Secured Party
(without recourse upon, or any warranty whatsoever by, Secured Party) will then
execute and deliver to Borrower such documents and instruments evidencing the
termination of the security interest hereunder as Borrower may reasonably
request.
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c. Borrower hereby irrevocably appoints Secured Party as Borrower's
attorney-in-fact, with full authority in the place and stead of Borrower and in
the name of Borrower, from time to time in Secured party's discretion, to take
any action and to execute any instrument which Secured party may deem necessary
or advisable to accomplish the purposes of this Agreement, including (i) to
modify, in its sole discretion, this Agreement without first obtaining
Borrower's approval of or signature to such modification by amending any Exhibit
hereto to include reference to any Intellectual Property Collateral acquired by
Borrower after the execution hereof or to delete any reference to any
Intellectual Property Collateral in which Secured Party no longer has or claims
any interest and (ii) to file, in its sole discretion, one or more financing or
continuation statements and amendments thereto relative to any of the
Intellectual Property Collateral without the signature of Borrower, where
permitted by law.
7. DEFAULT. The occurrence of one or more of the following will be a
default hereunder:
a. Borrower fails to pay any Indebtedness to Secured Party when due, in
accordance with the Loan Agreement.
b. Borrower breaches any term, provision, warranty or representation
under this Agreement, the Loan Agreement or any other loan agreement or other
agreement under which Borrower has obligations relating to the Indebtedness, or
Borrower breaches any other obligation to Secured Party, subject to cure
provisions in such documents.
c. Any custodian, receiver or trustee is appointed to take possession,
custody or control of all or a substantial portion of the assets of Borrower or
of any guarantor of any Indebtedness.
d. Borrower or any guarantor of any Indebtedness becomes insolvent,
generally not paying its debts as they become due, fails in business, makes a
general assignment for the benefit of creditors, dies or voluntarily files under
any bankruptcy or other law for the relief of or relating to debtors.
e. Any involuntary petition is filed against Borrower or any guarantor of
any Indebtedness under any bankruptcy or other law for the relief of or relating
to debtors and such petition is not dismissed within sixty (60) days of filing.
f. Any involuntary lien of any kind or character attaches to, or any
levies of attachment, execution, tax assessment or similar legal process are
issued against, any material assets or property of Borrower or any guarantor of
any Indebtedness.
g. Any financial statements, profit and loss statements, certificates,
schedules, or other information furnished by Borrower or as guarantor of any
Indebtedness to Secured Party relating to Borrower's or the guarantor's
financial condition or the Intellectual Property Collateral proves false or
incorrect in any material respect when made.
h. Any other event of default under the Loan Agreement or a related
document occurs.
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i. Any guarantor of the Indebtedness revokes or repudiates any provision
of its guaranty therefor.
8. SECURED PARTY'S REMEDIES AFTER DEFAULT. Upon the occurrence of any
event or the existence of any condition which constitutes a default under
SECTION 7, Secured Party may take any one or more of the following actions, all
without notice, demand, legal process, protest or presentment of any kind:
a. Declare any or all Indebtedness immediately due and payable, without
notice or demand.
b. Exercise any and all rights and powers of the Borrower respecting the
Intellectual Property Collateral.
c. Sell or assign or grant a license or franchise to use, or cause to be
sold or assigned or granted a license or franchise to use, any or all of the
Intellectual Property Collateral, in each case, free of all rights and claims of
Borrower therein and thereto (but subject, in each case, to the rights of others
heretofore granted or created by Borrower as contemplated herein).
d. Exercise the rights and remedies of a secured party under the
California Commercial Code or any other applicable law, including selling the
Intellectual Property Collateral at public or private sale, for cash or on
credit, in whole or in part and on such terms as Secured Party may determine.
e. Require Borrower to assemble any tangible Intellectual Property
Collateral and make such Intellectual Property Collateral available to Secured
Party at a place designated by Secured Party or to deliver a copy to Secured
Party of any such Intellectual Property Collateral consisting of books, records,
computer disks, tapes and the like.
f. Enter the premises of Borrower or third parties in order to take
possession of any tangible Intellectual Property Collateral.
g. Require Borrower to segregate all collections and proceeds of the
Intellectual Property Collateral so that they are capable of identification and
deliver daily such collections and proceeds to Secured Party in kind.
h. Notify any obligated persons of Secured Party's interest in the
Intellectual Property Collateral and the proceeds thereof and require any such
persons to forward all remittances, payments and proceeds respecting the
Intellectual Property Collateral to Secured Party or a post office box under
Secured Party's exclusive control.
i. Demand and collect any proceeds of the Intellectual Property
Collateral.
j. Bring suit in its own or Borrower's name to protect or enforce
Borrower's rights respecting any Intellectual Property Collateral, in which case
Borrower will do any and all lawful acts and execute any and all proper
documents requested by Secured Party in connection with such action.
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x. Xxxxx extensions of time for payment of amounts due respecting any
Intellectual Property Collateral and compromise or settle claims or disputes of
any customer of Borrower or any third party relating to any Intellectual
Property Collateral, including compromises and settlements that are for less
than the full amount due or involve discounts, credits or allowances other than
in the ordinary course of business, all as Secured Party in good xxxxx xxxxx
advisable or appropriate and without prior notice to or consent of Borrower.
l. Use any Intellectual Property Collateral in connection with any
assembly, use or disposition of other collateral in which Borrower has granted a
security interest to Secured Party.
m. Take such measures as Secured Party may deem reasonably necessary or
advisable to preserve, maintain, protect or develop the Intellectual Property
Collateral or any portion thereof or to perform such obligations hereunder as
Borrower may have failed to perform without curing Borrower's default arising
from such failure.
n. Apply to any court of competent jurisdiction for appointment of a
receiver to enforce any of Secured Party's remedies with respect to the
Intellectual Property Collateral to which appointment Borrower hereby consents.
o. Apply all recoveries received by Secured Party pursuant to the
exercise of Secured party's rights hereunder, net of all Secured Party's related
costs and expenses, to the Indebtedness with Borrower remaining liable for any
deficiency.
p. Demand Borrower's payment of all Secured Party's costs and expenses
incurred in connection with the exercise by Secured Party of its rights
hereunder not offset against recoveries as provided in paragraph 8. hereinabove.
q. Institute proceedings to enforce Secured Party's rights to any amounts
owed by Borrower hereunder.
r. Exercise such further remedies as Secured Party may have at law or in
equity.
9. MISCELLANEOUS.
a. Except for the gross negligence or willful misconduct of Secured
Party, Secured Party will have no liability for any handling or mishandling of
any check, note, acceptance or other instrument which the maker thereof tenders
to Borrower or Secured Party in connection with the Intellectual Property
Collateral.
b. All representations, warranties, covenants, agreements, terms and
conditions made herein will survive the execution, delivery and closing of this
Agreement and all transactions contemplated hereby.
c. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder or to insist on strict compliance or
performance of the representations, warranties, covenants, agreements, terms and
conditions of this Agreement will operate as a waiver thereof.
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d. Time and exactitude of each of the terms, obligations, covenants and
conditions are hereby declared to be of the essence hereof.
e. This Agreement will be governed by and construed according to the laws
of the State of California.
f. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law. Such rights and
remedies may be exercised singularly or collectively from time to time, and thus
any single or partial exercise of any right or remedy will not preclude the
further exercise thereof or the exercise of any other right or remedy.
g. The defined terms in this Agreement will apply equally to both the
singular and the plural forms of the terms defined. Whenever the context may
require, any pronoun will include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" when used in this
Agreement will be deemed to be followed by the phrase "without limitation."
h. In the event of any action or proceeding that involves the protection,
preservation or enforcement of Secured Party's rights or Borrower's obligations
relating to this Agreement or the Indebtedness, Secured Party will be entitled
to reimbursement from Borrower of all costs and expenses associated with said
action or proceeding, including reasonable attorney's fees and litigation
expenses. Borrower will reimburse Secured Party for all reasonable attorneys'
fees and expenses incurred in the representation of Secured Party in any aspect
of any bankruptcy or insolvency proceeding initiated by or on behalf of Borrower
that concerns any of Borrower's obligations to Secured Party under this
Agreement, the Indebtedness or otherwise. In the event of a judgment against
one party concerning any aspect of this Agreement or the Indebtedness, the right
to recover post-judgment attorneys' fees incurred in enforcing the judgment will
not be merged into and extinguished by any money judgment. The provisions of
this paragraph constitute a distinct and severable agreement from the other
contractual rights created by this Agreement or the Indebtedness.
i. Borrower hereby waives diligence, presentment, protest and demand and
notice of every kind and, to the extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder. Borrower further
waives any right to require Secured Party to proceed against any person for
payment of the Indebtedness or against any other security Secured Party may have
for the Indebtedness as a condition to realizing upon any Intellectual Property
Collateral hereunder.
j. If any provisions of this Security Agreement are held to be invalid,
illegal, unenforceable or against public policy in any respect, the validity,
legality and enforceability of the remaining provisions will not in any way be
affected or impaired thereby.
k. Borrower will indemnify, defend and hold Secured Party harmless from
and against any claims, losses, damages, suits, costs and expenses incurred by
or asserted against Secured Party arising out of this Agreement, including
Secured Party's enforcement of its rights hereunder, except where the covered
matter results from Secured Party's gross negligence or willful misconduct.
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1. This Agreement will inure to the benefit of Secured Party and its
successors and assigns. Borrower will not assign any of Borrower's rights,
duties or obligations hereunder. Any such assignment by Borrower will be void
and of no effect as to Secured Party and its successors or assigns.
Executed as of _________, ___ at _____________, California.
MDV TECHNOLOGIES, INC.
By:
------------------------------------------
Xxxxx X. Xxxxxxx
Title: Assistant Secretary
By:
------------------------------------------
Xxxxxxxx X. Xxxx
Title: Vice-President, Treasurer, Secretary
Address: 0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
THIS DOCUMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SO
EXECUTED SHALL, IRRESPECTIVE OF THE DATE OF ITS EXECUTION AND DELIVERY, BE
DEEMED AN ORIGINAL, AND ALL OF WHICH SAID COUNTERPARTS TAKEN TOGETHER SHALL
CONSTITUTE ONE AND THE SAME INSTRUMENT, AND ANY OF THE PARTIES HERETO MAY
EXECUTE THIS AGREEMENT BY SIGNING ANY SUCH COUNTERPART.
Sworn and subscribed before me this ____ day of ___________ 1999.
Notary Public:_________________________________
My Commission expires on:__________________
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ALLIANCE PATENTS AND PATENT APPLICATIONS:
XXXXXX-Registered Trademark- SUMMARY
(OWNED BY MDV TECHNOLOGIES, INC.)
COUNTRY PATENT NO. / LICENSED /
APPLICATION NO. OWNED
(Patents in bold)
--------------------------------------------------------------------------
U.S. 5,077,033 O
U.S. 5,277,911 O
U.S. 5,376,693 O
U.S. 5,847,023 O
* * *
EUROPE 470 703 B1 O
* * *
* * *
U.S. 5,318,780 O
U.S. 5,587,175 O
* * *
U.S. 5,298,260 O
U.S. 5,306,501 O
U.S. 5,300,295 O
U.S. 5,593,683 O
CANADA 2,040,460 O
EUROPE 0455 396 B1 O
JAPAN 2753152 O
U.S. 5,143,731 O
U.S. 5,346,703 O
* * *
U.S. 5,292,516 O
U.S. 4,911,926 O
U.S. 5,135,751 O
U.S. 5,126,141 O
U.S. 5,366,735 O
U.S. 5,681,576 O
* * *
PHILIPPINES 26319 O
AUSTRALIA 616065 O
* * *
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COUNTRY PATENT NO. / LICENSED /
APPLICATION NO. OWNED
(Patents in bold)
--------------------------------------------------------------------------
EUROPE 369764 O
JAPAN 2127399 O
U.S. 5,071,644 O
U.S. 5,124,151 O
* * *
PCT 97/00135 O
U.S. 5,843,470 O
* * *
* * *
U.S. 5,800,711 O
* * *
* * *
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